 Good day, fellow investors. I continue with my analysis of the lithium sectors and available lithium investors investing opportunities. And today I will discuss lithium Americas, which is an excellent example of junior miner promises versus reality potential and risk. So all of those who want to learn about how to make investment analysis, what to look especially how to analyze miners will have a lot to learn in this video. The potential is there. I think if everything develops as planned for lithium Americas it will be a 10-bagger so the stock will multiply 10 times. But there is a small probability for that and I want to show you important things that are lowering that probability and making this a good bet. So only if you are willing to take those extremist unbets okay I can lose everything but I can have 10 times upside in your portfolio with small portfolio allocation then this might be an interesting stock for you. Let's start with an overview. Let's discuss the technical issues that might plague the stock in the future and then see about the investment conclusion, the valuation and the risk reward. So Lithium Americas has two projects the Kaushari, Olaros, Brian, Asset in Argentina and the Taker Pass, Claystone, Asset in Nevada with very interesting economics. If we look at the net present value the current value of future cash flows minus cash outflows to build the mine to keep it up and running is 1.1 billion for the Argentinian project of which Lithium Americas owns 50% and 2.6 billion for the American project. So the combined net present value is 3.1 billion and that would be a value per share of $35. Compare that to the current market cap of 318 million and we have a discount of 90% to the net present value. Now we have to see whether the discount is justified or not. The Argentinian project should be up and running in 2021 and the Taker Pass in 2022 if they decide to develop it. They still have to make a decision despite the very positive feasibility study. So let's start with an overview. Now the Kaushari Olaros plant is close to Orocobra's plant that is already in production. They are practically mining the same asset. So we have an indication of the project's potential and profitability. There is a big difference between what Lithium Americas is saying and what Orocobra is actually achieving. They are producing margins there. The margins are strong, about 50%, even on the currently subdued Lithium prices. But the costs are there. The cost of sales are about 4,000, 4,200 per Lithium ton. But when we look at the technical report of Lithium Americas, their expected cost of sales should be around 3,000 per Lithium ton. So 30% below what Orocobra is actually achieving at this moment. This makes me think, how are they going to achieve 30% lower costs than somebody that is already producing there the same asset? The key is that when you are a junior miner, when you have to develop something, you have to make it look as good as possible to issue more shares to get the money management bonuses to develop the project. Over the last five years, the number of stocks went from 20 million to 89 million for Lithium Americas. So there has been a lot of dilution and there will be more dilution. Dilution is good because its equity is your currency when the stock price is higher. And to get the stock price as high as possible, you have to make great promises because people are investing in promises here. You might miss a little bit on those promises or you might package them in a different way, but the better those promises are, the more cash you can get when your equity is sold, when you dilute current shareholders. And this is always the game we have to understand. Of course, Lithium Americas management job is to sell the projects as good as they can. Therefore, they might take a chance on even lowering those operating costs lower than what Eurocobra has. They say we'll do it a bit differently this or that. But it's mostly likely that their costs will be on Eurocobra's level and this changes completely the present value calculation. I put the cash flows. This is their cash flow projection. They think to get about 130, 40, 50 million dollars per year when they start producing at a discount, at a selling price of 12,000. If we lower that selling price to the current level of 10,000 and increase the costs, the cash flow, my estimated cash flows almost half. So we are at 88 million and then the net present value drops to 600 million from the 1.1 billion at with a 10% discount rate, 50% owned. So the value could quickly be around 300 million, attach a discount of 30, 50% because it's still a development project and you soon fall to 150 million in value. So from the billions that we are talking, we are now down to hundreds of millions. That's a big risk and that's something investors should keep in mind. Everything can happen but this is what I think it's mostly likely. Then we have the techer pass in Nevada. Again, great economics because it is claystone and they're going to use a revolutionary new process. New processes are a huge risk. You never know whether it will work as planned. If it doesn't work as planned, then you're really running a big risk because to develop this techer pass, they need 600 million dollars in the first stage and then another 500 million dollars in the second stage and look at the after tax net present values. It also depends on lithium prices. If lithium prices go below 10,000, then the net present value goes below 1.2 billion, which is a great risk, especially if some things go wrong, then you are quickly down to 500 million or even to zero and you are not investing 1 billion to have a risk of getting value below zero. If lithium prices go up and everything goes well, then the techer pass is really the gem with lithium Americas because if they invest the 1 billion, but if they do so and find the money to invest, then if things go as planned, the cash flows estimated cash flows will be around 600 million per year. Investing a billion for 600 million per year sounds like a great project, but let's look at the risks. If we look at the sensitivity analysis of various variables, you see, okay, lithium carbonate prices can decrease 20 percent the net present value, then overall production rate can also lower what 15-20 percent the production value. And the key is that these variables are always assessed individually in technical reports, but what if we have lower lithium prices, production issues, higher initial capital cost, etc., then this quickly sums up and adds up and erases a lot of billions from the 2.5 billion value calculation. So when you sum these things up, it's really, really highly risky. And the key is that the management has to get the money too. They don't have 500 million to the first stage. They don't have a billion to develop the techer pass, so they will need to find that money. With a 300 million market cap, they can perhaps issue shares for 100 million, 150 million, but that's already dilution of more than 50 percent. If we had 50 percent dilution to the net present value of 35 per share, you're already down to 22 per share and then your return is not more 10x, but just 5x. Compare it to the risks and then you see the risk reward of this investment. So I put this all in a small table, the current price 3.43, 10x probability, 10 percent, probably even lower, 5 percent, 3x probability, 30 percent, 2x, 10 percent chance, down 50 percent. If they don't get the money soon to develop the techer pass, if there are delays, if there are production issues, if they don't get to enough cash flows, if there is dilution at the bad equity price that they have to do to save themselves, you will soon see the stock price down 50 percent, especially if there is lower lithium prices. And there is always the likelihood of down 100 percent if the projects don't get developed. But the biggest risk is that there is a bad environment for lithium over the short term and somebody takes it over for a premium of 20, 25 percent, then you take a lot of risk and the upside is limited for you. So this is what investors should think about when it comes to lithium Americas. Let me know if you have any questions in the comment section below. Thank you for watching. As for lithium stocks, I'll discuss more. I have to go to Australia to discuss the Australian stocks. But from a risk reward perspective, there are already producers like we have discussed, Albert Marley, diversified producer that has also the similar upside, but much lower downside. Thank you for watching, looking forward to comments and I'll see you in the next video.