Lithium Americas ($LAC) Closed $4.73 on Friday's Session up 1.5%

Lithium Americas ( LAC ) has recently announced that it will raise $275 million to accelerate the development and construction of the Thacker Pass lithium project in Nevada. The company will offer 55 million shares for $5 per share, just a month after the US government disclosed its plans to lend $2.26 billion to support the project.

The Thacker Pass lithium project is expected to reach its full capacity in 2028, with an anticipated production of 80,000 metric tons per year. Lithium Americas ( LAC ) aims to extract lithium from a large clay deposit at Thacker Pass, which has never been done before at a commercial scale.

The loan from the US government is a significant part of the Biden administration's strategy to reduce reliance on China for lithium supplies. The mine is expected to commence operations later in the decade and will play a crucial role in supplying General Motors.

In a statement, Vancouver-based Lithium Americas ( LAC ) revealed that the underwriters of the public offering would be granted a 30-day option to purchase up to an additional 8.3 million shares.

Lithium Americas' US-listed shares closed at $6.63 on Wednesday, with post-market trading seeing a 19% drop. However, before the market closed on Friday, the stock surged 1.5%, setting the stage for a promising start during Monday's trading session.

The stock's recent crash could be attributed to two major factors. Firstly, the price of lithium has plummeted in recent months due to concerns of oversupply. Secondly, there is evidence that the demand for electric vehicles is on the decline. Many vehicle dealers in the US have reported that EVs are not selling as quickly as they did before, leading them to focus on Internal Combustion Engine (ICE) vehicles.

On a positive note, Lithium Americas ( LAC ) has completed a spin-off of its operations into two separate companies: Lithium Argentina and Lithium Americas. This decision enabled the company to streamline its operations.

The company has also made a significant discovery in Nevada, which is set to become the largest lithium mine in the United States by 2026. It is currently developing the mine with the support of the Biden administration, which has agreed to provide $2.26 billion.

Investors of Lithium Americas ( LAC ) believe that the company stands to benefit from the ongoing energy transition. As an American company, it will also profit from the favorable terms offered by the government through the Inflation Reduction Act (IRA).

However, there are still risks to this belief, particularly with the current era of lithium abundance. Countries like Australia, Chile, Argentina, China, and Brazil are all boosting their lithium production, with more countries expected to enter the market, resulting in oversupply.

The daily chart indicates that the LAC share price hit its lowest point at $3.80 in February before rebounding to $7.73 this month, where it formed a double-top pattern. Currently, the stock has dropped below all moving averages and the 23.6% Fibonacci Retracement level, forming a down-gap. Therefore, it is likely to continue falling as sellers aim for the critical support level of $3.80, marking its lowest level for this year.