Lithium Argentina Stock

Hello, everyone. Thank you for joining us, and welcome to the Lithium Argentina Second Quarter 2026 Earnings Conference Call.

[Operator Instructions] I will now hand the conference over to Kelly O'Brien, Vice President of Investor Relations. Kelly, please go ahead.

Thank you, Kendra. I want to welcome everyone to our conference call this morning. Joining me on the call today to discuss the second quarter 2026 results is Sam Pigott, CEO of Lithium Argentina. Alex Shulga, our CFO, will also be available for Q&A.

Before we begin, I would like to cover a few items. Our second quarter 2026 earnings results were 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 projects, the 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 Pigott.

Thanks, Kelly, and thanks, everyone. Good morning. The second quarter was another period of strong execution at Cauchari-Olaroz, and the results reflect what the operation was designed to deliver, reliability, low-cost production and strong cash generation. For 2026, the operation has averaged 95% design capacity and remains firmly on track to achieve production guidance. From a cost perspective, costs remain under $6,000 per tonne. Supporting robust operating margins and driving significant cash flow. Reflecting the significant improvement in Argentina and substantial cash generation, the operation has now distributed $160 million year-to-date, of which $75 million was Lithium Argentina share.

Finally, we completed 2 new unsecured debt facilities totaling $220 million at the JV level. This further strengthens the financial position of the operation, supporting our growth plans and providing flexibility to continue to make distributions to derisk our balance sheet.

Turning to the financial performance at Cauchari-Olaroz. The operation delivered adjusted EBITDA of approximately $110 million in the second quarter, up 4% from the first quarter. Stronger realized prices, with prices averaging around $19,500 per ton in the second quarter and continued cost discipline supported these results with total adjusted EBITDA now over $200 million for the first half of the year. These financial results are now translating directly into strong cash generation, supporting distributions to the JV partners, debt reductions and providing flexibility for our next phase of growth.

Looking more closely at operations, for 2026, we've averaged 95% of design capacity, demonstrating consistent and stable operations. We were pleased with the results, which included a planned shutdown during the second quarter that allowed us to focus on optimization and debottlenecking efforts. For 2026, we are well positioned to deliver on the full year production guidance of 35,000 to 40,000 tonnes.

Going forward, our objective is to build on this consistency we are seeing today and support sustained production at rates even above the current 40,000 tonne capacity.

Moving to costs. Year-to-date, cash operating costs have averaged around $5,600 per tonne. Second quarter costs came in modestly higher due to planned shutdown, higher energy costs and the impact of a stronger peso. Since startup, we brought costs down from roughly $8,000 per ton to a consistent sub-$6,000 level, driven by ongoing process improvements, cost reduction efforts and the inherent advantages in the design of our brine-based operations. This low-cost position, coupled with higher average prices during the second quarter has translated into a meaningful expansion in margins. During the second quarter, the cash operating margin reached 70%, driving strong cash generation from Cauchari-Olaroz.

This slide shows exactly how EBITDA is driving free cash flow at the operational level. Starting on the left, the $110 million of adjusted EBITDA generated in the second quarter translated into a $141 million of free cash flow from operations. Part of this reflected a drawdown of working capital given the timing of sales made in the first quarter that were collected in the second quarter.

Moving to the right, you can see where this cash went. Net debt at the joint venture level declined from $256 million to $142 million, a reduction of $114 million in a single quarter, and importantly, that deleveraging was achieved while continuing to make distributions to the JV partners.

Turning to the balance sheet. We continue to strengthen our financial position. with improved liquidity at both Cauchari-Olaroz operation and the lithium Argentina corporate level. At Cauchari-Olaroz, we closed $220 million of new unsecured debt facilities, including $170 million 3-year facility closed in early August with a variable interest rate currently under 5%. Combined with strong cash generation, this provides additional balance sheet strength and financial flexibility to support further JV distributions and growth.

At the corporate level, we ended the quarter with $100 million of cash and total liquidity of $230 million. This includes $130 million in an undrawn 6-year debt facility provided by Ganfeng at SOFR plus 2.5% or around 6% today. We also received an additional $27 million in distributions from Qatari older as subsequent to the quarter end and expect to receive additional distributions in the second half given significant cash flow and liquidity at the operation.

Looking ahead, the chart on the right illustrates the significant earnings capacity of Cauchari-Olaroz across a range of lithium price scenarios. At current prices of $20,000 per tonne we estimate 2026 adjusted EBITDA of approximately $460 million on a 100% basis. The combination of strong operating cash flow, access to attractively priced debt and liquidity at both the joint venture and corporate level provides us with significant financial flexibility as we advance our growth plans and derisk our balance sheet.

Another milestone I'd like to highlight is the recent independent verification of the carbon footprint at Cauchari-Olaroz. The product's carbon footprint for 2025 was only 1.4 tons of CO2 equivalent per ton of LCE on a scope 1 and scope 2 basis under the internationally recognized ISO and GHG protocol standards. This result is supported by the fact that approximately 97% of the energy use of the production process comes from solar power. It also highlights 1 of the key advantages of our brine-based operation, which has a significantly lower carbon footprint than many other more energy-intensive lithium operations.

Turning to our growth pipeline, we remain disciplined and are taking a phased approach, building on the strength we've demonstrated at Stage 1. At Cauchari-Olaroz, our immediate priority is finalizing the Stage 2 development plan with the scoping study results expected around the end of the third quarter. Following rig approval in the second quarter, we're advancing an early works program, including drilling additional wells, engineering and debottlenecking the existing plant. Much of this work directly benefits the existing operation, helping push production above design capacity while also meeting the needs of the Stage 2 expansion. For Stage 2, we are working with our partner on a modular approach a DLE facility targeting an initial capacity of 10,000 tonnes per annum as the first phase of the broader 45,000 tonn per annum expansion.

Turning to PPG. We continue to wait for the approval of Riggi, which was submitted in Q1 2026 and and is expected later this year. In parallel, we've made significant progress with our partner, Ganfeng on the financing plans for PPG, including discussions with potential minority strategic partners. Across both Stage 2 and PPG, we're advancing a phased and disciplined approach to growth that leverages our experience with Stage 1, our existing cash flow and access to low-cost capital at the project level.

In closing, the first half of the year reflects strong execution across the business and the priorities ahead built directly on that foundation, operating safely and cost competitively, strengthening our balance sheet, advancing our growth pipeline and allocating capital with discipline.

Finally, as we continue to broaden our investor base and improve global market visibility, we're evaluating a secondary listing on the ASX, which we believe would complement our NYSE listing and further support long-term shareholder value.

Lithium Argentina is well positioned, high-quality operations, a strengthened balance sheet and a disciplined approach to growth. We look forward to sharing further updates on our progress in the quarters ahead.

And now we'll open the call for questions. Thanks.

[Operator Instructions] Your first question from the line of Mohamad Sidibe from National Bank.

Good progress on the operating production front. Just maybe from a modeling standpoint, can you help us understand how we should think about the cadence of production into Q3 and Q4? Any maintenance or shutdown expected and as well as any catch-up in sales given the lower sales versus production in Q2.

On the production question, we don't have any planned maintenance shutdowns. So we expect production to be very strong throughout the back half of the year. On the sales, it's really a timing issue between production when those get translated into sales and depending on when the quarter ends kind of cuts it off. So I think you'll see stronger sales through the back end of the year as well.

Your next question is from the line of Joel Jackson with BMO Capital Markets.

Sam, obviously, Lithia markets volatile, the best of times, we've seen a quite strong rebound lithium prices, now things have come down. We had seen some restarts, some companies. We've seen companies like yourself in Ganfeng talking about advancing projects. Can you speak to your conviction and your partner's conviction in your different projects here at different lithium price levels, how the market is faring, how assumptions have changed versus 6 months ago?

I mean we have a huge dramatic infection in our projects. And again, think in LAR view, the expansion at Qatari and PPG is 2 of the most attractive growth projects in the market today. That view is largely founded on the success we've had at Stage I. It's a project that we brought online for under $1 billion. Today, it's generating 100% basis, like $460 million EBITDA. It's one of the lowest cost producing assets in the world. So there couldn't be more conviction in our suite of assets. And I think the way we're approaching both is in a disciplined manner. So we talked a lot about kind of PPG. Obviously, we have a development plan out on that, that shows the economics really very robust projects, but we also talked about working with Ganfeng on our appropriate financing plan, including a potential minority partner to provide the equity capital.

So I mean, our job here at LAR is really to ensure that our shareholders benefit from what we have, which is joint control over 2 of the largest, highest-quality lithium assets in the world. Our view is the market is growing in a fairly healthy way. And these projects are definitely kind of at the top of the list in terms of projects that should be brought online and will be brought online. And I think stage 1 is just evidence of our ability to execute and lens to the conviction and continuing to grow in Argentina with Ganfeng.

Your next question from the line of Anthony Taglieri with Canaccord.

Maybe just on operating costs. So last quarter, we would have talked about sort of full year operating costs in that mid $5,000 per ton range. Obviously, there are some cost pressures this quarter, energy costs, that sort of thing. Like is this going to be sort of recurring for the rest of the year? Or is it sort of more onetime for this quarter? Like how should we think about operating costs for the rest of the year?

Yes. I mean Q2, obviously, we had a planned shutdown, which resulted in I guess, a few hundred tonnes less production, so operated at 93% operating capacity. That does have an impact on our costs. In terms of like structural changes to our cost profile, we don't see anything. There was a small impact kind of shared equally between just kind of energy costs globally as well as a stronger peso. But I think that mid $5,000 per tonne is still kind of how we're tracking through the rest of the year.

I think into next year and the years after, the view is as we kind of continue to debottleneck, push the plant to 40 or above there's room for those costs that to come down even further. So I mean, we're we couldn't be happier with how the operation is running. It is pretty remarkable. And I think the noise quarter-over-quarter in terms of an 8% increase in costs in a quarter, we have planned maintenance shutdown, I think is overshadowing the fact that this is a business with 70% operating margins, which generated $141 million of free cash flow from operations. I mean, we couldn't be more pleased with how how the operations go ahead and how our teams at Exar are performing just really kind of world-class.

Your next question is from the line of Corinne Blanchard with Deutsche Bank.

Maybe the timing for Stage 2. So I think 1 of the studio on a prefeasibility study also is now expected in of. I think you did stated for like midyear. So just maybe wondering if there's a slight delay and if that's the case, what caused it? And just in Linae,what can we expect over the next 6 to 12 months of Stage 2?

Yes. I mean I don't know really slipped. I think we guided to midyear, now we're got into before the end of Q3. I think we're just aligning with Ganfeng to make sure what we present here is going to be something that we can execute on immediately. And part of it, you'll see in the plan when we put it out, but it will be -- it will contain a lot more detail in terms of these early works that we're engaging in now to be able to accelerate the expansion in a phased approach, starting with 10,000 tons. So yes, I wouldn't flag it as a delay in any sense. Us and Ganfeng are very keen to get moving. Now with the rig approval, a lot of these early works, the spending can apply to that first $80 million of required spend in the first 2 years.

So I think you'll be very pleased to see the report. I think the entire market and the industry will be impressed.

Your next question is from the line of Ben Isaacson with Scotiabank.

Sam, can you talk about the deepbonecking opportunity at Stage 1? What exactly is being debottlenecked, how much does it cost? How long will this take? And then what are the next bottlenecks, if any, that can keep Stage 1 surpassing original nameplate capacity?

Thanks, Ben. Yes. The debottlenecking effort is a function of us through experience, being able to push major parts of the plant beyond 40,000 tons. So for instance, the carbonation plant can do a lot more than that. So we have to kind of go further I guess, upstream in terms of debottlenecking, like one example would be putting in a few additional wells to get more brine to push through the plant. So it's not it's not overly expensive. A typical well runs somewhere less than $3 million, about $2.5 million, and we're talking about maybe the need for like 2 or 3 of those over the course of the next 6 to 8 months. So it's pretty low-hanging fruit, and it doesn't carry a significant investment. And obviously, if we can make investments that can push production up 2,000 to 3,000 tonnes well worth doing. So I hope that answers your question.

And from a timing perspective, I mean, we're engaged in these early works kind of now. So you'll see a very modest kind of CapEx spend over the next 6 to 10 months, and the results should flow through into 2027, 2028.

Your final question from the line of Ishan Jain with HSBC.

I just have a question around the PPG. You have been looking for a partner or offtake agreement, anything off for the financing of the project. Is there any progress on that front? Or are you looking to secure permits before you get into any kind of partnership.

Yes. I mean we've had a lot of progress on that front. I think the major milestone will be the rig approval for PPG. It's kind of a fundamental piece that derisks this investment for a third party, and we expect to have that by the end of the year. It's something that we submitted in Q1 2020. The expectation and the dialogue with the authorities is very positive, and we expect to have it by the end of the year, and that will be kind of a key milestone for the process.

Another question from the line of Mac Whale with ATB Cormark.

I'm wondering, Sam, when you look at the DOE for the Phase 2 or Stage 2, does that require anything in terms of CapEx into the PON structure? Or do you -- are you able just to bring 10,000 tons per year online and not really have to invest at all in sort of the pond. Some of the infrastructure will borrow from what we've already built with Stage 1.

Okay. So I guess we'll get more of this when you come out with the actual plan, but I was just curious if that seems a relatively modest CapEx to begin with on Stage 2 relative and time to get that up and running, right? Yes, yes. We'll have a lot more the information with the development plan, but it is -- yes, it is very attractive in terms of Connect intensity to get additional tons Right. And it really allows you to lever all that CapEx spend on the pan structure, right?

So Yes. And then in terms of -- when you look at distribution, let's assume pricing stays roughly where it is now. Do you expect this level of distributions from Minera Exar back to you? Or is that -- how does that play out over the course of the year? Are there big are there other big debt down payments that have to come at the Mir level?

No. No. No Minera Exar has $300 million of liquidity -- so we expect distributions -- if prices remain where they are, distributions to be similar to the first half, potentially higher.

There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to Lithium Argentina Q1 2026 Earnings Presentation. [Operator Instructions] I will now hand the conference over to Kelly O'Brien, VP, Investor Relations. Kelly, 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 first quarter 2026 results is Sam Pigott, CEO of Lithium Argentina. Alex Shulga, our CFO, will also be available for Q&A. Before we begin, I would like to cover a few items. Our first quarter 2026 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 will now turn the call over to Sam Pigott.

Good morning, everyone, and thank you for joining us. The first quarter of 2026 represented another very strong quarter as Cauchari-Olaroz continued to operate at or near design capacity while beginning to generate meaningful cash flow. During the quarter, production totaled about 9,700 tonnes of lithium carbonate with the operation averaging approximately 97% of nameplate capacity, a level we've been able to consistently run for the past two quarters. This performance also highlights the progress we are making on costs.

First quarter operating cash costs were down again to just under $5,400 per tonne, making Cauchari-Olaroz one of the lowest cost lithium operations globally. I also want to highlight that since the beginning of the year, we have been able to distribute around $100 million in cash from Cauchari-Olaroz, $48 million for Lithium Argentina's share, strengthening our balance sheet and highlighting the cash-generating capability of the operation. This quarter reinforces the importance of Cauchari-Olaroz, both in what we've achieved with Stage 1 and in the opportunity to grow from here. On the left side of the slide, we've summarized operational and financial metrics for the quarter at Cauchari-Olaroz, which reflect both strong operations and an improving lithium pricing environment.

As noted previously, realized prices increased to just under $17,000 per tonne for the first three months of the year compared to just over $9,000 per tonne in the fourth quarter last year. Combined with stable production and continued cost discipline, we have produced an over threefold increase in EBITDA quarter-over-quarter. Adjusted EBITDA, which removes primarily noncash FX fluctuations, increased to $106 million for the quarter, up from $30 million in the fourth quarter.

Turning to costs. Last quarter, we highlighted the progress of our cost reduction efforts at the operation, and I am pleased to say that we reduced them even further in the first quarter, bringing our cash operating costs down below $5,400 per tonne. While these costs demonstrate what the operation is capable of, some quarter-to-quarter variability should be expected as we remain focused on driving costs lower over the long term. We are also watching the situation in the Middle East closely. And so far, we are seeing a limited impact related to costs and availability of key supplies of reagents such as soda ash. The operations at Cauchari-Olaroz do not require an energy-intensive process, have minimal diesel needs and do not need sulfuric acid, relying principally on solar evaporation.

As noted previously, direct diesel consumption makes up less than 3% of our direct operating costs. I think it's important to spend some time showing how the EBITDA generated at Cauchari-Olaroz translates to cash flow. As mentioned, during Q1, the operation generated $106 million in adjusted EBITDA. There is roughly a two month lag between when these sales are made and when the cash is received at the operation.

As we've outlined, we are expecting over 90%, nearly all of this EBITDA to convert to free cash flow this year and support our growth plans by providing capital to strengthen and derisk our balance sheet. We expect this cash flow generation should become increasingly evident through the second and third quarters. In terms of adjustments, during the first quarter, sustaining CapEx was even lower than normalized levels estimated at around $4 million to $5 million per quarter. On the interest side, we have a small amount of third-party project level debt, which is approximately the same as it was at the beginning of the year, even after making around $100 million in distributions and represents less than 0.5x net debt to Q1 EBITDA on an annualized basis.

Related to tax and other costs, we expect cash taxes to increase in the coming years, but we are realizing the benefits of accelerated depreciation in our intercompany loan structure, which is providing a much stronger cash flow generation during these early years of operations. The high level of cash flow generation from EBITDA during both high and low price scenarios is important to understand to see how we will leverage this cash flow to support our expansion plans and derisk our balance sheet.

Now turning to our outlook for 2026. This year's production guidance of 35,000 to 40,000 tons remains unchanged. This estimate has some flexibility built in as we look to optimize this year's production and also consider efforts to support sustained higher production levels in the years to come. We have provided an EBITDA outlook across a range of prices and see substantial upside as market reference prices move closer to the futures pricing.

Currently, our realized prices include an approximate 6% to 7% adjustment to market pricing. We expect this differential will decrease as consistency continues to improve and product quality evolves. Recent lithium prices range from roughly $20,000 to $30,000 per ton. At those levels, the operation is capable of generating approximately $460 million to $630 million of EBITDA in 2026 on a 100% basis. Moving to the market. We are seeing a much more constructive view on price and the sustainability of these higher prices based on accelerating energy storage demand.

On the EV side, we are seeing a much stronger outlook today, including for commercial vehicles than at the start of the year. This is supported by recent developments in the oil market as well as the increasingly strong performance in low cost of batteries, which now offer longer ranges and faster charging capabilities.

It will take time to bring on enough new lithium supply to meet that growing demand. large-scale and high-quality projects with experienced teams and a successful track record are rare. Against that backdrop, we believe assets like Cauchari-Olaroz Stage 2 and PPG are becoming increasingly strategic within the global lithium supply chain. During the first quarter, we made substantial progress advancing and derisking our Stage 2 development plan, which is targeting to add an additional 45,000 tonnes per year of production capacity.

One of the key upcoming milestones is the approval of the RIGI application, which was filed late last year. We understand this is progressing well and could be approved as early as this quarter. Another important catalyst is the advancement of the environmental permits.

This is underpinned by a recently updated resource estimate and a basin-wide hydro geological model supporting the project's ability to sustainably extract brine needed for these higher production levels. We are working closely with our partner to finalize the development plan midyear. Building off the success of Stage 1, the plan is expected to incorporate new technologies while leveraging Ganfeng expertise in lithium chemical processing and modular construction capabilities in China to help optimize time lines and overall development costs. We believe future growth should be funded in a manner aligned with shareholder interests, prioritizing Stage 1 cash flow generation and access to low-cost project level debt where appropriate, while minimizing the need for equity issuance and limiting shareholder dilution.

I want to spend a minute talking about the communities around Cauchari-Olaroz because these relationships are an important part of the operation. We've been working in the region for many years now and have built long-term relationships with communities across the region through agreements, local hiring, procurement and ongoing engagement as the operation has grown. And I think that's important context as we discuss Stage 2.

We expect ongoing dialogue with the neighboring communities where important relationships have been built and expect this to be an important part of supporting the next phase of growth at Cauchari-Olaroz. Moving to PPG. This is an equally important part of our longer-term growth platform in Argentina and represents a key source of value. As a reminder, the scoping study released late last year outlined a phased development plan targeting up to 150,000 tons of lithium carbonate production over time, beginning with an initial 50,000 tonne phase. By combining three separate projects, we believe PPG will be one of Argentina's largest lithium operations, benefiting from scale and synergies related to being a single operator across one single massive lithium system.

Our focus here is also to derisk and provide a path to value creation for Lithium Argentina's shareholders. Working with Ganfeng, we are looking at the option to bring in a minority investor at the project level. So far, we have been very pleased with both the level and breadth of interest there is from global groups seeking exposure to large-scale, low-cost and scalable lithium supply from brines.

PPG is on a strong path to create value. The combined assets have a historic book value of $1.7 billion based on investments made and the development plan has a range of NPV values from $6 billion to $8 billion. Overall, I believe finding a minority partner for PPG represents an opportunity to continue growing responsibly and unlocking significant value in a manner that does not require equity dilution or reliance on cash flow from Cauchari-Olaroz. As we look ahead, our focus remains on disciplined execution at Cauchari-Olaroz. The stronger financial position established over the past year, supported by distributions from Cauchari-Olaroz and the recently completed debt facility alongside Ganfeng provides additional financial flexibility.

At the same time, we continue to advance and systematically derisk our broader growth platform, which includes Stage 2 and PPG. These projects will benefit from the ongoing permitting progress, rigging approvals, development planning and other key upcoming technical and financial milestones. As we look to broaden our investor base and improve market visibility globally, we are considering plans for a secondary listing on the ASX, which we believe could further strengthen our position with international investors and support long-term shareholder value.

Our focus remains on disciplined execution and continuing to systematically derisk the broader growth platform in Argentina.

[Operator Instructions] Your first question comes from the line of Anthony Taglieri with Canaccord.

What might be a good expectation for cash distributions coming from the JV for the rest of the year, just given obviously the $48 million attributable generated year-to-date, 90% free cash flow conversion targeted?

And how does this mesh with other objectives like paying down debt and funding the Stage 2 expansion?

Yes. I think the way we look at it is that the project is going to be generating a significant amount of cash that will show up in Q2, Q3, Q4, the remainder of the year. I think between prices of $20 to $30, it's EBITDA of $460 million to $630 million, cash flow conversion of 90%. So you can see how the cash is going to build within the business. I think the priority #1 will be redeploying part of that cash into preparing for Stage 2.

However, it's certainly not going to absorb that amount of cash. So for the remainder, I think the secondary priority will be to make cash distributions. The joint venture level debt profile has improved a lot. So it's been termed out, very low cost, currently running at 0.5x net debt to kind of annualized Q1 EBITDA. So we feel very comfortable with that.

So I think we'll continue to work in align with Ganfeng on making cash distributions throughout the year and also spending on early-stage CapEx, certainly after we get the rig approval for Stage 2 in preparation for the expansion that will be coming.

Okay. Great. And maybe just following up with that, assuming the approval comes soon, what could sort of CapEx expectations look like this year then?

I mean I think for the full FID decision, that's going to depend on getting environmental permits in place, which is really a 2027 event. I think the RIGI will help in terms of catalyzing or accelerating that potential permitting process. But there are things that we can start to look at in order to accelerate Stage 2, but these would be fairly immaterial CapEx expenditures in 2026.

Your next question comes from the line of Joel Jackson with BMO Capital Markets.

It's Evan on for Joel. Just wanted to discuss some of the puts and takes on the pricing discounts this year. So I know there's a VAT and the quality discount. And if you don't mind kind of discussing how that's going to flow throughout the year?

And maybe if that's steady state, what we're seeing in Q1?

Yes. I mean for Q1, what we disclosed was the -- we were taking a 6% to 7% discount from reference prices. So these are reference prices stripped of Chinese VAT.

I think looking ahead, there's room for improvement here. The consistency of our product continues to improve. the product quality also evolves. So I think there is room to improve on what we had in Q1 throughout the rest of the year. And certainly, as we move into 2027, and we've talked a lot about this in the past, the objective of our partner and ourselves is to be able to supply lithium chemicals directly to customers without going through China and therefore, being able to capture kind of the full spot price. So I think you can -- for modeling assumptions, I think the 6% to 7% discount from reference price, there is room throughout the year for that to improve.

Okay. Just a second one. of your progress on Phase 2 with 3D expected soon. Anything new on PPG? Or is that still similar as is the last update?

It's -- yes, I think we're making significant progress on advancing options, which we have many to unlock value for this project, including potentially bringing in a minority partner. It's a bit premature at this point to provide specific timing around that event, but we would hope to provide more color midyear, probably around the same time when we're providing updates on Stage 2 development plans. But just as a reminder, we have made the submission for the RIGI for the PPG project, which will be an important catalyst Permits for Phase 1, the first 50,000 tonne development plan, which will start in Venezuela have been secured.

So it's just working with Ganfeng, not necessarily rushing a decision, but ensuring that we make the best decision for shareholders that maximizes value and provides kind of the foundational capital required to fund the Stage 1 CapEx.

Your next question comes from the line of Corinne Blanchard with Deutsche Bank.

Maybe first, can you guys talk about lithium pricing? I mean, obviously, you got a good inflation point for this quarter. And I think if you look at spot price in lithium futures a few days ago, that would imply to see another big jump in 2Q and probably 3Q. But it would be great to hear where do you think that can go to for Idea in the next two, three quarter?

I mean, predicting short-term moves in lithium prices is a challenging business, as you know. I think the read-through we get from our partner who obviously have a tremendous amount of kind of insights and touch points within China is the market is extremely tight. So yes, I mean, pricing has continued to climb pretty aggressively since Q1 in our realized pricing.

So we feel pretty strongly that, that market will continue to -- the market demand will continue to support these higher prices. In terms of where it reaches, I'm reluctant to provide that kind of granular forecast, but we feel very, very good about Q2, obviously, and throughout the rest of this year.

And then maybe for a second question, can you talk about -- I think you mentioned wanted to be doing the ASX inclusion. Is that the only index that you're thinking of maybe for a secondary listing? Or are you thinking any in Asia like Hong Kong or so?

I mean I think, yes, we've looked at all different avenues to try and broaden our visibility globally. And I think the ASX has emerged as one of the strongest areas, I think, for lithium producers like lithium Argentina. I think it's a market that appreciates free cash flow and the cost profile of brines and has also kind of taken notice of larger mining companies moving into Argentina and the change of the risk profile there.

So yes, I mean, I think the ASX does stand out. We obviously have no plans to get rid of the New York Stock Exchange listing. But I think the ASX could be useful as we spend more time in Asia Pacific and Australia. And just on the ASX, we're advancing a plan. It could have us listed there as early as midyear. But we should note that this is a secondary listing, and we're certainly not planning for any IPO or financing associated with this listing plan.

But from all our research, it does indicate that the ASX would be very supportive of a company like Lithium Argentina and the low-cost brine profile that we would provide investors there.

Your next question comes from the line of Ishan Jain with HSBC.

Great set of numbers. Just following up on your listing plan in Australia. So what I understand is not for the funding or financing the next leg of growth probably, but to improve, I'll say, the investor interest or given broadening the access. Is that the correct assumption?

That's the correct assumption, yes.

Yes. And secondly, on the cost side, you did highlight, right, your long-term target is of $5,400 per tonne cost. So is there scope of further improvement in this target? Should we expect it to further lower costs from the current levels?

I mean $5,400 was a number that we put out at the beginning of the year to reflect our existing cost structure at nameplate capacity at $40,000 per tonne. I think we're obviously very comfortable in that assumption given that Q1 costs came in slightly below that or in line with that, even at 96.8% operating capacity. So I mean, I think there is opportunities longer term for us to look at ways to bring costs down. Those probably come from elements of continuing to improve recoveries, continue to optimize the plant. But at this stage, given 5,400 was kind of a number we put out at the beginning of the year based on our existing cost structure, I think we'll stick to that.

But with the caveat that, of course, especially working with our partner, we're always looking for ways to bring down costs. And I think we're very comfortable with what we put out just a few months ago in terms of where long-term costs would be, and that happened very quickly.

Your next question comes from the line of Mac Whale with ATB Cormark.

You gave some indication for at current prices, what the EBITDA looks like. In terms of the pricing, is that with the VAT off of that reference pricing and still the discount? Like what are the -- what's the basis on pricing for that?

Yes, that's right. So that reference price, the $20 to $30 is like ex VAT.

Okay. And then -- but then you're just putting in that pricing, you're assuming there's no further discount in terms of generating those numbers.

I just want to make sure I'm modeling.

No, that would be assumed discount as well.

Okay. Can you also -- can you remind us how the royalty payment works? It seems higher than I'm modeling. I just wanted to check that I've got that correct. It's based off like a gross profit number less depreciation. Is that correct, like some percentage of that?

That's broadly correct, but maybe I'll turn it over to Alex to provide a little bit more detail.

Yes, sure, Mac. So we have several taxes, royalties. We have export tax less refund and we have provincial royalties, which are the kind of larger parts of what kind of goes below C1 cost. If you take, for example, export tax, then that's revenue minus certain expenses like temporary imports for some of the reagents. And that's net of export refunds approximately 2.87%, 2.9%. So that's kind of connected to revenue. That's why it jumped up as well, right? So -- and then in terms of provincial royalties, that is 3% of revenue minus C1 cost less certain deductions, if I were to look at it in a simple way.

So when you -- I guess, if we were to look at pricing like this $12.5 million on selling duties and royalties, kind of a bunch lumped in there. Some, I guess, is sort of more fixed, but I'm just trying to figure out how.

Part -- yes, there's part that's a percentage of revenue, and that's a part that is a fixed deduction from that. So yes, it's a bit of a combination, but a significant portion is connected to revenue. That's why it jumps up.

So when we -- if we're trying to come up with an EBITDA number at the Cauchari-Olaroz level, that should all be negative to EBITDA, right? So if we -- there should be nothing in there that's not -- that we would take out of EBITDA would there or add back?

No, because all of this we include in EBITDA, right? So this export taxes, expert funds, all of this is already deducted from EBITDA.

Okay. So we should be looking at all things being equal, that level, there isn't any onetime stuff in there. It should be kind of trending higher as pricing rises.

Yes, that's right.

Yes.

Your next question comes from the line of Mohamed Sidibe with National Bank.

On the strong numbers in the quarter. You reported pretty good cost in Q1, and I appreciate your commentary on the long-term cost there. I was just wondering if you could maybe provide us some color on inflation in country and potential FX impact. It seems like you've been managing to offset most of that through your operational improvements, but any color would be useful there.

Inflationary pressures, I think obviously, diesel prices globally have gone up. Argentina is not immune. Luckily for us, direct oil and gas diesel costs are less than 3% of our OpEx. So it is -- there will be some inflation there, but it is a very immaterial kind of piece of our cost structure. In terms of wages, yes, I mean, there's constantly kind of fluctuations in terms of how inflation is running versus devaluation and the impact on kind of like the dollar equivalent cost of Peso labor expenses. But again, those are somewhat manageable and not all that material. So we feel very good about our cost profile and kind of our insulation against kind of broader inflationary trends globally.

Great. And just on the ASX listing, maybe I know you clarified no plan on removing the New York Stock Exchange. What are your thinking around the TSX? Is that something that's up for debate? Or how do you look at that listing?

I mean, yes, we're evaluating just kind of the puts and takes of obviously, the Australian listing, which I think as I described, seems to be a market that would be supportive of bringing on kind of a brine exposure, which is something that is unique, not -- wouldn't just be unique to the ASX, but I think really in terms of pure-play equity exposures in the brine space, it's a pretty limited pool of options that investors globally have.

So I think without a doubt, the ASX would make a lot of sense. Yes, I think it's too early to commit to whether we would consider dropping the TSX. We have to wait pros and cons, and so we'll make that determination and provide further updates in the months to come.

We have reached the end of the Q&A session. This does conclude today's call. Thank you very much for attending, and you may now disconnect.

Hello, everyone, and welcome to Lithium Argentina Fourth Quarter and Full Year 2025 Earnings Conference Call. Please note that this call is being recorded. [Operator Instructions]

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 Shulga, 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 Pigott.

Thanks, Kelly. Good morning, everyone, and thank you for joining us. 2025 marked an important year for Lithium Argentina. Cauchari-Olaroz demonstrated its ability as a stable cash generating operation while we significantly advanced our next phase of growth. Starting with operations. Cauchari is performing exceptionally well. For the year, production was over 34,000 tonnes, 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 with fourth quarter operating cash cost is around $5,600 per tonne. Following year-end, the operation distributed $85 million of cash, $42 million for Lithium Argentina share, and we completed a $130 million 6-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 the Scoping Study released late last year as well as the submission of RIGI applications for both PPG and Stage 2.

Since completion of the chemical plant in late 2023, production has steadily increased. 2024 represented our first full year production, while in 2025, the focus has 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, well field 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 tonnes. This operational performance translated into strong financial results, which, despite the low lithium price environment in 2025, Cauchari-Olaroz 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% and from over $8,000 per tonne 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. This is not just fixed cost 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 our revised long-term estimates. Based on the current cost structure at full capacity, we now forecast costs of approximately $5,400 per tonne 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 with both Stage 1 and as we grow.

On the next slide is an updated cost curve, which includes actual operating performance at Cauchari-Olaroz, 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. And we are -- we now have the opportunity to scale from 40,000 to over 200,000 tonnes 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 forecast 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 tonnes of lithium carbonate, reflecting our focus on sustaining stable operations at current levels and long-term optimization.

Based on our production targets for 2026, Cauchari-Olaroz's expected to support significant EBITDA through a range of lithium price scenarios. Using today's market price of about $20,000 per tonne, the midpoint of production guidance would imply around $460 million...

Ladies and gentlemen, please be on standby. We will just address a quick technical issue.

[Technical Difficulty]

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, Cauchari-Olaroz is expected to support significant EBITDA under a range of lithium price scenarios. Using today's market price of about $20,000 per tonne 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 million 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 Cauchari-Olaroz's now operating at close to capacity and costs well below $6,000 per tonne, we are turning our attention to what comes next. And the opportunity in front of us is significant. We have the potential to grow from approximately 40,000 tonnes per annum today to over 200,000 across a series of phases using Cauchari-Olaroz Stage 1 as the foundation. In 2025, we laid the groundwork. The resource base is defined the permits and RIGI applications are advancing and the economics at the PPG Scoping Study showed are compelling in nearly all pricing scenarios.

We recently published an updated resource and reserve estimate for Cauchari-Olaroz, reinforcing the scale of the basin with total measured and indicated resources increasing by approximately 42%, positioning Cauchari-Olaroz among the largest lithium brine assets globally. Beyond this, our platform includes PPG, another large-scale brine resource with over 15 million tonnes of measured and indicated LCE resources. Together with Cauchari-Olaroz and PPG, we are advancing 2 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 of investment applications submitted or approved under the program. RIGI applications for both Cauchari Stage 2 and PPG have been submitted.

As we look ahead, we are scaling our lithium platform in Argentina. At Cauchari-Olaroz, we are advancing the Stage 2 expansion plan of 45,000 tonnes, leveraging our operating track record, existing infrastructure, resource scale and using the significant cash flow from Stage 1 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 tonnes LCE.

Here, we are working closely with Ganfeng 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 derisk 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 derisk our growth pipeline. Looking ahead, we are in a very strong position to build off what we have already accomplished at Cauchari-Olaroz Stage 1 and scale from 40,000 to 200,000 tonnes. 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 build-outs.

We are focused on derisking and advancing a path to more than 4x our lithium production and creating the largest lithium platform in Argentina. And with that, we're ready to open up the line for questions.

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

[Operator Instructions] Your first question comes from the line of Anthony Taglieri of Canaccord Genuity.

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 tonne. So how should we expect this to evolve in 2026? Is $5,600 a tonne the new base case for Q1 moving forward between that 35,000 to 40,000 tonnes of production on an annual basis?

Yes. Thanks for the question. So yes, in Q4, we delivered $5,600 per tonne 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 tonne. So we would expect some variability quarter-over-quarter tied to volumes produced and timing of cost, 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. And maybe as a follow-up on Q1 realized price expectations. Could you bridge us from sort of the average Chinese benchmark price of approximately $21,000 a tonne to date in Q1 versus the expected price of realized price of $17,000 a tonne? So simple math after considering that, maybe that implies around $1,900 a tonne of processing costs there. So is that something we should expect moving forward for the rest of the year?

Yes. I mean as a general statement, our pricing today is based on the market price for battery-quality lithium carbonate outside of China. So that does strip out VAT from the export reference prices you've typically seen quoted by SMM, fast markets, et cetera. 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.

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

You talked about the different opportunities working at any price level. I think your partner, Ganfeng, would sort of say similar things. Can you talk about some of the volatility we've seen in the global markets in the last few weeks, if that's changed? And the risk factors when you think about Cauchari-Olaroz Phase 2 of PPG? And then also would your objectives be the same as Ganfeng? Obviously, not your different companies. But could you talk about maybe how some of your objectives for growth in the next couple of years could be similar or different versus your partner?

Sure. Thanks, Joel. I mean, as a broad statement, like we are obviously monitoring the impact 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 cost 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 of weeks, just given the developments in the Middle East and the energy complex. And our direct energy exposure is very limited to approximately or 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 or 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 in our offtake agreement with Ganfeng. So we obviously do monitor it, but we're very pleased to report the minimal, if any, impacts are being experienced to date and very limited likelihood for escalation.

In terms of our growth ambitions with Ganfeng. I think both of us understand the unique position that we have here today. We've brought online Cauchari-Olaroz 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 Cauchari-Olaroz and then similarly, the largest potential lithium project in Argentina, 150,000 tonnes phased across 350,000 tonne phases. Expecting operating costs to be low $5,000 a tonne.

So 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. Ganfeng want -- Ganfeng has set pretty ambitious targets for where they want to see their lithium production by 2030. A big part of that growth is through their portfolio with us in Argentina. I think it's around financing. So Ganfeng is a $20 billion market cap company, huge access to capital in China.

I think 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, Cauchari Stage 2 at today's prices, Stage 1 will be generating somewhere in the order of $460 million in EBITDA, which provides quite a bit of cash flow to execute on 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 it's 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 team that's been able to execute at Cauchari.

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 -- in today's market, I think we're very much aligned in terms of pursuing both growth plans simultaneously.

Okay. And then I'll just follow up with -- I know you and Ganfeng talked about wanting to put on some DLE plants and trial it out at different assets in Argentina, [ Olaroz ], Mariana. Can you talk about, at least for Cauchari, what is the DLE plan there? Or is it more going to be a Stage 2 idea?

It's going to be a Stage 2. So the DLE -- all the results that we're working with Ganfeng on they're really taking the lead, as you would expect in terms of new technologies, applying new technologies to brine assets in Argentina.

So 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 it's -- 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 profile has come to a level that I think we were all very impressed with these are structural changes to the cost profile, the business, a long-term target of $5,400 a tonne, which is very, very real. I mean we just came out of Q4 at $5,600 a tonne. This already placed Cauchari certainly in the first quartile of the cost curve. And so we look favorably on the technology that Ganfeng 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.

Next question comes from the line of Corinne Blanchard of Deutsche Bank.

Maybe the first question, I want to come back on the pricing. Obviously, this is quite a big jump from 4Q to 1Q due to the spot market. But can you maybe share your view on expectations throughout 2026 and maybe kind of a sequential view here? That will be helpful.

And then maybe the second question, maybe if you can just comment on the financing environment for the expansion. I know you cannot comment extensively on Ganfeng, but there is definitely as well question coming from the conveyors and balance sheet. So anything you can address there?

I mean pricing, as you know, Corinne, 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 on -- largely on ESS. I think the view is pricing could remain volatile, but expectations are for pricing 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 -- and 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 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. 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. So I mean Ganfeng's used it in China, and this is shared by many of the other kind of customers that we've discussed over the last couple of 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, just a second question. Do you mind repeating that?

Yes, no problem. Just asking about financing. And again, you kind of [ translate it ]previously with Ganfeng view, but if you can talk about the balance sheet and conveyor and what you intend to do there?

Yes. So I mean I think we're very, very pleased with the progress we've made and strengthening our balance sheet over the last year. So we've closed the $130 million 6-year debt facility with Ganfeng. We distributed $85 million from the operation, $42 million of which came to LAR. Our cash position is just under $100 million. And meanwhile, at today's prices are anywhere near them. The project is generating meaningful cash flow. So I think taken together, the cash we have on hand, the cash flow capacity of our operations and 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 2 different, 2 different distinct paths between PPG and Cauchari. Cauchari Stage 2 has [ a bit of ] Stage 1 as a foundational backstop. So today's price is $460 million which can provide some funding of the project. It can also allow us to access debt to finance Phase 2, and we'll have a lot more information midyear 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 Benjamin Isaacson of Scotiabank.

Hoping I could ask 3 quick ones. Sam, your costs have improved dramatically over the past 8 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 competitive projects in Argentina have the ability to also reach that sub-$6,000 area? Or do you think LAR is unique?

I mean there are a lot of different projects in Argentina. So it's hard to paint them all with the same brush. Chemistry composition is obviously a very important factor. Scale is an important factor to get costs down and then the ability to kind of execute in the technology and selection. So all different factors, but certainly, brines 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 it represents overall is brine seems to be like the lowest cost in some ways, most resilient, reliable source of lithium chemical production outside of China.

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 spodumene 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 Cauchari and I think that's related to the quality of our underlying resource as well as the design of our Stage 1 plant.

Great. And then just second question. I see that Stage 2 for Cauchari is weighted at 45,000 tonnes. Can you talk about debottlenecking opportunities at Stage 1? Is it possible to get that to 45,000 tonnes? Why or why not?

Yes, I think it could with further investment, I think we probably could push it above 40,000 tonnes. I think one of the realities in planning Stage 2 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, it's a noncash 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 2, 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?

Yes. I mean 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 so -- and in terms of cycle life, I should say. So all those are very important for, obviously, the EV segment, any mobility applications, but also energy storage, there's still a significant economic advantage.

I think sodium is a legitimate risk if 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 substitution. But I don't think we view it as a material threat at today's price level or even significantly higher than today.

[Operator Instructions] Your next question comes from the line of Mohamed Sidibe from National Bank.

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 no impact on fuel and diesel, but are you seeing anything from reagents pricing impacting your costs right now at your operations?

As of now, we are seeing a very limited impact -- most of the impact will obviously be the input cost of producing the reagents that we have. So we obviously use soda ash lime hydrochloric acid. I mean, some 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 worth 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 cost for us. And so far, it seems minimal, if at all.

As 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.

Thank you for standing by. My name is Jayle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lithium Argentina Third Quarter 2025 Earnings Call and Scoping Study Results. [Operator Instructions]

I would now like to turn the conference over to Kelly O'Brien, Vice President, Investor Relations. You may begin.

Thank you for the introduction. I want to welcome everyone to our conference call this morning. Joining me on the call today to discuss PPG scoping study and the Q3 results is Sam Pigott, President and CEO of Lithium Argentina. We are also happy to welcome to the call Wang Xiaoshen, Chief Executive Officer of Ganfeng Group; Carlos Galli, Vice President of Growth and Innovation at Lithium Argentina; and Jason Luo, President of Ganfeng South America, to discuss the Pozuelos Pastos Grandes, or PPG consolidated project. Alex Shulga, Vice President and CFO of Lithium Argentina, will also be available for Q&A.

Before we begin, I would like to cover a few items. Our third quarter 2025 earnings and the PPG scoping study results were press released earlier this morning, and the corresponding documents are available on Lithium Argentina's website.

I remind you that some of the statements made during this call, including any production guidance, expected company performance, update on the PPG development plan, the timing of our projects 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 will now turn the call over to Sam Pigott.

Good morning, everyone. We have a lot to discuss today. I will start quickly with third quarter results and want to recognize the incredible work of the global team that continues to collaborate and contribute to the success of the Cauchari-Olaroz operation. The third quarter saw continued execution and the impact from our ongoing efforts to optimize our production plan, increase efficiencies in our process and make improvements designed to bring down costs long term.

We remain confident in meeting our targets for 2025. While there is still work to do to complete these optimization efforts, we are very pleased with the plant's performance, where we are seeing production rates of 90% capacity sustained over extended periods of time. In October, we achieved a new record monthly production volume, reaching close to full capacity.

As we look towards 2026, our goal is to continue to sustain higher production levels while also taking long-term actions to best position the business for the years to come. On the balance sheet, we were pleased to announce a new $130 million 6-year debt facility from Ganfeng.

This new facility gives us added flexibility to enhance our debt profile at the corporate level while preserving shareholder value. Finally, and what matters most is that the operation continues to perform safely and reliably with a committed team driving continuous improvements. I want to pause on what's been one of the most important drivers of our progress, the strong performance at Cauchari-Olaroz, and that's our collaborative partnership.

Together, Lithium Argentina and Ganfeng have built a highly successful joint venture in Argentina. With just under $1 billion in capital investment, we have established one of the largest and most efficient new lithium operations globally with a shared goal of supplying lithium chemicals to a diversified global customer base. If you look at the production profile on this slide, you can see the strength of our execution.

Within 12 months following the completion of the lithium chemical plant, we were able to steadily increase production, reaching close to our targeted capacity. That reflects the quality of our resources, team and collaborative partnership with Ganfeng.

With that, I would like to turn it over to Ganfeng's CEO, Wang Xiaoshen to provide his perspective on our partnership and shared vision for Argentina.

Thank you, Sam. We are proud of our 8 years partnership with Lithium Argentina and look forward to growing with PPG. The new joint venture will build on our existing relationship and new technologies to bring low-cost growth in Argentina. We continue to expand in Argentina, reflecting our confidence in its high-quality resources, experienced local workforces and improved investment framework with RIGI.

We expect Cauchari-Olaroz to continue to lower costs and use new technologies to grow, while PPG will be one of the largest and lowest cost lithium operations globally. We see an important opportunity for brine where we can apply mature technologies from China to high-quality resources in Argentina to reduce costs and minimize environmental impact.

Our plan in Argentina is to grow from our existing 60,000 tonnes of capacity today from Cauchari-Olaroz and Mariana to over 250,000 tonnes.

Following the receipt of the environmental permits at PPG last week and as we begin to prepare our RIGI filings for Stage 2 and PPG, we expect these growth plans to become a bigger focus for the company.

Turning to PPG. We are excited to share the results of our scoping study. The project is located in Salta province in Northern Argentina and benefits from access to infrastructure, energy and local talent and is located approximately 100 kilometers from Cauchari-Olaroz. While we agreed to consolidate these 3 projects in August, the scoping study builds off approximately 3 years of collaborative partnership with Ganfeng.

What makes this project especially compelling is that it combines scale, a proven partnership and technological innovation. These are essential components for successful project execution. Turning to the details of the PPG scoping study. We reiterate the project's scale and economics, which all support PPG becoming one of the most competitive lithium operations globally.

The study outlines a Stage 1 LCE capacity of 50,000 tonnes per year, expanding to 150,000 tonnes per year in 3 phases. Initial capital investment is estimated at $1.1 billion and total life of mine capital is estimated at $3.3 billion. These results confirm the benefits of an integrated PPG as a scalable, low-cost, long-life operation. PPG produces a strong after-tax NPV of $8.2 billion at an 8% discount rate and an IRR of 33% based on a long-term price of $18,000 per tonne, a level well supported by long-term market fundamentals.

It's important to note that even at a very conservative price estimate of $12,000 per tonne, close to market prices today, the IRR of the project is still over 20%. The lithium market continues to evolve, but one constant remains, strong sustained demand driving the need for new high-quality supply. Benchmark estimates that over the next decade, roughly 1 million tonnes of new LCE capacity will be required to meet global demand.

This sustained demand supports long-term pricing levels necessary to incentivize new project development. Based on the current project pipeline, a price of approximately $18,000 per tonne of lithium carbonate would be required to achieve a 15% return for this new supply. For PPG, as with Cauchari, the combination of attractive capital intensity and low operating costs provides additional flexibility, ensuring that projects remain well positioned across a range of market scenarios.

I'll now turn it over to Xiaoshen to comment further on market conditions.

At Ganfeng, we see shifts in the lithium market, driven by demand for LFP from ESS. Ganfeng's battery business is running at full capacity. We think the industry is in the early phases of ESS and believe that this could become as big as or bigger market than the EV market in the future. At Ganfeng, we are well positioned with low-cost lithium resources as well as battery production.

We are the largest fully vertically integrated lithium producer and as a result, have established a long-term relationship with leading industry players across the EV battery supply chain, which gives helpful insights and competitive advantage. We have always taken a long-term view of the market. And for this reason, we have been focused on low-cost resources in Argentina.

Lithium Argentina brings more than 2 decades of experience in Argentina, advancing projects from exploration through to production. In 2024, the Argentine government implemented the RIGI program to attract long-term investment by offering a predictable and competitive fiscal framework. To date, more than $33 billion in new projects have applied under RIGI with roughly 40% already approved.

For PPG, this framework represents a meaningful value driver, providing competitive incentives and importantly, greater clarity on foreign exchange regulations that are critical to securing lower-cost capital. Following the receipt of the Stage 1 environmental permit last week, we plan to formally submit our RIGI application for PPG during the first half of 2026.

I'll now turn it over to Jason Luo, President of Ganfeng South America, to discuss PPG's targeted cost profile in more detail.

Thanks, Sam. Sam's comments described the competitiveness of PPG when we combine a good mine asset, processing expertise and experience in Argentina to deliver both low capital intensity and competitive operating cost. On the left, you can see the breakdown of Stage 1 capital cost. The total investment is about $1.1 billion or 50,000 tonne operation.

Roughly 41% of that is tied to the process plant, including DLE. Here, we are able to build in modules of 10,000 tonnes and leverage our supply chain and expertise in China.

Next, around 30% goes into wells and evaporation ponds. Here, both Ganfeng and LAR have significant experience building and operating ponds from Mariana in Salta and at the nearby Cauchari-Olaroz. Finally, 22% is for the infrastructure, power, roads and the tailing facilities. For comparison, Stage 1 at Cauchari-Olaroz was completed for just under $1 billion.

So this represents a comparable scale up of an operation with similar brand and the benefits of new processing technologies to reduce the overall size of ponds and processing needs. For all 3 stages, it's estimated that the total 150,000 tonnes will require a total capital investment of approximately $3.3 billion phased over several years. On the operating cost structure, PPG is expected to be similar to where Cauchari-Olaroz is today at around $5,000 per tonne.

We continue to look for ways to optimize and lower this cost further by leveraging synergies with our existing operations in Argentina, processing efficiencies and scale. What's important here is that those numbers aren't just competitive. They are based on proven operating experience, new technology, optimized ponds to plant integration and efficient reagent use. All this keeps both capital and operating costs competitive. We are maintaining flexibility across different lithium price environments.

Carlos Galli, VP of Growth and Innovation from Lithium Argentina will now discuss the PPG resource.

Thank you, Jason. What makes PPG truly unique is it's part of a connected system fed from 2 adjacent basins, Pozuelos and Pastos Grandes, each with similar geology, hydrology and brine chemistry. By combining them, we've created a single project with both grade and scale.

Over the past 3 years, our teams have completed one of the most comprehensive exploration programs in the Puna region of Argentina. This combines with experience from previous owners and collaboration with Ganfeng, we have been able to take advantage of different work and methodologies, including that of the oil and gas industry, which is different from typical mining approach to Salars, and our studies incorporate the sophisticated and modern techniques.

From this data, we now understand how these 2 systems evolved and why they complement each other so well. Pastos Grandes is a large deep basin that formed around 3 million years ago with substantial and drilled potential at depth and along it margins, while Pozuelos, on the other hand, is shallower and wider Salar, which has led to higher lithium grades and good brine availability.

Together, these 2 systems host an exceptionally large and well-defined resource, over 15 million tonnes of measured and indicated LCE resources and additional 6.7 million inferred tonnes. Along with these works done to explore the lithium resources, Lithium Argentina and Ganfeng have deployed significant efforts to gain a unique understanding of the water system in the basin using innovative and sophisticated methodologies and techniques.

This also brings confidence to the possibility of developing in a sustainable way, a large-scale production system. The key takeaway here is that PPG stands on its own as a remarkably strong geological foundation. This level of technical confidence combined with basin control positions us to move rapidly and ultimately to derisk product execution during development.

This chart really puts the scale of the combined PPG project into perspective. It compares the major lithium brine resources by basins across South America, and you can see how Cauchari-Olaroz and now PPG, both compare here in green, firmly position our JV projects among the largest brine resources globally. It is also one of the few basins that has been largely consolidated.

This kind of scale and brine chemistry is what underpins the strong project economics, including low operating costs and low CapEx and long-term growth potential that was highlighted earlier by Jason. It's what enables us to plan for meaningful stage development with significant expansion potential over time. It is also worth emphasizing that while Pozuelos and Pastos Grandes appear as morphologically separate basins, our upstream geological work has shown that they are remarkably similar geological histories and brine chemistry.

Both were shaped by the same tectonic and hydrological processes, meaning that they effectively evolved as part of a single connected geological system. The shared origin is what makes combining the 3 projects across these 2 Salars into 1 integrated development such a logical and value-driven step, maximizing capital efficiency, enhancing scalability and derisking development on a basin-wide scale.

We continue to focus on innovation and process improvement, building on the success of Cauchari-Olaroz while incorporating new technologies for further improving efficiency and sustainability. The new hybrid technology that we are advancing for PPG as well as for Cauchari Stage 2 removes the requirement for several processing components that are currently used at our Stage 1 operation.

The new design maintains the core advantage of solar evaporation, but it integrates lithium solvent extraction technology to enhance recoveries, reduce water and energy use and simplify the downstream processing needs. The process of PPG will eliminate several intermediate steps from the Cauchari-Olaroz flow sheet, including liming and post-liming ponds and multiple purification stages.

Instead, it introduces a series of closed-loop solvent tanks where lithium is selectively extracted and purified in a more controlled environment. This approach utilizes new DLE technology developed by Ganfeng in China that has been tested on our brine. While this processing technology for Argentina, they are mature for China and integrate well given our specific brine characteristics and hybrid approach leveraging benefits of our abundant solar radiation.

In short, the proposed hybrid DLE process combines the proven benefits of evaporation where it works best with modern extraction techniques, improving efficiency, reducing environmental impact and positioning PPG as a next-generation lithium operation.

Over the course of 3 distinct phases, we expect PPG to become one of the largest lithium operations globally. We are taking a disciplined staged approach, starting with 50,000 tonnes per year in Phase 1 and ultimately expanding to 150,000 tonnes of lithium carbonate equivalent as Phase 2 and 3 come online.

Each phase will build on the next, capitalizing on the synergies of the Salars and original projects to achieve significant scale with a target of lowering unit costs and optimizing capital efficiency. The processing plant for all 3 phases is designed to be built at Pozuelos, leveraging shared infrastructure. The first phase will use brine from Pozuelos, which is slightly higher grade and advanced in terms of both production wells and permitting.

The following phases will bring in concentrated brine from the larger Pastos Grandes resource as well as water necessary to support our larger scale plants. Together, by consolidating and integrating the 3 projects, this provides significant synergies and allow us to optimize for much larger and efficient production scale.

As we transition towards execution, our focus is on maintaining a disciplined path towards construction, leveraging our learning from Cauchari-Olaroz and Mariana. We are very pleased to have received environmental approval for Stage 1 of PPG on Friday.

This is a critical milestone that require a rigorous 14-month review and proves that the PPG project meets the highest environmental and social standards required in Argentina. We engaged early with provincial regulators in Salta and communities on PPG, ensuring that our studies and designs and new technology meet or exceed both Argentina and international standards.

All of those steps put us in a strong position to be able to start Stage 1 construction in the second half of 2026 and allow us to achieve first production before 2030.

Thanks, Jason. As we wrap up, we're excited to begin sharing more details and increasing our focus on long-term growth. This does not change our near-term priorities, disciplined execution at Stage 1 and prudent management of our balance sheet. But as we advance our RIGI filings, we see this as a critical step in outlining Lithium Argentina and Ganfeng's shared vision and long-term value proposition in Argentina.

On PPG, with the receipt of environmental approvals, we will now work closely to further optimize our plans, derisk our execution strategy and finalize an updated hydrogeological model, integrating resources across both basins. In parallel, Lithium Argentina and Ganfeng are advancing a coordinated financing strategy designed to support the next phase of growth.

As we move forward, we'll maintain the same disciplined approach, prioritizing shareholder value, prudent capital allocation and strong alignment between partners. This is a pivotal moment for our company. It marks the beginning of a new chapter of disciplined growth built on the same focus, collaboration and execution that delivered success at Cauchari-Olaroz.

[Operator Instructions] Your first question comes from the line of Joel Jackson of BMO Capital Markets.

I had a question about PPG. So the capital intensity, $22,000 a tonne CapEx is very low. It's like half the capital intensity when you look at public project estimates out of other projects in Argentina, let's say, Rio Tinto Rincon or stuff in the States. I was wondering why is the capital intensity half the CapEx of other greenfield brine projects? And Xiaoshen how would you compare the economics of this project, PPG versus Mariana?

Thanks for the question, Joel. Maybe I'll start and then pass it over to Xiaoshen. So yes, the CapEx intensity is much lower than recent examples of chemical processing outside of China. I think part of the explanation here is driven by the quality of the resource. So the first phase of Pozuelos is benefiting from considerably higher grades upwards of high 500 milligrams per liter lithium.

So most similar to Cauchari-Olaroz. The CapEx also reflects the use of new processing technologies, which Xiaoshen can elaborate on, including SX-based DLE, which is designed and built in modular units, engineered and constructed in China with the support, obviously, of Ganfeng. So this technology is designed to help reduce pond footprint and simplify purification requirements. So I think those are the 2 major drivers towards the CapEx intensity.

But Xiaoshen, maybe you can elaborate on that and then also share your experience with Mariana and Cauchari.

Yes. Thank you, Sam. Yes, you're right. Actually, if you look at our projects in everywhere in the world, actually, we have a relatively lower CapEx density compared with other Western companies projects. So that's because of the Ganfeng. We have our own in-house engineering teams, and we have in-house process. So that's probably one of the reasons.

And also, we have built 2 projects in Argentina, which is not an easy place. We have lots of challenges, especially you don't have the existing human resources for the lithium projects in the region. So we are bringing some of the talent from China and together with our local teams successfully.

And to your question about comparison between Mariana and the PPG, I would say PPG has higher concentration of the lithium. Mariana has lower, but Mariana has a much higher pumping rate. So each one has their own advantage. And so both projects are good projects.

Okay. And then following up from that, and by the way to Cauchari-Olaroz as well, I believe at some point in 2026, you're going to test this hybrid Pond plus DLE system with a small plant at Cauchari-Olaroz, I think it's 2026.

And can you talk about as you progress PPG here, will you wait for results on that pilot or demo plant at Cauchari-Olaroz to learn what it looks like in Argentine brine before you move out PPG, so you get more refined estimates for PPG and see how effects Cauchari-Olaroz as well?

I don't think we have to wait. We don't need to wait. Sorry, sorry, Sam. Go ahead, please.

No, I was just going to -- I was going to say the demo plant is obviously a really important derisking step for this new technology being incorporated into our production process, both at Stage 2 and PPG. But clearly, we expect this to be done in a way that will integrate with the broader construction time line. But Xiaoshen, maybe go ahead and you can share on the confidence Ganfeng has in this technology and what's been done in China.

Yes. We have projects -- commercial projects in China using this DLE technologies already. many times test on the PPG brine. So we think PPG brine, we don't have to wait until the final results from the Cauchari project, the DLE project. Maybe, Jason, you have anything to add?

Yes, Justin, just as you said, it's a proven technology. And so we don't have to wait for the demonstration plant from Cauchari. And actually, this is a hybrid. This is a hybrid process combined with ponds and the salt extraction. So the salt extraction process is proven in China in commercial scale and also like actually it's more simplified process.

And I will say like technically, it's like even like a simpler and straightforward. So yes, we are going to just like go ahead to like start the construction once like we have the permitting, financing and other things ready on Cauchari -- on PPG project.

Your next question comes from the line of Katie Lachapelle of Canaccord Genuity.

First off, congrats on the release of the scoping study and the environmental approval. I was just wondering if you could provide a more detailed overview of the permitting of the asset, what additional permits, if any, are required? And then maybe with having Jason on the call, I'd love to hear his vision about the progression of the PPG project and how you guys balance priorities going forward in PPG versus Cauchari-Olaroz Phase 2?

Thanks, Katie. Maybe I'll take the second part of that question and turn it over to Jason to comment on permitting. I think from a sequencing perspective, the fact is both these projects [Technical Difficulty] market needs, low cost, being driven forward by a proven operating team in Argentina. And so for both, we're advancing similar RIGI application time lines, which is the first half of next year.

From a development standpoint, we expect these projects to be broadly comparable, each with distinct advantages. So for PPG, obviously, it's further ahead. The permit was secured last Friday. and it also benefits from very significant historical investments that Ganfeng has carried out on well fields infrastructure and then further benefits from the advantages of Pozuelos being considerably higher grade. I'd say for Exar, we're obviously also advancing a RIGI application.

We expect to have a development plan similar to that for PPG first half of next year. And we'll provide more visibility on the sequencing into 2026. But as a general statement, we're confident both assets provide meaningful flexibility and optionality to both Lithium Argentina and Ganfeng. The how and the when of this growth is underpinned by responsibility to our shareholders and maximizing shareholder value.

So maybe, Jason, answering the first part of the question, which was related to permitting and what else is required to push ahead with the PPG project.

Yes, Sam, yes, for starting construction of PPG, of course, the most important in Salta province is to obtain the approval of the DIA, which is the environmental permit. And as Sam said, we obtained that approval last Friday. And we submit the DIA application in September 2024, and it takes us like 14 months to work through the technical approval and environmental approval and also the community consultation and finally, public hearing.

So 14 months, you can see it's like a record like fast approval procedure, and we have achieved compared with other peers in this region. So we can see this project is technically sound and well received and supported by the local government and the communities. So looking forward, what else like what other permits do we need? Actually, with this, we can start the construction immediately.

But there are two more things important we need to obtain. One is, as Sam said, we need like to apply for the RIGI, and we are working on that. We started the communication with the national government already. So the RIGI application will be submitted in Q1 next year, and we anticipate it won't take long to be approved, maybe a few months by estimation.

That is one thing. With that, we can start the construction of the project. And one more thing is like we need like also to obtain the water permit. And so that's like we are already working on the water balance, and we just need to drill more water wells. And because this salt extraction process, will require much less water consumption. So we don't see it a problem compared with other process, the water consumption is the lowest. So that's like two more things we need for PPG project on the permit side.

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

I have a few quick ones, if that's okay. So the first question is the overall CapEx for PPG is $3.3 billion for all 3 phases, exactly 1/3 of that for the first phase. I would have thought there would be some economies of scale and Phase 1 would be a little more expensive and 2 and 3 would be a little lower. Can you just talk about that?

Thanks, Ben. Yes, the CapEx for the entire project in each phase represents the benefits of scale, but the brine characteristics do change over time. So the CapEx for Phase 1 does incorporate infrastructure expenditures that will extend across all 3 phases.

But as you go to Phase 2 and Phase 3, which will be sourcing brine from Pastos Grandes, it comes at a lower concentration. And therefore, the number of wells and the size of the ponds increase. So there is a bit of a trade-off there, and that explains the...

Sorry, the second point is on the SX plant itself. This is done in like a modular unit, so you don't see the same kind of economies of scale you would see in other projects.

That's helpful. Moving on, for Cauchari, I believe GEMSA has what, an 8.5% interest. What is the likelihood that Salta would somehow require some stake? And is there a negotiation on that? And how should we think about the dilution impact of that?

Maybe, Jason, if you want to take that one.

Yes, Sam. So yes, we know, Salta province, like they have no intention at all to negotiate a stake. And we don't -- we didn't even touch that point, and we didn't like -- we have a good communication with the provincial government. And we didn't see the provincial government of Salta wanted to bring that up to any recent projects or like mining projects in Salta so far.

Great. And then if I can just switch quickly to Q3. So your cash costs were just a touch higher, about 3% higher to about $6,300. Production was a couple of hundred tonnes lower. Can you just talk about was the reason -- had production been stable? Would the cash costs have been flat? Why did the cash cost increase? And why did production take a little dip down?

Yes. I mean the two are very much related. So we had slightly lower 200 tonnes less production than Q2. So that does increase the unit costs. I think from a production standpoint, we're still making optimization changes. These are small, but from a month-to-month basis, do increase some variability. I'd say the optimization efforts that we've made in Q3 -- or sorry, Q2 have delivered.

So 3 in the last 4 months, we've been operating above 90% capacity. And obviously, when we're pushing volumes up, we see the kind of a relation to costs coming down. So on the cost side, yes, slightly higher than Q2 due to -- largely due to the slightly less volume, but we're seeing costs continue to trend down.

Great. And if I can just throw one last one in there. So just back to the PPG project. Can you just talk about, Sam, how do you envision minimizing equity dilution risk for large shareholders in terms of the capital structure and funding your 1/3 portion of Phase 1 of PPG?

Yes. I would highlight that Lithium Argentina has a pretty strong track record of executing strategic and disciplined financing. And so if you look at, for example, how we funded the $1 billion investment into Stage 1, we did this thoughtfully. We leverage partnerships, offtakes, project-level debt to minimize shareholder dilution. We're certainly going to take the same disciplined approach here as we advance our growth plans.

One of the differences today, obviously, is we're doing so from a much stronger position, having successfully brought on Stage 1 into operation, having Argentina's RIGI investment framework, a more mature lithium market. And more specifically at PPG, under our agreement to consolidate these 3 PPG assets, Ganfeng and LAR have committed to working together to secure third-party capital to finance Stage 1 development costs. We'll do this by leveraging Ganfeng's global customer relations and access to low-cost financing.

So we're obviously going to be very responsible in terms of how we do this. We see a tremendous amount of value in the projects that we have, and we'll be very disciplined and careful to ensure that shareholders are rewarded and avoid dilution.

Your next question comes from the line of Corinne Blanchard of Deutsche Bank.

Sorry if I missed it, but could you talk about what would be the IRR like the return if you were to be using market price and the $18,000 per kilo per tonne? And maybe if you can talk also about the rationale of using the $18,000 given where the market is trading at.

So yes, the sensitivities around that at today's -- well, at $12,000 per tonne, I think we're close to that today in the spot market in China. The project would have a 20 -- over 20% IRR. I think the rationale for choosing 18 is, one, it's aligned with third-party forecast and Street consensus. And it seems to be a level that would seem to be required to incentivize enough production over the next decade.

So it's a price level at which would result in a 15% IRR for kind of the last marginal project contributing to that 1 million tonnes. But seeing that we have Xiaoshen on the line, maybe I can turn it over to you, Xiaoshen, and just comment on the use of $18,000 per tonne as a long-term price and how that squares with how you're seeing the market today and how you're seeing the lithium market evolving over the next 5 to 10 years.

I know it's a difficult question, but I think you're pretty well positioned to provide some perspective.

Yes. Thank you, Sam. Yes. I think if you look at it from the demand side and also the supply side, the demand side is still a very strong growth and not only the EV, but also the energy storage. This is what we see probably in the future, even bigger than EV demand for lithium. So that's one thing from demand side. From the supply side, we see lots of uncertainty for those projects on the pipeline.

And we know the lead time for develop those projects takes quite longer time. I also talked to some of the people from in Chile to get the environmental permits for new project at least it takes 5 years. So that's the reason we think $18,000 is, I think, is reasonable for long-term pricing. Even today is still tough. But if you look at China today, the price has been increased 6%, 7% already for the lithium carbonate.

So that's -- we believe $18,000 is reasonable. If you also consider there is other companies, new projects on the pipeline in -- for instance, in Australia and for some other projects in the U.S. or Canada, all those projects, we believe that they probably will require much even higher price to incentive them to build those projects.

Maybe if I can ask a second one, just more on the quarter. What about an update on the material quality? So I know that you still have that discount for like purity removal. Can you just talk again what the expectations are in terms of timing to come to like a battery grade here?

Yes. I mean this year was about operating stability. So we're very pleased with what we're seeing at the plant. There has been some gradual improvement in the quality of the product. And based on the current pricing and reprocessing arrangement we have with Ganfeng, the reprocessing costs are quite low.

I think longer term, looking out to back end of '26, '27, Ganfeng and LAR are very much aligned in the ability to be able to supply global customers directly. So obviously, that would mean that we would need to deliver battery-grade product. So it's still in the vision. We're not there yet, but we're making gradual improvements towards that goal.

Your next question comes from the line of David Deckelbaum of TD Cowen.

Congrats to everyone. I was curious just with the PPG phase development approach. It looks like every phase is between 4 and 5 years apart from each other. Is that flow sheet constrained? Or is that theoretically market and finance constrained? How are you thinking about the timing of Phases 1, 2 and 3? And it doesn't seem like necessarily there's a change in the assumptions around cadence of bringing projects online post permitting.

Thanks for the question. No, I think it is theoretical and finance constrained. But Jason, feel free to provide your view.

Yes. Yes, Sam, you made a very good point. And just add a few more is technically, we think it's like we have one team continue to work on one project, finish it and bring the line and check everything, ramp it up and then we move to Phase 2. That's like more -- let's say, it's more like smooth. So that's just one thing.

Another thing is like each phase -- for each phase, Phase 2, Phase 3, we also need like to obtain the construction permit and the provincial government would like to see we construct the Phase 1 first and then move to Phase 2 and then Phase 3.

Appreciate that. And then, Xiaoshen, if I could ask you a question. You remarked earlier that perhaps you could see that we're in the early stages of ESS, but you think it could be larger than the EV market. Could you provide some more color around that?

When do you think that the market is going to see this grand inflection on demand for energy storage, particularly on the lithium side? Is that something that you anticipate in the next decade? Or is that something that you think is going to be more impactful sooner?

Yes, probably will be sooner. But even for the EV, today, people only focus on the passenger cars, but actually in China, not only the passenger cars, but all kind of transportation now is becoming electrified or going to be electrified in the next several years. If you look at the heavy-duty trucks, this year, the electrical heavy-duty trucks grows more than 100% compared with the same time last year.

So we know -- of course, energy storage will have a higher -- much higher growth rate. But even for the motive batteries is also growing. And in China, the next several years later will be also another new demand for the boat, for the vessels will be also electrified. So it will be -- so it's difficult to predict which year energy storage will be take over the demand, but we see probably within 10 years, we believe that will come.

Your next question comes from the line of Mohamed Sidibe of National Bank.

Congrats on a good scoping study here. Just a question in terms of timing. I guess you're targeting construction by the second half of 2026. Are there anything on the detailed engineering front that we should be thinking about that are on the critical path that would further derisk that $1.1 billion CapEx over the next, call it, 6 to 12 months?

Thanks for the question. Maybe I'll turn this one over to Jason.

Yes. So a few factors are very critical on the construction time line. And one is like the engineering. And right now, like we pretty much finished all the detailed engineering for the pond and well field area. So that has like we will have all the drawings by end of this year. So -- and meanwhile, we are working on the process -- detailed process, the internal in-house engineering team is working on that, and we will have that ready early next year.

So you will see like on the engineering side, we are good. And also like another important is like the DIA, the construction permit, the environmental permit, we already have it last week. And the next 2 factors, one is like financing, hopefully like we will have it the first half next year and also RIGI, as we discussed, and we will -- we may have that approval by Q2 -- end of Q2 or early Q3 next year.

Then with all those like key points, key milestones, we are ready to start. And that's why we see we're going to start the construction in second half next year.

Great. And then maybe a question for both Sam and Wang here. Just in terms of the sequencing of projects, how should we think about Cauchari-Olaroz Stage 2, maybe Mariana Stage 2 and PPG Stage 1 in terms of sequencing of projects? Could this be undertaken at the same time? Or it's more of a phasing approach for each of them, one coming after the other?

Sure. I'll answer first, but won't comment on Mariana. That's a Ganfeng 100% owned project. Yes. I mean for Exar Stage 2, Cauchari overall Stage 2, the plan right now is to prepare a RIGI application and a development plan to align with that RIGI application, which will be submitted in the first half of 2026.

I think, obviously, coming back to one of the questions earlier about just how we're going to finance this, it's important to note that for PPG, we're both looking at third-party capital. Likewise, for Stage 2, I think there are different set of circumstances around options to finance that given that we have an existing operation for Stage 1. But underlining it all is like the how and the when of growing this, we're going to be extremely responsible for our shareholders.

So that's from a financing perspective. From a team's perspective, I mean, Jason down in Salta, he's built up an incredible team who have just completed Mariana, and it's a separate team to Exar. So I think from a personnel standpoint, we do have a good chance of advancing them in parallel.

But obviously, we're going to be able to share a lot more early next year around our -- defining our development plan for Exar and be able to share a lot more in terms of visibility on specific sequencing steps for both projects. I don't know if, Jason, you want to share on Mariana. I think there was a question about Stage 2.

Yes. Right now, Mariana is still working on the ramp-up stage for the Stage 1 -- and it's going good. It's been good. And regarding Stage 2, the first thing we want to share is like Mariana recently, we just updated the resource estimation and the resource increased from $8 million to $13 million, up for more than 60%. And we still have a big potential in the deeper horizon because like we didn't drill deep enough.

Right now, most of the wells just reached to 350 meters. And actually, we can drill like much deeper. And Mariana is unique because the pumping rate is very big. So the resource is not a bottleneck for Mariana. So yes, indeed, we are planning for the expansion Phase 2 and Phase 3, and we plan to put a package and apply for RIGI, we will present that early next year.

And then we will look at the market condition and also like the construction progress of other projects such as PPG and Cauchari. And then we will analyze and finally decide what will be the time line for the expansion of Stage 2 and Stage 3 with Mariana.

Thank you. With no further questions, this concludes our Q&A session. We thank you for your participation. This concludes today's conference call. You may now disconnect.