Lithium Argentina AG

Hello, everyone, and welcome to Lithium Argentina fourth quarter and full year 2025 earnings conference call. Please note that this call is being recorded. After the prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time, please press star followed by one on your telephone keypad. Thank you. I'd now like to hand the call over to Kelly O'Brien, Investor Relations. Please go ahead.

Thank you for the introduction. I want to welcome everyone to our conference call this morning. Joining me on the call today to discuss the fourth quarter and full year 2025 results is Sam Pigott, CEO of Lithium Argentina. Alex Shoga, our CFO, will also be available for Q&A. Before we begin, I would like to cover a few items. Our fourth quarter 2025 earnings results were press released earlier this morning, and the corresponding documents are available on our website. I remind you that some of the statements made during this call, including any production guidance, expected company performance, update on development plans, the timing of our project, and market conditions, may be considered forward-looking statements. Please note the cautionary language about forward-looking statements in our presentation, MD&A, and news releases. I now turn the call over to Sam Piggott.

Thanks, Kelly. Good morning, everyone, and thank you for joining us. 2025 marked an important year for lithium Argentina. Kachari-Oloraz demonstrated its ability as a stable, cash-generating operation while we significantly advanced our next phase of growth. Starting with operations, Kachari is performing exceptionally well. For the year, production was over 34,000 tons, reaching the high end of our guidance range and ending the year near capacity with fourth quarter production at 97%. We are now seeing this strong operational performance translated into lower costs fourth quarter operating cash costs around $5,600 per ton. Following year end, the operation distributed $85 million of cash, $42 million for Lithium Argentina's share, and we completed a $130 million six-year loan facility, strengthening our balance sheet and highlighting the financial capacity of our assets. In parallel, we were able to make meaningful progress across our growth pipeline. This included the consolidation of PPG, supporting a more efficient development plan as outlined in this coping study released late last year, as well as the submission of rigging applications for both CPG and Stage 2. Since completion of the chemical plants in late 2023, production has steadily increased. 2024 represented our first full-year production, while in 2025 the focus shifted to consistency, recoveries, and sustaining higher production levels for longer periods of time. During the year, the team made continued improvements across several areas, including brine management, wellfield optimization, process stability in the plant, and reduced reagent usage, which together supported more reliable and consistent operating performance. That progress resulted in the operations achieving close to nameplate capacity in the fourth quarter, with production of approximately 9,700 tons. This operational performance translated into strong financial results, which, Despite the low lithium price environment in 2025, Kachari Olderod has generated $56 million in adjusted EBITDA. I want to spend a moment on cost because I'd argue this is just as important as the production story, if not more so. Since Q1 2024, cash costs have declined 30% from over $8,000 per ton to around $5,600 in Q4. That improvement is broad-based. Reagents, maintenance, camp services overhead, every major cost line moved in the right direction. And this is not just fixed costs at higher volumes. Much of this reduction is in variable costs driven by our efforts to optimize the operation following the ramp up. The best way to show this structural change is from looking at the impact to a revised long-term estimate. Based on the current cost structure at full capacity, we now forecast costs of approximately $5,400 per ton down from 6,500 a year ago. That's a 17% reduction to our own prior estimates. And it's important to note that we're not done. We and our partner, Ganfeng, remain fully focused on driving further efficiencies, both stage one and as we grow. On the next slide is an updated cost curve, which includes actual operating performance at Kachari Old Robs. It's not a feasibility study. It's not a projection. These are actual costs from an operation that has now been running and improving quarter over quarter. This operation is one of the few sources of lithium chemical production to come online outside of China in the past 10 years. We now have the opportunity to scale from 40,000 to over 200,000 tons of lithium chemicals to serve global markets directly from the Americas. Turning briefly to the market, since mid-2025, there has been a significant recovery in lithium prices. supported by strengthening demand across both electric vehicles and increasingly energy storage systems. On ESS specifically, the wide range of forecasts you'll see from global banks and consultants reflects how new and large this demand is becoming. This gap is particularly visible even in 2025, where estimates, especially those outside of Asia, are still adjusting to how material ESS has become as a driver of overall lithium demand. For Lithium Argentina, this rising ESS demand aligns well with our existing operations and growth platform that we've developed in terms of scale, cost, and ability to integrate with a more global customer base. Looking ahead to 2026, we expect production in the range of 35,000 to 40,000 tons of lithium carbonate, reflecting our focus on sustaining stable operations at current levels and long-term optimization. Based on our production targets for 2026, Kachari Ola is expected to support significant EBITDA under a range of listing price scenarios. Using today's market price of about $20,000 per ton, the midpoint of production guidance would imply around $460 million

Ladies and gentlemen, please be on standby. We will just address a quick practical issue. Again, please be on standby. We will back momentarily. Thank you.

Apologies for that. My line dropped. Obviously, we're not recording this. And so I'll carry off where I left off. Based on our production targets for 2026, Kachari Oloron is expected to support significant EBITDA under a range of lifting price scenarios. Using today's market price of about $20,000 per ton and the midpoint of production guidance would imply around $460 million in EBITDA for 2026. This incorporates actual results year-to-date and adjustments to market price. From a cash flow perspective, this should translate into strong cash conversion supported by accelerated depreciation and low sustaining capital requirements of approximately $15 to $20 million per year. Following year end, the operation distributed $85 million of cash, increasing Lithium Argentina's cash position in Q1 to now around $95 million. In March, at the corporate level, we also completed a $130 million debt facility with Ganfeng, increasing our balance sheet flexibility. With Kachari-Oloraz now operating at a close to capacity and costs well below $6,000 per ton, we are turning our attention to what comes next. The opportunity in front of us is significant. We have the potential to grow from approximately 40,000 tons per annum today to over 200,000 across a series of phases, using Kachari-Oloraz stage one as the foundation. In 2025, we laid the groundwork. The resource base is defined. The permits and RIGI applications are advancing. and the economics, as the PPG scoping study showed, are compelling in nearly all pricing scenarios. We recently published an updated resource and reserve estimate for Kachari Olaras, reinforcing the scale of the basin, the total measured and indicated resources increasing by approximately 42%, positioning Kachari Olaras among the largest lithium brine assets globally. Beyond this, our platform includes PPG, another large-scale brine resource with over 15 million tons of measured and indicated LTE resources. Together with Kachari Olarons and PPG, we are advancing two of the largest lithium brine resources globally, providing the right scale and brine chemistry to support our growth plans. We continue to see a more supportive investment environment emerging in Argentina, with the RIGI helping to attract long-term capital and improve project economics. as reflected in the more than $70 billion in investment applications submitted or approved under the program. RIGI applications for both Kachari Stage 2 and PPG have been submitted. As we look ahead, we are scaling our listing platforms in Argentina. At Kachari Olaraz, we are advancing the Stage 2 expansion plan at 45,000 tons. leveraging our operating track record, existing infrastructure, resource scale, and using the significant cash flow from stage one to provide a strong foundation to support the execution of this expansion. In parallel, at PPG, we are progressing what is targeted to be Argentina's largest lithium operation, with a phased development plan to grow to 150,000 tons LTE. Here, we are working closely with Genfeng to bring in the necessary financing and are seeing strong engagement from customers and potential minority partners. The next phase of execution is defined by a series of clear milestones to de-risk this growth, including RIGI approvals, finalizing the Stage 2 development plan, and financing PPG. In conclusion, we're incredibly proud of what we have accomplished and excited for the years to come. In 2025, we delivered what we set out to do, established a strong operating foundation with industry-leading costs, strengthened our balance sheet, and have taken meaningful steps to de-risk our growth pipeline. Looking ahead, we are in a very strong position to build off what we have already accomplished at Kachari LR Stage 1 and scale from 40,000 to 200,000 tons. We have world-class teams, a proven track record, two of the largest and highest quality lithium-brine resources globally, a much-improved investment environment in Argentina, and a market that is undergoing strong demand tailwinds from continued EV growth and accelerating demand from energy storage buildouts. We are focused on de-risking and advancing the path to more than 4x-ing our lithium production and creating the largest lithium platform in Argentina.

And with that, we're ready to open up the line for questions.

We are now opening the floor for question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad. Please limit your question to one question and one follow up. We will pause for a brief moment to wait for the questions to come in. Your first question comes from the line of Anthony Taglieri of Canaccord Genuity. Your line is now open.

Good morning, Sam and team. So first of all, congrats on the excellent cost performance in Q4. My first question is related to cash cost expectations for 2026, noting your new long term goal of $5,400 a ton. So how should we expect this to evolve in 2026? Is $5,600 a ton the new base case for Q1 moving forward, you know, between that 35 to 40,000 tons of production on an annual basis?

Yeah, thanks for the question. So yeah, in Q4, we delivered $5,600 per ton in cash costs. These were really driven not just by volume increases reaching 97% capacity, but also structural changes we made to the cost profile. So that would include things like reagents, camp services, maintenance, and optimization of our workforce at camp. With all those changes and what we realized in Q4, we did update our long-term cost estimate at full capacity to 5,400, which is a 17% decrease from what we put out last year at $6,500 per ton. So we would expect some variability quarter over quarter tied to volumes produced and timing of costs, but certainly sub $6,000 in that $5,600 is a pretty good indication of where things are likely to settle throughout the year.

Okay, great. That's helpful. Thank you. And maybe as a follow-up on Q1 realized price expectations, could you bridge this from sort of the average Chinese benchmark price of approximately $21,000 a ton to date in Q1 versus the expected price of realized price of $17,000 a ton? So, you know, simple math after considering that. Maybe that implies around $1,900 a ton of processing costs there. So, you know, is that something we should expect moving forward for the rest of the year?

Yeah, I mean, as a general statement, our pricing today is based on the market price for battery quality lithium carbon outside of China. So that does strip out VAT from the export reference prices you typically see quoted by SMM, fast markets, etc. Beyond that, the adjustments for quality are around mid-single digits from that reference price. And that's something that we continue to monitor with our partner, Ganfeng. But at the moment, that's what we're realizing.

Thank you. That's helpful. I'll pass on.

Your next question comes from the line of Joel Jackson of BMO Capital Markets. Your line is now open.

Hey, Sam. You talked about, you know, the different opportunities working at any price level. I think your partner, Genfeng, would sort of say similar things. Can you, you know, talk about some of the volatility we've seen in the global markets the last few weeks? If that's changed any of the risk factors, when you think about Couchero or Phase 2 or PPG, and then also, would your objectives be the same as Genfeng? Like, obviously, they're not your different companies, but could you talk about maybe how some of your objectives for growth the next couple of years could be similar or different versus your partner?

Sure. Thanks, Joel. I mean, as a broad statement, we are obviously monitoring the impacts of the situation in the Middle East. We're not seeing any material impact to our operations. In a lot of ways, we're pretty well set up and insulated from increased costs to oil and gas prices. Our largest Energy input by far is kind of the solar radiation onto our ponds. We've done a series of analysis over the past couple weeks just given the developments in the Middle East and the energy complex. And our direct energy exposure is very limited. So approximately less than 2% of our total operating costs are tied to diesel and natural gas. And then looking further afield into our indirect costs associated with logistics and other cost lines. It all remains below 15% of our OPEX, which is exposed to that. So we're very well insulated. We're not a traditional kind of mining operation with heavy reliance on diesel for mining or crushing their ore haulage. So from that perspective, we're doing very well. All of our deliveries and shipments are meeting their targets on schedule. Demand is still being pulled very strongly from China and our offtake agreement with Danfang. So, you know, we obviously do monitor it, but are very pleased to report that minimal, if any, impacts are being experienced to date and very limited likelihood for escalation. In terms of our growth ambitions with GADFANG, I think both of us understand the unique position that we have here today. We've, you know, brought online Kachari overalls exceptionally well. Costs are, again, below where we thought they'd be at full capacity going back last year, $5,600 in Q4. The ability to kind of more than double production at Kachari-Olaraz. And then, similarly, the largest potential lithium project in Argentina, 150,000 tons across three 50,000-ton phases. expecting operating costs to be low $5,000 a ton. So, you know, I think we have the right type of growth. We now have proven that we can execute. I think the partnership is working very well. Genfeng wants, you know, Genfeng has set pretty ambitious targets for where they want to see their lifting production by 2030. A big part of that growth is through their portfolio with us in Argentina. I think You know, it's around, it's around finance. And so Gadfang is a $20 billion market cap company, huge access to capital in China. I think that the question was always, are we going to get pulled in one direction or another? I think the answer to that is one, our shareholder agreements provide joint control over key decisions, including expansions. So we do have some control over our destiny, but the way things are developing now, You know, Kachari Stage 2 at today's prices, Stage 1 would be generating somewhere in the order of $460 million in EBITDA, which, you know, provides quite a bit of cash flow to execute on a Stage 2. We're obviously waiting for a development plan mid-year. And then PPG. When we decided to put all these assets together with Ganfeng, we made it very clear and a formal agreement to work together on financing plans that wouldn't require shareholders to contribute equity. And we're seeing a lot of engagement around that. There are a lot of groups that really appreciate the scale of this business. They appreciate the teams that have been able to execute at Kachari. And so we're very confident we'll be able to put together a financing package that does not require equity contributions from shareholders. So I think we're, you know, in today's market, I think we're very much aligned in terms of pursuing both growth plans simultaneously.

Okay, now I'll just follow up with, I know you and Genfung have talked about wanting to put on some DLE plans and trial it out at different assets in Argentina, be it Charleros, Mariana. Can you talk about Lucifer Cresceri, what is the DLE plan there, or is it more going to be a stage two idea?

It's going to be a stage two. The DLE, all the results that we're working with Ganteng on, they're really taking the lead, as you would expect in terms of applying new technologies to brine assets in Argentina. Right now, the focus for us is completing this development plan with Ganfeng, and we're targeting mid-2026. With that, we'll obviously have a lot more to share through that report and other disclosures. But I would say the bar has been raised in terms of what we'd want to see from that new technology. Conventional has pluses and minuses. But we're seeing a lot more of the pluses right now. I mean, our cost profiles come to a level that I think we were all very impressed with. These are structural changes to the cost profile of the business. A long-term target of $5,400 a ton, which is very, very real. I mean, we just came out of Q4 at $5,600 a ton. This already places Kachari certainly in the first quartile of the cost curve. And so, you know, we look favorably on the technology that, you know, Ganseng has been pushing ahead. But it has to deliver better CapEx and better OpEx, which we're confident it will, and we'll disclose more when the development plan is finalized mid-2026. Thank you.

Next question comes from the line of Corrine Blanchard of Deutsche Bank. Your line is now open.

Okay. Good morning, and thank you for taking my question. Maybe the first question, I want to come back on the pricing. Obviously, this is quite a big jump from folks who want to do to the spot market, but can you maybe share your view on expectations throughout 2026 and maybe kind of a sequential view here that would be helpful? And then maybe the second question, Maybe if you can just comment on the financing environment for the extension. I know you kind of comment extensively on , but there is definitely as well a question coming from the conveyors and balance sheets, so anything you can address there? Thank you.

I mean, pricing is, as you know, Corinne, very, very difficult to predict. I think the visibility that we get is largely through our partner, Ganfeng, which is the largest lithium producer in China. They're seeing very, very strong demand, and it is really based largely on ESS. I think the view is pricing could remain volatile, but expectations are for pricing to to remain in and around where it is trading today. I'm not saying that's necessarily our expectation, but that's what we're hearing through our partner in China. And I think part of that is just around, I think we had it in one of our slides, because ESS is relatively new, it's growing very quickly. It's relatively opaque versus tracking EVs. There's just not the same maturity of, of data collection and disclosure that there is in the automotive business. So there is a huge divergence of views in terms of what the market is going to be in 2030. You know, even in 2025, I think people are still trying to reconcile what the actual kind of lithium demand pull through from ESS installations or shipments was. I mean, again, thanks to you sitting in China, and this is shared by many of the other kind of end customers that we've discussed over the last couple months, is that energy storage is certainly on the high end of the bank and consultant range. So that should be very supportive to lithium prices going forward. And sorry, your second question. Do you mind repeating that?

Yeah, no problem. Just asking about financing. And again, you kind of answered it a bit previously with Gainfang View, but if you can talk about the balance sheet and Convert and what you intend to do there.

Yeah. So, I mean, I think we're very, very pleased with the progress we've made in strengthening our balance sheet over the last year. So we've closed the $130 million six-year debt facility with Gainfang View. We distributed $85 million from the operation, $42 million of which came to LAR. Our cash position is just under $100 million. And meanwhile, today's prices are anywhere near them. The project is generating meaningful cash flow. So I think taking together the cash we have on hand, the cash flow capacity of our operations in a wide range of pricing scenarios provides us with a lot of flexibility and optionality. to deal to address with the convert. I'd say one thing that I think is important to note is that the lithium price environment has been very challenging over the last couple of years. Anybody following the space would appreciate that for being a fact. Meanwhile, LAR has not issued a single share for any financing purposes. And I think that speaks to our discipline, quality of our approach. And we're in a very, very good position right now. So That's on the convert. In terms of the financing plan for our growth, I think there are two different distinct paths between PPG and Kachari. Kachari Stage 2 has Stage 1 as a foundational backstop. So today's price is $460 million EBITDA, which can provide some funding to the project. It can also allow us to access debt to finance phase two, and we'll have a lot more information mid-year with the development plan. On PPG, this is a joint effort with Ganfeng, working with some of Ganfeng's global customers to look at different potential minority partners to bring into that project to provide the majority, if not all the equity financing required.

Your next question comes from the line of Ben Isaacson of Scotiabank. Your line is now open.

Thank you very much and good morning. Hoping I can ask three quick ones. Sam, your costs have improved dramatically over the past eight quarters or so. And I'm just curious, do you think your costs are at sub $6,000 are a competitive advantage? And why I'm asking that is, do you feel that uh competitive projects in argentina have the ability to also reach that that six out that sub six thousand dollar area or do you think uh lar is unique in that um i mean there are a lot of different projects in argentina um so it's it's hard to to paint them all with the same brush um

Timothy Eccleston- chemistry composition is obviously a very important factor scale is an important factor to get costs down. Timothy Eccleston- And then the ability to kind of execute in the technology selection so all different factors, but certainly Brian. Timothy Eccleston- Do represent a very attractive resource base to deliver low cost lithium units into the market, I think the second factor is just in terms of what you know what it represents overall is. know brine seems to be like the the lowest cost in some in some ways most resilient reliable source of lithium chemical production outside of china um the in the entire industry is fixated on how to deliver these chemicals without going through china eventually there have been a number of attempts and efforts to bring in conversion capacity outside of china to process spodum and concentrate i think To date, those plans have been challenging from a cost perspective, from an execution perspective. So I think my answer is yes, Argentina can be low cost producers. Yes, I think there is something fundamentally different about what LAR has been able to accomplish at Kachari. And I think that's related to the quality of our underlying resource, as well as the design of our stage one plant.

Great, thank you. And then the second question, I see that stage two for Currituri is rated at 45,000 tons. Can you talk about the bottlenecking opportunities at stage one? Is it possible to get that to 45,000 tons? Why or why not?

Yes, I think it could with further investment. I think we probably could push it above 40,000 tons. I think One of the realities in planning stage two is that we're currently under a RIGI application process. RIGI is a very attractive investment framework in Argentina. It provides a number of fiscal benefits, lower tax rates from 35 to 25, some changes in terms of VAT treatment where it's a non-cash item. But more importantly, any qualified RIGI, approved RIGI project has very clear ability to take cash out of Argentina and keep it out of Argentina. So I think our preference certainly is to make investments in stage two, whereby all of that production, sales, profit will be captured under the RIGI.

Great. And then just my last one, Sam, you have a lot of experience in lithium and in China. And I was hoping you could shed some insights into how you think sodium batteries are evolving and what it means to lithium demand growth rates, and maybe on the EV and on the battery storage side. Thank you.

Yeah, we typically hear a lot about sodium ion batteries whenever the lithium price starts to spike. And the start of this cycle is no different. So I think our view is that both technologies are improving. LFP has a significant advantage right now in terms of energy density, in terms of weight, and in terms of cycle life, I should say. So all those are very important for, obviously, the EV segment, any mobility application, but also energy storage. There's still a significant economic advantage You know, I think sodium is a legitimate risk as lithium prices were to kind of approach where they were last cycle. That starts to really eat into the economics and forces people to look at substitutions. But I don't think we view it as a material threat at today's price level or even significantly higher than today. Great. Thank you.

If you'd like to ask a question, please press star followed by one on your telephone keypad. That's star followed by one on your telephone keypad. Your next question comes from the line of Mohamed Tadeem of National Bank. Your line is now open.

Thanks, Sam and Tim, for taking my question, and congrats on a good quarterly cost performance. You answered my questions on the growth, the cadence of your growth projects as well as financing on that. But maybe back on the cash operating costs that you have, I know you touched on the no impact on fuel and diesel, but are you seeing anything from reagents pricing impacting your costs right now at your operations? Thank you.

As of now, we're seeing very limited impacts. Most of the impact would obviously be the input cost to producing the reagents that we have. So we obviously use soda ash, lime, hydrochloric acid. I mean, obviously all of those do use diesel as an input to the actual production of the reagent itself. None of it travels through the Strait of Hormuz. None of it travels through the Middle East, the Red Sea. So from a shipping logistics standpoint, it is somewhat unaffected. We do understand that the war in the Middle East, the conflict in the Middle East, is creating some issues for various kind of fertilizer inputs. We're not exposed to anything of that order of magnitude. Our exposure is really around what is the diesel price going to do, and are those diesel prices going to be forced down into higher input costs for us? And so far, it seems minimal, if at all. Great. Thank you.

As of right now, we don't have any pending questions. I'd now like to hand the call back to Kelly for closing remarks.

Great. Thank you, Ellie. And thank you, everyone, for joining us this morning. Please feel free to reach out directly to the team if you have any additional questions. Have a great day. Thanks.

Thank you for attending today's call. You may now disconnect. Goodbye.