The stock of Lithium Americas (LAC) is up 33% on Oct. 1 as details emerge of the U.S. government’s stake in the company.
Shares of the lithium miner are soaring after the Vancouver, British Columbia-based company announced that it has reached an agreement with the U.S. Energy Department.
The deal will see the Energy Department advance the first draw of $435 million U.S. on the previously announced $2.30 billion U.S. loan from America’s federal government.
As part of the agreement, the U.S. government will receive a 5% equity stake in Lithium Americas and a 5% equity stake in the joint venture that’s developing the Thacker Pass mine site located in Nevada.
Lithium America’s joint venture partner on the Thacker Pass mine is Detroit automaker General Motors (GM). Lithium is a key component of electric vehicle batteries.
The Thacker Pass mine is not yet operational and Lithium Americas doesn’t yet generate any revenue or profits.
The Energy Department said the revised deal includes more than $100 million U.S. of new equity for the U.S. government.
This latest deal by the U.S. Energy Department follows the American Defense Department’s investment in rare earth miner MP Materials (MP) earlier this year.
Rare earth materials that are critical to electric vehicles and electronic devices such as smartphones are increasingly important to the U.S. government.
Currently, China is the world’s largest producer of rare earth metals and minerals. The U.S. government is looking to lessen its reliance on China for rare earth materials.
The stock of Lithium Americas is now up 87% this year and trading at $5.71 U.S. per share.
