Lithium Americas: Shares Plunge on Equity Issuance

Lithium Americas announced plans to issue up to 63.25 million shares, including underwriter options, which is nearly 38% of shares outstanding as of Dec. 31, 2023. The offering will be issued at a price of $5 per share. The equity raise is necessary as it will fully fund the phase 1 capital expenditures for the Thacker Pass project. However, the price is highly dilutive to shareholders. Having updated our model to incorporate the equity issuance, we reduce our Lithium Americas fair value estimates to $12 (CAD 17) from $18 (CAD 24). We maintain our no-moat rating.