Lithium Americas (LAAC) Stock’s Upward Momentum Driven By Acquisition Strategy

Lithium Americas (Argentina) Corp. (NYSE: LAAC) saw a notable surge in its stock price, climbing by 11.97% to reach $5.33 in the preceding trading session. This upward movement was attributed to an asset acquisition move by the company.

LAAC announced that it and a few of its subsidiaries have completed a formal agreement with a Ganfeng Lithium Co. Ltd. subsidiary. As per the terms of this agreement, Proyecto Pastos Grandes S.A. (PGCo), an indirect wholly-owned Argentinian subsidiary of LAAC that manages the Pastos Grandes project in Salta, Argentina, would sell newly issued shares to Ganfeng Lithium for $70 million.

This investment is expected to translate into an approximate 15% stake in PGCo and the associated project. This transaction underscores LAAC’s enduring commitment to Salta and the sustainable growth of Argentina’s lithium sector. While the company continues to prioritize the expansion of its operations at Caucharí-Olaroz, already one of Argentina’s largest lithium brine facilities, the deal bolsters its financial position and augments growth strategies by capitalizing on existing resources and nearby operations.

In terms of specifics, Ganfeng Lithium’s subsidiary will subscribe to PGCo’s share capital for a cash price not exceeding $70 million, with the proceeds earmarked for advancing LAAC’s lithium ventures in Argentina. Upon completion, Ganfeng Lithium may potentially gain an additional 1.6% interest in PGCo, subject to an independent resource assessment, although no such adjustment is presently anticipated.

Additionally, LAAC and Ganfeng Lithium will enter into a shareholders agreement that delineates various provisions, including a temporary restriction on the sale of Pastos Grandes interest until December 31, 2024. Furthermore, by 2025, Ganfeng Lithium will enjoy enhanced consent rights concerning operational matters and a right of first refusal over any future sale of PGCo interest at a valuation equivalent to that of the ongoing transaction.

Moreover, in the event of a change in LAAC’s ownership, Ganfeng Lithium retains the option to acquire a 50% stake in Pastos Grandes by subscribing to PGCo’s share capital for an additional $330 million, totaling $400 million. These measures reflect the strategic collaboration between Lithium Americas and Ganfeng Lithium, aimed at advancing lithium production in Argentina while ensuring mutually beneficial terms for both parties.