Shares of Lithium Americas Corp. (NASDAQ:LAC) jumped Wednesday after the company shared that the U.S. Department of Energy (DOE) took a 5% stake in the mining company. The DOE also gave Lithium Americas a critical approval on a previously announced loan.
What To Know: Lithium Americas’s stock is up about 24% on Wednesday, according to Benzinga Pro. The rise extends a week-long upward swing in the stock, driven by reports of a potential government deal.
Lithium Americas announced that it reached an agreement with the DOE to advance the first draw of $435 million on the company’s previously announced $2.26 billion DOE loan, which has since been reduced to $2.23 billion.
Key provisions of the agreement include the DOE’s 5% equity stake, in addition to a deferral of $182 million of debt service over the first five years of the loan.
The funds will go towards a joint venture project between Lithium Americas and General Motors called Thacker Pass. The site in Nevada is the largest known lithium deposit in the United States. Lithium is needed to produce lithium-ion batteries used in cell phones, laptops and electric vehicles.
“We are onshoring large-scale U.S. lithium production, strengthening America's supply chain, creating exceptional jobs and enhancing our long-term energy security and prosperity," Lithium Americas CEO Jonathan Evans said.
Following the DOE investment, Wedbush analyst Dan Ives maintained Lithium Americas with a Neutral rating and raised the price target from $5 to $8. The consensus price target for Lithium Americas among analysts is $6.28. Lithium Americas has a Street-high target of $15 and a Street-low target of $2.50, according to Benzinga data.
LAC Price Action: Lithium Americas’s stock was up 24.4%, trading at $7.10 at the time of publication. Lithium Americas shares briefly hit 52-week highs on Wednesday before pulling back.
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