Lithium Argentina (LAR) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, Aug. 11, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

• Vice President of Investor Relations-Kelly O'Brien
• Chief Executive Officer-Samuel Pigott
• Chief Financial Officer-Alexander Shulga

TAKEAWAYS

• Lithium Carbonate Production -- 9,280 tonnes in the second quarter, reflecting a planned maintenance shutdown completed in May 2026.
• Full-Year Production Guidance -- 35,000 tonnes to 40,000 tonnes for 2026, with the operation averaging 95% of design capacity in the first half of the year.
• Cash Operating Costs -- $5,897 per tonne in the second quarter, driven by higher energy costs, the impact of a stronger Argentine peso, and the planned shutdown.
• Average Realized Price -- $19,563 per tonne of lithium carbonate sold in the second quarter, representing a significant increase from $9,049 per tonne in the fourth quarter of 2025.
• Cash Operating Margin -- 70% in the second quarter, supported by cost discipline and improved realized pricing.
• Adjusted EBITDA -- $110 million at the project level on a 100% basis, representing a 4% increase from the first quarter of 2026.
• Total Project Revenue -- $174 million in the second quarter on a 100% basis, reflecting the impact of higher realized lithium prices compared to previous quarters.
• Free Cash Flow from Operations -- $141 million in the second quarter on a 100% basis, reflecting strong earnings and a drawdown of working capital.
• Joint Venture Net Debt -- $142 million as of June 30, 2026, representing a reduction of $114 million during the quarter.
• Joint Venture Distributions -- $160 million distributed year to date from the operation, with the company's share totaling $75 million.
• Subsequent Distributions -- $27 million received by the company after the quarter ended, with additional distributions expected in the second half of 2026.
• New Debt Facilities -- $220 million in new unsecured facilities at the project level, including a $170 million 3-year facility with an interest rate under 5%.
• Corporate Cash and Equivalents -- $99.7 million as of June 30, 2026, providing a stable foundation for corporate and development activities.
• Total Corporate Liquidity -- $230 million, which includes an undrawn $130 million 6-year debt facility provided by Ganfeng.
• Net Income Attributable to Shareholders -- $1.3 million in the second quarter, compared to a net loss of $4.1 million in the same period last year.
• Diluted Net Income Per Share -- $0.01 per share, reflecting the turn to profitability in the second quarter.
• Carbon Footprint -- 1.4 tonnes of CO2 equivalent per tonne of lithium carbonate, verified independently for 2025 Scope 1 and Scope 2 performance.
• Solar Power Usage -- 97% of energy for the production process sourced from solar power, contributing to low carbon intensity.
• Stage 2 Expansion Target -- 45,000 tonnes per annum of additional capacity, with an initial 10,000 tonnes per annum modular facility planned.
• Pastos Grandes Project (PPG) Target -- 150,000 tonnes per annum across three phases, leveraging a consolidated resource base.
• RIGI Investment Requirement -- $80 million in minimum required spending over the first 2 years for the approved Stage 2 expansion.
• Stage 1 Capex Efficiency -- Brought online for less than $1 billion and currently generating approximately $460 million in annual adjusted EBITDA at current lithium prices.

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RISKS

• Pigott noted that higher energy costs and a stronger Argentine peso contributed to a modest increase in cash operating costs during the quarter.
• Pigott stated that a planned maintenance shutdown in May 2026 "resulted in I guess, a few hundred tons less production" during the period.

SUMMARY

Lithium Argentina AG (NYSE:LAR) management reported consistent operational execution at the Cauchari-Olaroz project, emphasizing a low cost profile and the prioritization of joint venture debt reduction. The company is advancing a modular expansion strategy that incorporates direct lithium extraction technology to accelerate initial production phases while maintaining a low carbon footprint. Strategic initiatives include securing regional tax incentives and exploring a secondary listing to diversify global market visibility and investor access.

• CEO Pigott noted a shift toward a modular Direct Lithium Extraction (DLE) approach for the first 10,000 tonnes of Stage 2 to leverage Ganfeng's equipment fabrication expertise.
• Lithium Argentina AG is evaluating a secondary listing on the Australian Securities Exchange (ASX) to complement its existing NYSE listing and improve visibility for Asia-Pacific investors.
• CEO Pigott stated, "The operation has averaged 95% design capacity, and remains firmly on track to achieve production guidance."
• PPG project development is contingent on RIGI approval, which the company expects to receive by the end of 2026 following its submission in the first quarter.
• CEO Pigott highlighted the low carbon footprint, stating that approximately 97% of the energy used at the operation comes from solar power.
• CEO Pigott noted that the debottlenecking effort involves installing two or three additional wells over the next 6 to 8 months to increase brine flow.

INDUSTRY GLOSSARY

• RIGI: Regimen de Incentivo para Grandes Inversiones, an Argentine investment framework providing fiscal stability and tax benefits for major projects.
• DLE: Direct Lithium Extraction, a technology used to extract lithium from brine more efficiently and quickly than traditional evaporation ponds.
• LCE: Lithium Carbonate Equivalent, a standard industry unit for measuring quantities of lithium products.
• PPG: Pozuelos-Pastos Grandes, a consolidated lithium project in Salta Province, Argentina.
• JEMSE: Jujuy Energia y Mineria Sociedad del Estado, the mining investment company owned by the provincial government of Jujuy.

Full Conference Call Transcript

Operator: Hello everyone. Thank you for joining us and welcome to the Lithium Argentina Second Quarter 26 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press Star 1 to raise your hand. To withdraw your question, press Star 1 again. Will now hand the conference over to Kelly O'Brien, Vice President of Investor Relations. Kelly, please go ahead.

Kelly O'Brien: 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 26 results is Samuel Pigott, CEO of Lithium Argentina. Alexander Shulga, our CFO will also be available for Q&A. Before we begin, I would like to cover a few items. Our second quarter 26 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 and A and news releases. I now turn the call over to Samuel Pigott.

Samuel 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 thousand per ton, 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 is Lithium Argentina's 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 $19.5 thousand 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 have 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 thousand-40 thousand tons. 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 thousand ton capacity. Moving to costs. Year to date, cash operating costs have averaged around $5.6 thousand per ton.

Second quarter costs came in modestly higher due planned shutdown, higher energy costs, and the impact of a stronger peso. Since start up, we have brought cost down from roughly $8 thousand per ton to a consistent sub-$6 thousand level. Driven by ongoing process improvements, cost reduction efforts, and the inherent advantages in the design of our brine based operation. 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, $110 million of adjusted EBITDA generated in the second quarter translated into $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 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, 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 $27 million in distributions from Cauchari-Olaroz 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 lithium prices, of $20 thousand per ton, 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 would 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 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 used in 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 are taking a phased approach, building on the strength we have 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 RIGI approval in the second quarter, we are 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 thousand tons per annum at the first phase of the broader 45 thousand-ton-per-annum expansion. Turning to PPG, we continue to wait for the approval of RIGI. Which was submitted in Q1 26, and is expected later this year. In parallel, we have made significant progress with our partner, Ganfeng, on the financing plan for PPG including discussions with potential minority strategic partners. Across both stage 2 and PPG, 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 are 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 will open the call for questions.

Thanks.

Operator: Will now begin the question and answer session. Please limit yourself to 1 question and 1 follow-up. If you would like to ask a question, please press Star 1 to raise your hand. To withdraw your question, press Star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Mohamed Sidibe from National Bank. Mohamed, your line is open. Please go ahead.

Mohamed Sidibe: Good morning, Tom and Tim, and thanks for taking my question. And good to see the 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 shuts expected, and as well as any catch up in sales Given the lower sales versus production in Q2? Thank you.

Samuel Pigott: Yeah. On the production question, Rito. We do not have any plan maintenance shutdown, so we expect production to be very strong throughout the back half of the year. On the sales, it is really a timing issue. Between production when those get translated into sales and depending on when the quarter ends kinda cuts it off. So I think you will see stronger sales through the back end of the year as well.

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

Joel Jackson: Hi. Good morning, everyone. Samuel, obviously, lithium market's volatile at the best of times. We have seen a quite strong rebound in lithium prices. Now things have come down. We had seen some restarts from companies. We have seen like yourself and 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's faring, how assumptions have changed versus 6 months ago? Thanks.

Samuel Pigott: The mean, we have a huge amount of conviction in our projects. And, again, Ganfeng and LAR view the expansion at Cauchari and PPG is 2 of the most attractive growth projects in the market today. You know, that view is largely founded on the success we have had at stage 1. You know, it is a project that we brought online for under a billion dollars Today, it is generating a 100% basis, like $460 million of EBITDA it is 1 of the lowest cost producing assets in the world. So there could not be more conviction in our suite of assets.

And I, you know, I think that the way we are we are approaching both is in a disciplined manner. So, I mean, we talked a lot about kind of PPG. Obviously, we have a development plan down on that shows the economics really very robust project, but we also talked about you know, 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.

You know, our view is the market is growing fairly 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, you know, evidence of our ability to execute and lends to the conviction and continuing to grow in Argentina with GANFANG.

Operator: Your next question from the line of Anthony Taglieri with Canaccord. Anthony, your line is open. Please go ahead.

Anthony Taglieri: Hey, guys. Good morning. Thanks for taking my questions. Maybe just on operating costs. So last quarter, we would have talked about sort of full year operating costs in that mid-$5 thousand-per-ton range. Obviously, there is some cost pressures this quarter, energy cost, that sort of thing. Like, is this is this gonna 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?

Samuel Pigott: Yeah. I mean, Q2, obviously, we had a plan shut down. Which resulted in I guess, a few hundred tons less production. So operate in 93% operating capacity, that does have an impact on our cost. In terms of, like, structural changes to our cost profile, we do not see anything. You know, 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 know, that mid you know, $5 thousand per ton is still kind of how we are how we are tracking through the through the rest of the year.

I think into next year and the years after, know, the view is as we kinda continue to debottleneck, push the plant to 40 or above you know, that there is room for those costs that come down even further. So, I mean, we are we could not be happier with how the operation's running. It is it is pretty remarkable, and I think you know, that the noise quarter over quarter in terms of 8% increase in costs in a in a quarter. We have planned maintenance shutdown, I think, is, you know, overshadowing the fact that this is a business with 70% operating margins that generated, you know, $141 million of free cash flow from operations.

I mean, we could not be more pleased with how the operation's going and how our teams at Exar are performing Just really kind of you know, world class.

Operator: Your next question from the line of Corinne Blanchard with Deutsche Bank. Corinne, your line is open. Please go ahead.

Corinne Blanchard: Hi. Good morning. Good morning. I want Maybe can you talk about the timing for stage 2? So I think 1 of the study scope or, like, pre feasibility study also is now expected end of. I think you already expected for, like, media. So just maybe wondering if there is a slight delay then is that the case? What caused it? And just in general, like, what can we expect over the next 6 to 12 months of stage 2? Thank you.

Samuel Pigott: Yeah. I mean, I do not I do not know if it is really slipped. I think we got it to midyear You know, I think we are just aligning with Ganfeng to make Now we got into before the end of Q3. sure what we present here is going to be something that we can execute on immediately. And a part of it will you will see in the in the plan when we put it out, but it will be you know, it will contain a lot more details in terms of these early works that we are engaging in now to be able to accelerate the expansion in a phased approach starting with 10 thousand tons.

So I, yeah, I would not flag it as a delay in any sense. You know, us and Ganseng are very, you know, very keen to get moving. That the RIGI 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 I think you will be very pleased to see the report. I think the entire market and the industry will be impressed.

Operator: Your next question from the line of Ben Isaacson with Scotiabank. Ben, your line is open. You may now go ahead.

Ben Isaacson: Thank you very much, and good morning. Samuel, can you talk about the debottlenecking 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? Thank you.

Samuel Pigott: Thanks, Ben. Yeah. Yeah. The debottlenecking effort is a function of us through experience being able to push major parts of the plant beyond 40 thousand 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 and in terms of debottlenecking. Like, 1 example would be putting in a few additional wells to get more brine to push through the plant. So it is not it is not overly expensive.

A typical well runs somewhere less than $3 million, about 2.5 million, and we are talking about maybe the need for, like, 2 or 3 of those over the course of the next 6 to 8 months. So it is it is, it is it is pretty low hanging fruit and it does not carry a significance investment. And, obviously, investments that can push production up 2,000 to 3 thousand tons, well worth doing. So I hope that answers your question. And from a timing perspective, I mean, we are we are engaging in these early works kind of now.

So you will see very modest kind of capex spend over the next 6 to 10 months, and the results should flow through you know, into 2027-2028.

Operator: Your final question from the line of Ishan Jain with HSBC. Ishan, your line is open. Please go ahead.

Ishan Jain: Good morning, everyone. I just have a question around the PPG. You have been looking for a partner or an offtake agreement. Anything of for the financing of the project. Is there any progress on that front, or are you looking to secure a promise before you get into any kind of partnership? Thank you.

Samuel Pigott: I mean, we have had a lot of progress on that front. I think the major the major milestone will be the RIGI approval for PPG. 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 is something that we submitted in Q1 26. So the expectation and the dialogue with the authorities is very positive, and expect to have it by the end of the year, and that will be kind of a key a key milestone. For the process.

Operator: Another question from the line of MacMurray Whale. With ATB Cormark. MacMurray, your line is open. Please go ahead.

MacMurray Whale: Hi. Good morning. I am wondering, Samuel, when you look at the DLE for the phase 2 or stage 2, does that require anything in terms of CapEx into the pawn structure, or are you able just to bring 10 thousand tons per year online and not really have to invest at all in sort of the ponds. Some of the infrastructure will borrow from we have already built with stage 1. Okay. So I guess we will get more of this when you come out with the actual plan, but I was just curious. as that seems a relatively modest capex. to begin with on stage 2. Relative time to get that up and running. Right? Yeah. Okay.

We will have a lot more, obviously, information with the development plan, but it is, yeah. It is very attractive in terms of CapEx intensity to get additional tons. Right? And really allows you to lever all that CapEx spend on the pond structure. Right? Exactly. Yeah. And then in terms of, you look at distribution, let's assume pricing stays roughly where it is now. Do you expect this level 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 Minera Exar level? Nope. Nope. Okay. Nope. Minera Exar has $100 million of liquidity.

So we expect distributions. If prices remain where they are, distributions to be you know, similar to the first half, potentially higher. Right. Okay. Okay. Great. that is all my questions. Thanks.

Samuel Pigott: Okay. Thanks, Mark.

Operator: This concludes our Q&A. There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

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