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Shares of early stage lithium miner
Lithium Americas
have been rising Tuesday buying and selling after a bullish observe from J.P. Morgan. The observe is nice information for Lithium Americas buyers, however a few of the agency’s observations additionally apply to the remainder of the lithium mining business.
Lithium Americas (ticker: LAC) inventory was up 9% on Tuesday. The
S&P 500
and
Dow Jones Industrial Common
have been up about 1.4% and 1.2%, respectively.
J.P. Morgan analyst Tyler Langton wrote Tuesday that there are “numerous catalysts forward to help [Lithium Americas] inventory in a uneven market.”
Buying and selling has been uneven certainly. Lithium Americas inventory has fallen about 30% for the reason that finish of November. Company fundamentals can’t actually be blamed. As a substitute, Lithium Americas is a improvement stage miner. The corporate didn’t generate gross sales in 2021. Greater inflation, rising rates of interest and geopolitical tensions between Russian and Ukraine have sapped buyers’ willingness to carry extra speculative shares.
That explains the current worth motion, however the inventory is down whereas commodity pricing is up. The “inventory worth largely adopted the regular enhance in lithium costs in [second half 2021], however they’ve decoupled extra just lately,” noticed Langton. Lithium carbonate costs have moved to $62,000 per metric ton from $31,000 a metric ton on the finish of November.
Lithium carbonate is a key benchmark worth for lithium product. These merchandise are key parts in lithium-ion batteries. Battery demand is rising as manufacturing of electrical autos grows around the globe.
Lithium Americas inventory isn’t the one lithium mining inventory that’s down for the reason that finish of November.
Piedmont Lithium
(PLL) shares have been down 18% over the identical span.
Albemarle
(ALB) and
Livent
(LTHM) shares fell about 15% and 25%, respectively, for the reason that finish of November.
The rising commodity price-falling commodity inventory paradox is a chance, in accordance with Langton. His observe is about Lithium Americas, so his observations targeted on that firm’s catalysts.
Particularly, Langton sees a good allowing final result for Lithium Americas by the tip of the primary quarter on the firm’s Thacker Cross undertaking, the corporate’s lithium undertaking in Nevada.
Lithium Americas additionally has a undertaking in Argentina that is because of begin up in 2022. That is named the Cauchari-Olaroz undertaking and is collectively owned with a Chinese language firm.
Upcoming earnings can be a catalyst for Lithium Americas in addition to the remainder of the sector. Lithium mining chief Albemarle stories fourth-quarter numbers on Thursday. Traders and analysts will hear extra about pricing, demand and enlargement undertaking from administration on that day.
Write to Al Root at allen.root@dowjones.com
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