LAC - Massif Capital - Lithium Americas: Why We Still Own LAC And LAAC

2024-02-16 02:05:00 ET

Summary

• Investing in the Lithium mining and processing industry has gotten very tricky.
• Currently, we remain, at a small size, invested in two lithium mining firms, Lithium Americas and Lithium Argentina.
• We view LAAC as a compelling value play with a de- risked producing asset and the potential to reinvest capital at high rates of return via the development.
• LAC has many strengths: strong management, strong backing, a first-of- a-kind flow sheet.

The following segment was excerpted from this fund letter.

Lithium Americas ( LAC )

Lithium Overview and Position Update

Investing in the Lithium mining and processing industry has gotten very tricky; this is perhaps no surprise; after all, the sector was nascent just a few years ago and is now taking center stage in a global transportation transition. Furthermore, for those who do not follow these things as closely as we do, the spot price sold off roughly 75%-80% in 2023, depending on what price index you are looking at, having risen close to 800% from the 2021 low to the 2023 peak. At the same time, the contracted prices that key producers received in 2023 were higher than those received in 2022. A significant divergence has emerged between the transparent but little-used spot price and the opaque but industry-standard contracted prices....

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