Lithium Americas (LAC 0.41%) shares rocketed 132% in 2021, according to data provided by S&P Global Market Intelligence. The lithium stock lagged through the first half of the year and started to rally only in the latter half. In fact, Lithium Americas would've ended 2021 with even bigger gains had its shares not shed nearly 26% in December. So what was the biggest trigger that fueled the rally, and what can investors expect from Lithium Americas in 2022?
Lithium Americas got a boost right as 2021 kicked off when its Thacker Pass project in Nevada, which had been stuck in a rut for years, received a federal permit. Thacker Pass is said to have the largest lithium resource in the U.S. and holds the key to the company's growth. The market cheered the permit, but the euphoria was short-lived, as the lithium company immediately issued shares worth nearly $400 million to fund the development of Thacker Pass. The stock dilution didn't sit well with investors because the company has yet to start commercial production, although Lithium Americas said it expected to start production at Thacker Pass in early 2022.
In between, Lithium Americas continued to advance its other project, the Cauchari-Olaroz mine in Argentina, which it owns alongside China's Ganfeng Lithium. In May, the two companies announced second-stage expansion to add additional annual capacity of at least 20,000 tons of battery-grade lithium carbonate equivalent (LCE) by 2025 over and above the initially planned annual production of 40,000 tons of LCE. In its third quarter, Lithium Americas said it was targeting first production at Cauchari-Olaroz in mid-2022.
In short, Lithium Americas made significant progress on both its projects in 2021 at a time when electric vehicle (EV) sales were booming, and that fueled investor interest in its stock. Stocks across the lithium industry, in fact, zoomed last year as lithium prices skyrocketed on soaring demand from the EV industry.
Why then did Lithium Americas shares lose value toward the end of 2021? It was the company's decision to acquire Canada's Millennial Lithium in an all-stock deal worth $400 million. The market perhaps thought it was a pricey deal, as it came right in the middle of the lithium industry's boom and won't add value to Lithium Americas immediately. The thing is, Millennial Lithium's Pastos Grandes lithium project in Argentina with an expected annual production of 24,000 tons of battery-grade lithium carbonate isn't expected to start production before 2024.
Lithium Americas stock has received at least three analyst upgrades already in 2022 because of the company's growth potential. After a stellar last year, 2022 could be an even bigger year for Lithium Americas stock if it can start construction at Thacker Pass and production at Cauchari-Olaroz as planned. Keep an eye out.