Company Reports

Our key takeaway from Lithium Argentina's first-quarter earnings was that the company's first project, Cauchari-Olaroz, continues to ramp up as planned. The project produced 4,500 metric tons of lithium carbonate during the first quarter, which is an annual run-rate of 18,000 metric tons, or 45% of the 40,000 total annual capacity. Management reiterated its production guidance for the project to produce 20,000 to 25,000 metric tons of lithium carbonate in 2024, which we think is achievable.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

The US on May 13, 2024, announced a series of new tariffs on Chinese imports. These include a 100% tariff on electric vehicles and a 25% tariff on lithium-ion batteries and battery parts. There was also a 25% tariff on critical minerals, which include graphite, permanent magnets, and cobalt.

On April 29, lithium stocks rallied on the news of China's recently issued automobile subsidy. Consumers who trade in an older vehicle and buy a new vehicle that meets energy-saving requirements, including electric vehicles, can get a subsidy of up to CNY 10,000 (about $1,381) to reduce the purchase price through the end of 2024.

Our key takeaway from Lithium Argentina’s 2023 fourth-quarter results was the company's continued ramp-up on its first lithium project, Cauchari-Olaroz, which began production in late 2023. After reviewing the quarterly results and outlook for Cauchari-Olaroz and updating our model, we're maintaining our USD 25/CAD 33 fair value estimate. Our narrow moat rating is also unchanged.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

Lithium Argentina announced a deal to sell 15% of its Pastos Grandes project to Ganfeng Lithium for $70 million. The price is a 17% premium to what Lithium Argentina paid for the project through the acquisition of Millennial Lithium in 2022. Having updated our model to incorporate the deal, we're maintaining our $25 fair value estimate. We're trimming our CAD fair value estimate to CAD 33 from CAD 34 due to currency movements since our last update. Our narrow moat rating is unchanged.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

Lithium Argentina announced that Sam Pigott will become the company's president and chief executive officer effective March 18. Pigott replaces interim CEO John Kanellitsas. Kanellitsas, who is also the executive chair of Lithium Argentina's board of directors will retain his executive chair role. After reviewing the announcement, we see no reason to change our outlook for the company. Accordingly, we're maintaining our $25 (CAD 34) fair value estimate. Our narrow moat rating is also unchanged.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

Lithium spot prices fell over 80% in 2023. As prices reached all-time highs in 2022, new, higher-cost supply brought the market to balance, sending prices plummeting. Bears say oversupply conditions will occur in 2024 amid rising supply and slowing demand as battery electric vehicle, or EV, sales falter.

Lithium Argentina reported 2023 operational results on Jan. 10. In the fourth quarter, the company began to generate revenue as its first resource, Cauchari-Olaroz, entered production. Cauchari-Olaroz produced 6,000 metric tons of lithium during the quarter, which surpassed management's guidance of 5,000 metric tons. For now, we maintain our $25/CAD 34 fair value estimate. Our narrow moat rating is also unchanged.

Lithium producer stocks fell on ExxonMobil's announcement that the company is planning to enter the lithium production industry through the development of a lithium project in the U.S. state of Arkansas. While Exxon provided little details on its plans, the company said it aims to begin lithium production in 2027 and produce around 100,000 tons per year by 2030.

Lithium Argentina's third-quarter results, its first quarter since the separation from the previous Lithium Americas, highlighted the continued progression of the Cauchari-Olaroz project. The project entered production early in the fourth quarter, and management affirmed its production estimates of 5,000 metric tons in 2023. While Cauchari-Olaroz appears on a track toward ramping up its phase 1 production, we delayed our forecasts for the Pastos Grandes project, and now expect the neighboring production site to produce its first lithium in 2030, as we think Lithium Argentina and partner Ganfeng will need a longer timeline for project development than we had previously forecast. We also incorporated lower near-term lithium prices.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

On Nov. 6, shares of lithium producers Albemarle, Livent, and SQM fell on a broker downgrade. After reviewing the note, we see no reason to change our fair value estimates for the three narrow-moat companies. At current prices, we view all three lithium producers as materially undervalued relative to our base-case fair value estimates. Albemarle and Livent both trade at roughly 40% of our $300 and $38 fair value estimates, respectively, and in 5-star territory. SQM trades at a little less than 50% of our $95 per share fair value estimate. Along with Lithium Americas and Lithium Argentina, we view these five stocks as the most undervalued among our specialty chemicals coverage.

On Oct. 18, lithium stocks plummeted following a sell-side broker's downgrade for Albemarle and SQM. The downgrade is due to the outlook that the lithium market will move into a supply surplus in 2024 and 2025, leading to lower lithium prices. We disagree and continue to forecast a price rebound as strong demand growth outpaces supply leading to a supply deficit in 2024.

We are initiating coverage of Lithium Argentina with a $30 (CAD 41) per share fair value estimate. Lithium Argentina was created in the Lithium Americas separation that divided the company's Argentina and North America assets.

Lithium Argentina is a pure-play lithium producer with two assets in Argentina. The company was created as a result of the former Lithium Americas separation, which separated the firm's Argentina and North America businesses.

We are placing Lithium Americas under review as the firm separates its North America and Argentina businesses. Current shareholders in Lithium Americas will be issued shares of both companies, which will begin trading independently on Oct. 4. The North American company will retain the Lithium Americas name and will trade on the New York Stock Exchange and Toronto Stock Exchange under the ticker LAC. The Argentina company will be named Lithium Argentina and will trade on the NYSE and TSE under the ticker LAAC. We plan to cover both companies following the separation.