Lithium Argentina (LAR) Q1 2026 Transcript

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DATE

Tuesday, May 12, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Samuel Pigott
• Chief Financial Officer — Alexander Shulga

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TAKEAWAYS

• Cauchari-Olaroz Production -- 9,700 tons of lithium carbonate, averaging 97% of nameplate capacity, maintained for two consecutive quarters.
• Cash Operating Cost -- Below $5,400 per ton in the quarter, positioning Cauchari-Olaroz among the lowest-cost lithium producers globally.
• Realized Pricing -- Just under $17,000 per ton, rising from just over $9,000 per ton in the prior quarter.
• Distributable Cash -- $100 million distributed from Cauchari-Olaroz JV year-to-date, with $48 million attributable to Lithium Argentina AG, strengthening the balance sheet.
• Adjusted EBITDA -- $106 million, surging more than threefold from $30 million in the previous quarter.
• Production Guidance -- 35,000 to 40,000 tons for the year, with guidance remaining unchanged and flexibility to optimize output.
• Price Differential -- Realized prices carry a 6%-7% discount to reference market prices, expected to narrow as product quality improves.
• EBITDA Sensitivity -- Management guided full-year EBITDA at $460 million to $630 million at current market prices of $20,000 to $30,000 per ton on a 100% ownership basis.
• Stage 2 Expansion -- Progress on regulatory approvals for a stage 2 capacity increase of 45,000 tons per year, with RIGI application potentially approved as early as the current quarter.
• PPG Project Milestones -- PPG’s Phase 1 permits secured, initial development phase targets 50,000 tons, ultimately scaling up to 150,000 tons over time; active exploration of bringing in a minority partner.
• Balance Sheet and Debt -- Net debt at the project level is below 0.5× annualized Q1 EBITDA after recent distributions; leverage profile described by management as "very comfortable."
• Cost Structure Details -- Diesel accounts for less than 3% of direct operating costs; company relies primarily on solar evaporation with minimal energy-intensive inputs.
• Sustaining CapEx -- Spending in the quarter was $4 million to $5 million, lower than normalized levels.
• Tax and Royalties Structure -- Export tax is net revenue-based, approximately 2.87%-2.9%, and provincial royalties are 3% of revenue minus C1 cost and some deductions; all these items are reflected in EBITDA.
• International Listing Plans -- Management is advancing a secondary listing on the ASX, with no associated financing or IPO planned.

SUMMARY

Lithium Argentina (NYSE:LAR) management described a surge in cash generation, citing the high conversion of EBITDA to free cash flow and reiterating the intention to reinvest in growth projects while maintaining minimal leverage. The company is prioritizing deployment of JV distributions primarily toward Stage 2 preparatory activities, with remaining cash earmarked for further shareholder distributions, and emphasized no immediate need for equity issuance. Regulatory advancement on both Cauchari-Olaroz Stage 2 and PPG is underway, with key permitting milestones imminent and a focus on de-risking execution through updated hydrogeological and resource models. The broader industry context was explicitly framed as favoring established, large-scale operations, as management highlighted increased demand from both energy storage and commercial EV sectors, creating supportive lithium pricing dynamics for the foreseeable future.

• Management reiterated that any capital investment in Stage 2 this year will be immaterial until full environmental permits are secured, a process not expected to conclude until at least 2027.
• Pigott stated, "we are always looking for ways to bring down cost" while maintaining the current published long-term cost target for Cauchari-Olaroz.
• Cash operating cost performance and minimal FX or inflationary exposure were described as being aided by the company’s low diesel reliance and an intercompany loan structure that leverages accelerated depreciation benefits.
• The ASX listing is intended solely to broaden investor access and has no bearing on capital raise intentions; management confirmed continued NYSE listing and is evaluating future TSX status.

INDUSTRY GLOSSARY

• RIGI application: Regulatory filing required to advance major stages of mine development and increase permitted lithium production capacity at Cauchari-Olaroz and PPG.
• PPG: Pozuelos-Pastos Grandes, a combined brine project under development in Salta Province, Argentina, targeted as a large-scale, staged lithium carbonate production asset.
• C1 cost: A mining industry term for direct production costs, excluding royalties and taxes.

Full Conference Call Transcript

Samuel Pigott: Good morning, everyone, and thank you for joining us. The 2026 represented another very strong quarter. As Cauchari-Olaroz continued to operate at or near design capacity, beginning to generate meaningful cash flow. During the quarter, production totaled about 9.7 thousand tons of lithium carbonate. With the operation averaging approximately 97% of nameplate capacity. A level we have been able to consistently run for the past 2 quarters. This performance also highlights the progress we are making on costs. First quarter operating cash costs were down again to just under $5.4 thousand per ton. Making Cauchari-Olaroz 1 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 have achieved with Stage 1 and in the opportunity to grow from here. On the left side of the slide, we have 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 thousand per ton for the first 3 months of the year compared to just over $9 thousand per ton in the fourth quarter last year. Combined with stable production and continued cost discipline, we have produced an over 3-fold 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 $5.4 thousand per ton. All 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 or 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 <3% of our direct operating costs.

I think it is 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 2-month lag between when these sales are made and when the cash is received at the operation. As we outlined, we are expecting >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 <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 and 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 thousand to 40 thousand 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 thousand to $30 thousand 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, 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, 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 thousand tons/year of production capacity.

1 of the key upcoming milestones is the approval of the RIGI application, which was filed late last year. We understand this is progressing well, 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 hydrogeological 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 mid year. Building off the success of Stage 1, the plan is expected to incorporate new technologies while leveraging Ganfeng's expertise.

Lithium chemical processing and modular construction capabilities in China to help optimize timelines 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 have 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 is important context as we discuss stage 2. We expect ongoing dialogue with the neighboring communities, 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 for getting up to 150 thousand tons of lithium carbonate production over time. Beginning with an initial 50 thousand-ton phase.

By combining 3 separate projects, we believe PPG will be 1 of Argentina's largest lithium operations. benefit from scale and synergies related to being a single operator across a 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. TPG 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, RIGI approvals, development planning, 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: Thank you. We will now begin the Q&A session. Please limit yourself to 1 question and 1 If you would like to ask a question, please press star 1 to raise your hand. Please remember to unmute your device. Your first question comes from the line of Anthony Tagliari with Canaccord. Your line is open. Please go ahead.

Analyst (Anthony Tagliari): What might be a good expectation for cash distributions coming from the JV for the rest of the year, just given, obviously, $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?

Samuel Pigott: Yeah. 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. You know, I think between prices of 20 to 30, it is, you know, EBITDA of $460 million to $630 million cash flow conversion of 90%. So you can see how the cash is gonna build within the business. I think the priority number 1 will be redeploying part of that cash into preparing for stage 2. However, it is certainly not gonna 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 is been termed down very low cost. Currently running at 0.5 times net debt kind of annualized Q1 EBITDA. So we feel very comfortable with that. I think we will continue to work and align with Ganfeng on making cash distribution throughout the year and also, you know, spending on early stage CapEx certainly after we get the rigging approval for stage 2 in preparation for the expansion that will be coming.

Analyst (Anthony Tagliari): Okay. Great. And maybe just following up with that. You know, assuming the approval comes soon, what could sort of CapEx expectations look like this year then?

Samuel Pigott: I mean, I think for the--so, full FID decision, that is gonna 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. Okay, great. Thanks for that. I will pass it on.

Operator: Your next question comes from the line of Joel Jackson with BMO Capital Markets. Your line is open. Please go ahead.

Analyst (Joel Jackson): Hi, morning. it is Evan on for Joel. Just wanted to discuss some of the puts and takes on the pricing discounts this year. So I know there is VAT and the quality discount, and if you do not mind to kind of discussing how that kind of flow throughout the year. And maybe if that is already steady state, what we are seeing in Q1.

Samuel Pigott: Yeah. I mean, for Q1, you know, what we disclosed was the--we are taking a 6% to 7% discount from reference prices. So these are reference prices stripped of Chinese VAT. I think looking ahead, there is 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 as we move into 2027, we have talked a lot about this in the past, You know, the objective of our partner and ourselves is to be able to supply lithium chemicals directly to customers without going through China.

And therefore, able to capture kind of the full spot price. So I think you can, you know, from modeling assumptions, I think the 6% to 7% discount from reference price you know, there is room throughout the year for that for that to improve.

Analyst (Joel Jackson): Okay. Thanks. Just a second 1. Both of your progress on Phase 2, with the RIGI expected soon. Anything new on PPG, or is that still similar as is the Min-Amb box update?

Samuel Pigott: Yeah. I, you know, I think we are making significant progress on advancing, you know, options, which we have many, to unlock value for this project. Including potentially bringing in a minority partner. it is 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 are 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 thousand-ton development plan for Pozuelos Pesuelos have been secured.

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

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

Analyst (Corinne Blanchard): Hey. Good morning, Sam. Good morning, Kelly. Maybe first, can you guys talk about lithium pricing? I mean, obviously, you got a good inflation plan for this quarter, and I think you should look at spot price and lithium futures a few days ago, that would imply to see another big jump in February and probably March. But would be great to hear where do you think that, that can go to for EBITDA in the next, you know, few months?

Samuel Pigott: I mean, predicting short term moves in lithium prices is a challenging business as you know. I, 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 as the market is extremely tight. So, yeah, I mean, pricing has continued to climb pretty aggressively since Q1 in our realized pricing. So you know, we feel pretty strongly that market will continue to the market demand will continue to support these higher prices in terms of, you know, where it reaches.

I am reluctant to provide that kind of granular forecast, but we feel very, very good about, you know, Q2, obviously, and throughout the rest of this year.

Analyst (Corinne Blanchard): Thank you. And then maybe for a second question, can you talk about I think you mentioned you wanted to be doing the ASX inclusion. Is that the only index that you are thinking of? Maybe for a secondary listing, or are you thinking anywhere in you know, Asia, like Hong Kong or so?

Samuel Pigott: I mean, I think, yeah. We have looked at all different avenues to try and broaden our visibility globally. And, you know, I think the ASX emerged as 1 of the strongest areas, I think, for lithium producers like lithium Argentina. I think it is a market that appreciates free cash flow and the cost profile of brines. And is also kind of taken notice of larger mining companies moving into Argentina and the change of the risk profile there. So, 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, you know, we are advancing a plan It could have us listed there. As early as midyear. But we should note this--you know, this is a secondary listing, and we are certainly not planning for any IPO or financing associated with this listing plan. But, you know, from all our research, it does indicate that, you know, the ASX would be would be a very supportive of a company like Lithium Argentina. And the low-cost brine profile that we would provide investors there. Thank you.

Operator: Your next question comes from the line of Santhosh Seshadri with HSBC. Your line is open. Please go ahead.

Analyst: Thanks for taking my question. ahead. 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 will say, the investor interest on given broadening the access? Is that the correct assumption?

Samuel Pigott: that is the correct assumption. Yep. And secondly, on the cost side, you did highlight, right, your long term target is a $5.4 thousand per ton cost. So is there scope of further improvement in this target, and could we expect it to further lower? Cost from the current levels? I mean, $5.4 thousand was the number that we put out at the beginning of the year. To reflect our existing cost structure at nameplate capacity, so at 40 thousand per ton. You know, I think we are obviously very comfortable in that assumption given that Q1 costs came in you know, slightly below that or in line with that even at 96.8% operating capacity.

So there I mean, I think there are opportunities longer term for us to look at ways to bring cost down, those probably come from elements of, you know, continuing to improve recoveries. Know, continue to optimize the plant. But at this stage, it is--you know, given 5.4 thousand was kind of a number we put out at the beginning of the year based on our existing cost structure. I think we will stick to that.

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

Operator: Your next question comes from the line of Shannon Gill with Cormark Securities. Your line is open. Please go ahead.

Analyst: Hey, Sam. 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 is the basis on pricing for that?

Samuel Pigott: Yeah. that is right. That so that reference price, the 20 to 30 is ex VAT. Okay. And then but then you are just putting in that pricing. You are assuming there is no further discount. In terms of generating those numbers. I just wanna make sure I am modeling-- No, no, that is modeling. Yeah, no. That would be an assumed discount as well. Okay. Okay. Can you also can you remind us how the royalty payment works? It seemed higher than I am modeling. I just wanted to check that I have got that correct. it is based off like, a gross profit number, gross profit number less depreciation. Is that correct?

Like, some percentage of that? that is broadly correct, but maybe I will turn it over to Alexander to provide a little bit more detail.

Alexander Shulga: Yeah, sure, Mac. So we have several taxes, royalties. We have export tax, export 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 is revenue minus certain expenses, like temporary imports for some of the reagents. that is net of export refunds approximately 2.87% and 2.9%. So that is kind of connected to revenue. that is 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 put it in a simple way.

So when you I guess, if we were to look at pricing like, this 12 and a half million on selling duties and royalties, kind of a bunch lumped in there. Some, I guess, is sort of more fixed but I am just trying to figure out how to parse this. This, yeah. there is a part that is percentage of revenue, and that is that is a part that is a fixed deduction from that. So, yeah, it is a bit of a combination, but significant portion is connected to revenue. that is why it jumps up.

So when we if we are trying to come up with an EBITDA number at the Cauchari-Olaroz level, that should all be negative to EBITDA. Right? So if we--is there should be nothing in there that is not in there that we would take out of EBITDA, would there? Or add back? No. Because all of this, we include in EBITDA. Right? So these 4 taxes, export refunds, expert funds, all of this is already deducted from EBITDA. Okay. Okay. So we should be looking at it, all things being equal. That level. There is not any onetime stuff in there. It should be kind of trending higher as pricing. Rises. Yes. that is fine. Yeah. Okay. Okay.

Just a few of those sort of housekeeping questions. Thanks. Guys.

Operator: Your next question comes from the line of Mohamed Sidibe with National Bank. Your line is open. Please go ahead.

Analyst (Mohamed Sidibe): Hi, Sam, Tim, and thanks for taking my question. Congrats on the strong numbers in the quarter. You reported pretty good cost in Q1 and appreciate your commentary on the long term cost there. I was just wondering if you could maybe provide us some color on inflation seen in country and potential FX impact It seems like you have been managing to offset most of that through your improvements, but any color would be, useful there.

Samuel Pigott: Thank you. Inflationary pressures, you know, I think, obviously, diesel prices globally have gone up. Know, Argentina is not immune. Luckily for us, you know, direct oil and gas, diesel, costs are <3% of our OpEx. So it is you know, there will be some inflation there, but it is very immaterial kind of piece of our cost structure. In terms of wages, yeah, I mean, there is constantly kind of fluctuations in terms how inflation's running versus devaluation and the impact on kind of, like, the dollar equivalent cost of peso labor expenses. But, again, those are, you know, those are somewhat manageable and all of that material.

So we feel very good about, you know, our cost profile and kind of our insulation against kind of broader inflationary trends globally.

Analyst (Mohamed Sidibe): Great. Thank you. And just on the ASX listing, maybe, you know, you clarified no plan on removing the New York Stock Exchange. What are your thoughts around the TSX? Is that something that is up for debate, or how do you look at that listing? Thank you.

Samuel Pigott: I mean, yeah. We are we are evaluating just kind of the puts and takes of obviously, the Australian listing, which I think as I described, you know, seems to be a market that would be, you know, supportive of bringing on kind of a brine exposure, which is something that is unique, not would not just be unique to the ASX, but I think really in terms of you know, pure play equity exposures in the brine space, it is a pretty limited pool of options that investors globally have. So, you know, I think without a doubt, the ASX would make a lot of sense. Yeah.

I think it is, you know, it is too early to commit to whether you know, we would consider dropping the TSX. We have to weigh pros and cons and so we will make that determination and provide further updates in the months to come. Great. Thank you.

Operator: 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.

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