Summary
- In a non-shocking move, a new lawsuit has been filed to stop Thacker Pass from advancing.
- In our opinion, the lawsuit is very unlikely to succeed; it may well delay construction or it might simply be thrown out of court.
- General Motors closes on LAC via tranche one, injecting $320 million into Lithium Americas with more capital to follow via tranche two financing.
- The new lawsuit might be a gift to the patient long-term investor if share prices are impacted in the short term.
In our last Lithium Americas ( LAC ) article, we mentioned that investors should expect an appeal given Judge Du's decision that favored Lithium Americas and paved the way to construction. In a move that should shock no one, the same actors have sued once again. In this article we will explore the latest lawsuit and its meaning to investors. While this article might be short, it provides the info you need to make informed decisions.
A Quick History Lesson of Lithium Americas
Thacker Pass is a massive lithium project that has been in the works over 10 years in Nevada. Close to Tesla ( TSLA ) and capable of supplying quite a bit of lithium and Thacker Pass is a key project for both national security and economic development. Digressions aside, Chief Judge Miranda Du ruled on the case in early February. The BLM won the case and will have to correct a small legal technicality. After that the lithium project is a go. In our opinion the odds of this passing are near certain which allows Lithium Americas to begin construction of its mine.
However, as we pointed out in our last Lithium Americas article, one should expect some sort of action by the environmentalists, be it an appeal or in this instance a new court case. It appears the prosecution either wants to keep the appeals card in its pocket for future use, or they deem the case unwinnable.
Hence, we are seeing a new lawsuit, "Reno-Sparks Indian Colony v. Haaland, Case No. 3:23-cv-00070-LRH-CLB"
Reno-Sparks Indian Colony v. Haaland (Pacer Legal) |
The New Lawsuit Against Thacker Pass
A summary of the new lawsuit against Thacker Pass can be found here . The short-term goal is obviously an injunction to stop construction with the long term goal of stopping the project or gaining economic concessions. Here are the three points of the filing:
The lawsuit, filed by the Reno-Sparks Indian Colony, Burns Paiute Tribe, and Summit Lake Paiute Tribe in Federal District Court on Thursday evening, includes three major allegations.
First, the tribes claim that the Bureau of Land Management ((BLM)) withheld crucial information from the Nevada State Historic Preservation Office and lied about the extent of tribal consultation in order to secure legally-required concurrence about historic properties in Thacker Pass.
Second, the tribes allege that Lithium Nevada, with BLM's complicity, lied about terminating a set of older permits for mining-related activities in Thacker Pass. Further, the tribes say that the BLM has, without notifying tribes or the public, expanded the scope of previous permit authorizations dozens of times, allowing Lithium Nevada to conduct preliminary mine construction activities that are harming traditional cultural properties in Thacker Pass.
Third, the lawsuit argues that the BLM lied about consulting with tribes before issuing their Record of Decision, and that the agency has continually refused to acknowledge both oral and written histories presented by the tribes about the sacredness and cultural significance of Thacker Pass."
It will be up to the courts to determine if the allegations are valid. If not valid it may well be thrown out of court, never to see the light of day. If valid, we might see an injunction.
Lithium Americas Risk And What It Means For You
Obviously, this is not positive news for Lithium Americas but it was to be expected. One might also expect an appeal to the Supreme Court if this lawsuit fails. Granted, the Supreme Court does not have to entertain the suit but we must stay cognizant of these possibilities.
Moving on, realize that LAC does not currently have revenue but they are close: The South American project is set to come online the first half of 2023. This will provide plenty of revenues for the company and associated profits as the project spins up.
South American Production Estimate 1H 2023 (Lithium Americas)
$320 Million Reasons To Invest in Lithium Americas
If an injunction is granted this might delay the Thacker Pass project. How long is anyone's guess, but when it comes to legal matters always presume delays. General Motors ( GM ) does not seem overly concerned, having just completed tranche one and injecting $320 million into LAC for an equity stake in the company. Moreover, GM money is set to arrive given time and future conditions being met.
Conclusion
If LAC share prices are impacted negatively, this would allow for additional time to acquire shares. With the South American project set to come online in the first half of the year and with the possibility of additional revenues and profits, this may alleviate investors' concerns.
Additionally, from a long-term perspective, the company will separate into two parts, each with its own ticker symbol. North America will be Thacker Pass and we might assume LAC's percentage of ownership in Green Technology Metals ( OTCPK:GTMLF ). South America will keep Cauchari-Olaroz, the Arena Minerals project, and the Pastos Grandes project.
While lawsuits are annoying, the long-term perspectives for Lithium Americas are very favorable given future opportunities. Factor in potential government loans and you have a recipe for success.
For further details see:
Lithium Americas: A New Lawsuit