Can Lithium Americas break through the $1 CDN barrier?

Full disclosure right up front.

I have what I consider to be a significant position in Lithium Americas, traded in Canada on the TSX under the symbol LAC.  In the U.S. the stock symbol is LACDF and trades OTC Foreign.  I have not been compensated for writing this, (or any other) blog entry.  In point of fact I have not and will not accept payment to express an opinion on any stock, either bullish or bearish.

Also it is my full intention to sell my shares of LAC at some point.  And spoiler alert, I do think LAC will break through the $1 CDN barrier.  When I sell I do intend to write a blog post explaining my reasons, however in all probability it will be after the fact.  And if past history is any judge I tend to get out too soon, meaning those buying my shares have had the chance at gains themselves. Nemaska is a prime example.  

Bottom line, nobody ever went broke taking profits, and that axiom is doubly important with speculative stocks like LAC/LACDF from my perspective.

So why do I think the market will support a price of greater than $1 CDN for LAC?  Admittedly its not a big stretch at this point, with LAC sitting at .99 cents on the TSX as I write this.  Since April this is LAC's third kick at the one dollar can as evidenced by the chart below.

I wrote my first blog entry about LAC here at Avoid The Bag on April 27th, Before that I'd shared my opinions on Seeking Alpha.  Seeking Alpha Instablog.  April 27th ATB Blog Post  

In that April 27th ATB entry I offered up the opinion that LAC was seeing the formation of a Cup & Handle chart pattern, the stock was trading at 75 cents and I offered up the view that I could see it dropping as low as 65 cents (it got to 66) before rebounding and heading back to a dollar and beyond.

Well its pretty much made it back to the dollar mark, and I do think it will go beyond....and of course I will explain the rationale behind my opinions.  You can then decide if you consider my opinions rationale or not for yourself.

All my regular readers (all three of them) know that I'm not big on fundamentals.  I consider fundamental data to be any and all information available in the public sphere, and as such it is all dated.  Even if a company announces a merger or acquisition (as happened when LAC and Western Lithium merged), by the time the news hits I consider it already priced in.  Others might pump synergies and economies of scale, but not me.

There are however, events that I believe could serve as catalysts in the future.  

Lithium Americas has a corporate slide presentation available on line that is dated March 2016. (VIEW THE SLIDE PRESENTATION HERE).

In that old slide presentation the company cites a Feasibility Study (FS) done in July of 2012, obviously very old info, soon to be four years old.  In that presentation it cites the price used for Lithium Carbonate in its projections as being $5,500 p/tonne.  

I like conservative estimates, its better to under promise and over deliver.  But while $5,500 p/tonne might have been a reasonable number a few years ago, the explosion in Li prices I believe warrants an upward revision.  When Nemaska announced its updated FS in early April of this year it sent that company's share price sky rocketing from around 70 cents CDN up near $2.  Nemaska revised their Li Carbonate price upward from $5,000 to $7,000 p/tonne.

Then there's the elephant in the room, Tesla.  They will be having their battery Giga Factory grand opening on July 29th.  As the date gets closer I think a lot of Lithium Mining companies, both Juniors and Incumbents, will see their share prices boosted as a bright light shines on the entire sector.  Its the old:  "A rising tide lifts all boats" line of thinking.

And don't forget that Lithium America's recently brought David Deak on board as a Sr VP and CTO. Mr. Deak had spent his previous two years working for Tesla as a Senior Development Engineer according to his Linked-In Profile.  I am not suggesting that anything is in the works between LAC and Tesla, but I do consider it a possibility.

It is for these reasons, in combination with the chart, that I very much like the chances for LAC to bust through that $1 barrier and to make significant gains.  

But please take note....there is no such thing as a slam dunk in the public markets and in my opinion LAC still comports significant risks.  Everyone has different tolerances for risk, and different time horizons.  Stocks can be dangerous, and people do get hurt buying into hype and excitement and the risks here are very real.  

Ultimately any money made or lost, the person to be congratulated or angry with is the one that looks back in the mirror.  The comment field here is open, and while it is moderated, all I ask is that the tone be respectful with no brainless "lots of upside here" pumping or "get out now" bashing.