Gordie Howe was my late great mother's favorite hockey player. She taught me a song about him when I was a kid:
Gordie Howe is the greatest of them all
He can stand, while all the others fall
And when he skates down ice
He shoots he scores
We love Gordie Howe
Sorry I can't convey the tune here. I guess I could make a video with me singing it, but given that I can't carry a tune in a suitcase, ugh. This pathetic and miserable little blog would lose the few followers its gained if I foisted my singing (sic) talents on here.
Why am I comparing Lithium Americas with the legendary Gordie Howe? Its the second line of that tune, "He can stand, while all the others fall".
Over the past few months LAC.TO has been having a nice little run, and is currently trading at $1.10 CDN, the highest price it has ever closed at. That's just 5 cents from its 52 week high reached interday the past two trading sessions.
That compares very well to a number of other junior Lithium stocks that climbed higher and faster, but that have since fallen back (or down).
- Lithium X Energy (LIX.V) went to $2.85 in April and has fallen back to $1.70 now.
- Nemaska Lithium (NMX.V) reached a high of $1.97 in May of this year but now sits at $1.29
- Pure Energy (PE.V) up to $1.15 in April now at .69 cents
- Dajin Resources (DJI.V) 30 cents in April 19 cents now
So why has LAC continued to uptrend while all the other juniors mentioned have pulled back?
I think the mostly likely culprit is dilution.
LAC has 295,311,916 shares listed as outstanding as of June 15th. There has been some dilution, but not very much. In March there were 291,974,008 shares. The increase to 295,311,916 amounts to 3,337,908 more shares or an increase of just 1.1%
Nemaska by contrast showed 206,715,385 listed as outstanding in March 2016, and now that number has climbed to 236,137,873 for an increase of 29,422,488 shares. That's an increase of over 14%, or about 1,400% more dilution than what LAC has undergone. And Nemaska recently announced a proposed offering of between 43,480,000 and 52,174,000 more shares priced at $1.15 expected on July 8th of this year.
It should be noted that, concurrent with this share offering Nemaska has received tentative approval for an uplisting to the TSX, and I do think that will help in attracting investors, possibly even institutions which tend to shy away from the riskier Venture exchange.
Lithium Energy has seen even greater dilution in percentage terms. As of March 15th the company had 43,820,732 shares outstanding. The most recent number, current up to June 15th is 60,538,202 an increase of over 16.7 million or 38%.
Pure Energy, however, has not seen any dilution over this period, staying at the same 66,2 million from March until the most recently available update to June 15th, so obviously the drop in PE.V is not attributable to the printing of more shares. Perhaps if some Pure Energy shareholders are reading this they can comment.
Dajin Resources though conforms to the dilution narrative having gone from 118.4 million shares in March to 130.9 currently for an increase of about 10.5%
There is one notable difference between LAC as compared to NMX, LIX, PE and DJI. The latter four companies all trade on Canada's Venture exchange while LAC trades on the more regulated big board TSX. It appears that with NMX joining LAC on Canada's big board exchange, they'll be going from the AHL to the NHL, in keeping with the hockey metaphor.
Here's hoping LAC continues climbing, skating down the ice and scoring for shareholders.
I should note, there is one Canadian listed Lithium mining company that hasn't pulled back, Orocobre, (ORL.TO). However unlike LAC and the others mentioned above ORL has actually begun production so I don't consider it a "junior" The PPS sits at $4.75, just off its highest ever close of $4.79 on June 23rd, and its 52 week high (achieved interday on July 4 2016) of $4.87.
Full disclosure: I currently own shares in Lithium Americas, hence my opinions are not without bias. I have no position, long or short, in any of the other companies mentioned. Do note that I do expect to sell some or all of my LAC holdings at some point.
Speculative stocks like LAC and the others mentioned here comport significant risks. Everyone has different tolerances for risk and different investment objectives. The bottom line is to sell for more than what you paid, nobody ever went broke taking profits.
The comment field is always open, but it is moderated....comments that are abusive, contain blatant pumping or bashing, won't be approved. Pumping and bashing include statements of opinion expressed as fact, such as "Gonna go much higher" or "Look out below".
