Lithium Americas Corp (LAAC)

[jbsliverer]

Lithium Americas: An Update On The Court Case For Thacker Pass
Feb. 17, 2022 1:55 PM ET Lithium Americas Corp. (LAC)

Austin Craig

Summary
We cover timeline updates to the legal case at Thacker Pass. This might be useful for options traders to know.
General market fears are explored to include inflation.
Big picture lithium demand is covered. This demand will push projects via funding. If you build it they will come.

I've noted confusion on various forums concerning dates for Lithium Americas (NYSE:LAC) Thacker Pass project and the associated lawsuit. The purpose of this article is to give the reader updates on the timelines the court is looking at, some general musings on inflation, and corresponding updates to big picture lithium demand by major players. Consider this article a minor update.

Recent Developments & Court Dates
Reading in the forums you will encounter conjecture concerning court dates, which range from the Thacker Pass lawsuit will be wrapped up in February to April. First, we must realize that the court case has morphed into two actions: We can see the case and then an appeal for the injunction by looking at Pacer Legal.

Lithium Americas Thacker Pass Lawsuit
Thacker Pass Lawsuit

Source: pacer.uscourts.gov

Checking on the older of the cases (3:21-cv-00080-MMD-CLB Bartell Ranch LLC et al v. McCullough, et al) which most investors are watching, we see an Event filed date of 1/26/2022 and a Due/Set date of 3/04/2022.

174 Motions Deadline 01/26/2022 03/04/2022
(Source: Pacer Legal)

This tells us no court conclusion till sometime after this (at the earliest) and you still have legal delays and possibly additional appeals to be dealt with. A good guess would be April-May onwards for case #1. It also appears a hail Mary appeal has been filed for the preliminary injunction (Per Case 3:21-cv-00080-MMD-CLB). The odds of this appeal being successful are very low in my opinion, but it is worth noting for general situational awareness.

01/18/2022 4 Filed clerk order (Deputy Clerk: LCC): A review of the record reflects that this appeal, filed January 6, 2022, is a preliminary injunction appeal. Accordingly, Ninth Circuit Rule 3-3 shall apply.
(Source: Pacer Legal, Case 3:21-cv-00080-MMD-CLB)

We can also see a bit of a civil war within the Plaintiff ranks as multiple lawyers leave the case.

Lawyers leave the case (Pacer legal system)

(Source: Pacer Legal, Case 3:21-cv-00080-MMD-CLB)

In the main case, Obama appointee, Judge Du, did mention that she wants to wrap up the case by construction season. Per the December 27th Pacer court document #155 - Page 6 we see:

Lithium Americas - court timeline aspirations
Court Timeline Aspirations (Pacer Legal)

(Source: Pacer Legal - Highlights are the authors)

Typically, the construction season would be after the weather in northern Nevada turns favorable in April for construction. Hence we see the intent of the court to try to get this resolved somewhere near this time frame give or take due to delays.

A Realistic View of Market Risk
While I'm going to get to the big picture view of lithium, one cannot ignore the overall market trend. We are in a strange period where the government has really backed itself into a corner. Interest rates are abnormally low. Supply chains are disrupted and continue to be challenged. The labor market is a really strange one with "Help Wanted" signs everywhere and very good wages for unskilled labor, yet, somehow these jobs go unfilled. I find that most perplexing.

I've noticed prices for food have skyrocketed. Some of my personal observations are: Canned black olives are up 104%. Canned mushrooms are about the same. A frozen pizza which was $5.75 or low $6's is now $8. Of course, fuel is up as well. Housing has gone loco and rent is up 71% for some listings. The used car supply is tight, forcing consumers towards new cars. Meanwhile, new cars are being impacted by a semiconductor shortage. Frankly, it is rough times for anyone economically challenged. Something must give and the Fed is terrified of doing anything meaningful before midterms.

The Fed realizes that if they do what is necessary, they will send the nation into a recession. Remember Federal Reserve Chairman Volcker from the 1980's? He was not afraid to do what had to be done. Recessions are normal: they are part of the business cycle. During prosperity, weaker businesses can survive but eventually the party ends. These businesses fold or merge into stronger companies and the cycle continues. Chairman Volcker indeed shook the tree (perhaps to the point of insanity), but I see some parallels to modern times. Per the article.

"Many economists still argued that the Fed could reduce inflation gently, without causing a recession, by raising interest rates just enough to slow economic activity. But Mr. Volcker said inflation had become a self-fulfilling prophecy. People had come to expect prices and wages to rise, so they borrowed and spent more and demanded larger pay increases, and prices and wages rose.

The Fed had been promising to crack down on inflation for more than a decade, but it had repeatedly caved into intense political pressure so as to avoid a recession. Mr. Volcker decided a dramatic gesture was necessary to convince the public that this time would be different."


My best guess is they continue to hint at small raises; then we start seeing them as the quarters roll by, but frankly little 1/4-point or even 1/2-point raises are just a drop in the bucket to fight inflation. Some economists even say (and I concur) that the Fed is backed into a corner.

On the flip side, I have come across some discussions where people think that easing supply chains and productivity increases might result in lower inflation. I suppose time will tell. Keep some powder dry just in case.

Lithium Demand
Moving back on topic, let's look at some big picture lithium demand. It is this demand that will push project funding and acquisitions. The cream of the crop is being picked over by bigger fish. Millennial Lithium was acquired by Lithium Americas. The Chinese bought Neo Lithium and CATL is still on the prowl. Let's look at demand and lithium news. When you are reading over this, realize a sea change is coming. One day you will be able to tell your kids that you grew up when electric cars were not the dominant form of travel:

Unconfirmed reports place Ford at investing $40-50 billion in EV.
A Porsche Taycan goes coast to coast on 2.5 hours of charging.
Firestone offers charging stations.
LG Energy to spend $1.7 billion on battery factory in the US.
Glencore & Britishvolt to build lithium / cobalt recycling plant in the U.K.
US Gov to put $5 billion into EV chargers nationwide over five years. An additional $2.5 billion will be released later on. (Total $7.5 billion)
EV models will double by 2024.

EV Models to Double by 2024 (Visualcapitalist.com)

(Source: Visualcapitalist)

Conclusion
The above court timelines for the case could be useful for options traders to know concerning what time frames they might trade around.

The real catalyst for Lithium Americas is going to be the ruling on the legal case concerning Thacker Pass in Nevada. If the BLM decision of approval is upheld via a successful court case outcome, I think the stock will react in a violently positive fashion. The inverse is also true. Yet, one must wonder what happens to lithium investments in America if the court happens to side with the prosecution? Given that many mines can take 10 years to obtain permits, fully fund and build out, a negative ruling might have a very negative impact on aspiring lithium miners across the United States. Hence (with the support of the Biden administration and an Obama appointed Judge Du) I view the odds favorable that the court will uphold the BLM approval for Lithium Americas.

This article was written by

Austin Craig


Disclosure: I/we have a beneficial long position in the shares of LAC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: We also own long calls.
We have sold covered calls as well.