Lithium Argentina AG Q1 FY2026 Earnings Call

Hello, everyone. Thank you for joining us, and welcome to Lithium Argentina Q1 2026 Earnings Presentation. After today's prepared remarks, we will host a Q&A session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. 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 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 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, updates 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 MD&A and news releases. I will now turn the call over to Samuel Pigott.

Good morning, everyone, and thank you for joining us. The first quarter of 2026 represented another very strong quarter. 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 two quarters. This performance also highlights the progress we are making on costs. First quarter operating cash costs were down again to just under $5.4 thousand per ton, 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 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 three 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 three-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 two-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 de-risk 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 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 de-risk 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 and lower 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 de-risking our Stage 2 development plan, which is targeting to add an additional 45 thousand tons 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 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. 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 we 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 three separate projects, we believe PPG will be one of Argentina's largest lithium operations and will benefit from scale and synergies related to being a single operator across a single massive lithium system. Our focus here is also to de-risk 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 de-risk our broader growth platform, which includes Stage 2 and PPG. These projects will benefit from the ongoing permitting progress, RIGI 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 de-risk the broader growth platform in Argentina.

Thank you. We will now begin the Q&A session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press *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.

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?

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, for the remainder of the year. Between prices of $20 to $30 thousand per ton, it's EBITDA of approximately $460 million to $630 million with cash flow conversion of 90%, so you can see how the cash is going to build within the business. I think the priority number one will be redeploying part of that cash into preparing for Stage 2. However, it is certainly not going to absorb all of that cash. For the remainder, I think the secondary priority will be to make cash distributions. The joint venture level debt profile has improved a lot and it has been termed down at very low cost. Currently running at about 0.5 times net debt on an annualized Q1 EBITDA basis, so we feel very comfortable with that. I think we will continue to work and align with Ganfeng on making cash distributions throughout the year and also spending on early-stage CapEx, certainly after we get the RIGI 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, for the full FID decision, that is 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. Your line is open. Please go ahead.

Hi, morning. 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 is VAT and the quality discount, and if you don't mind discussing how that kind of flows throughout the year. Maybe if that is already steady state, what we are seeing in Q1.

For Q1, what we disclosed was we are taking a 6% to 7% discount from reference prices. These reference prices are stripped of Chinese VAT. Looking ahead, there is room for improvement here. The consistency of our product continues to improve and 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: the objective of our partner and ourselves is to be able to supply lithium chemicals directly to customers without going through China and therefore capture the full spot price. So I think from modeling assumptions, the 6% to 7% discount from reference price has room throughout the year to improve.

Okay. Thanks. Just a second one: 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?

We are making significant progress on advancing options, which we have many, to unlock value for PPG, 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 mid-year, probably around the same time when we are providing updates on Stage 2 development plans. 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—have been secured. So it is just 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 capital required to fund the Phase 1 CapEx.

Your next question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is open. Please go ahead.

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

Predicting short-term moves in lithium prices is a challenging business. The read-through we get from our partner, who obviously has a tremendous amount of insights and touch points within China, is that the market is extremely tight. Pricing has continued to climb pretty aggressively since Q1 in our realized pricing, so we feel pretty strongly that market demand will continue to support these higher prices. In terms of where it reaches, I am reluctant to provide a granular forecast, but we feel very, very good about Q2 and throughout the rest of this year.

Thank you. And then maybe a second question: you mentioned you wanted to do an ASX inclusion. Is that the only index you are thinking of for a secondary listing, or are you considering anywhere in Asia like Hong Kong or so?

We have looked at different avenues to broaden our visibility globally, and the ASX emerged as one of the strongest options for lithium producers like Lithium Argentina. It is a market that appreciates free cash flow and the cost profile of brines, and has taken notice of larger mining companies moving into Argentina and the changing risk profile there. We obviously have no plans to remove the New York Stock Exchange listing. The ASX could be useful as we spend more time in Asia Pacific and Australia. On the ASX, we are advancing a plan that could have us listed there as early as mid-year. This would be a secondary listing and we are not planning any IPO or financing associated with this listing. Our research indicates that the ASX would be very supportive of a company like Lithium Argentina and the low-cost brine profile we would provide investors there.

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

Thanks for taking my question. Just following up on your listing plan in Australia: what I understand is it is not for funding or financing the next leg of growth, but to improve investor interest by broadening access? Is that the correct assumption? Secondly, on the cost side you highlighted your long-term target is $5.4 thousand per ton cost. Is there scope for further improvement in this target, and could we expect costs to lower further from the current levels?

That is the correct assumption regarding the Australian listing. On the cost side, $5.4 thousand per ton was the number we put out at the beginning of the year to reflect our existing cost structure at nameplate capacity, so at 40 thousand tons. We are comfortable with that assumption given that Q1 costs came in slightly below or in line with that even at about 96.8% operating capacity. There are opportunities longer term to look at ways to bring costs down, which probably come from elements like continuing to improve recoveries and optimizing the plant. But at this stage, $5.4 thousand is the number we put out a few months ago for long-term costs, and we will stick to that while continuing to work with our partner to find ways to reduce costs further.

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

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 that reference pricing and still the discount? What is the basis on pricing for that?

That is right. The reference price of $20 to $30 thousand is ex-VAT. And when modeling those EBITDA numbers, they also assume a discount as we discussed, such as the 6% to 7% adjustment we mentioned for Q1.

Okay. Can you also 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 less depreciation, some percentage of that?

Broadly, yes, it is connected to revenue and certain deductions, but maybe I'll turn it over to Alexander to provide more detail.

Yeah, sure. So we have several taxes and royalties. We have export tax, export refunds, and provincial royalties, which are the larger parts of what sits below C1 cost. For example, the export tax is calculated on revenue minus certain expenses like temporary imports for some reagents; net of export refunds it is approximately 2.87% to 2.9%, so that is connected to revenue and that is why it jumped up as pricing increased. In terms of provincial royalties, that is 3% of revenue minus C1 cost less certain deductions. If I were to put it simply, a portion is a percentage of revenue and another portion is a fixed deduction, so it is a combination. A significant portion is connected to revenue, which is why it increases as prices rise. If you are coming up with an EBITDA number at the Cauchari-Olaroz level, these taxes and royalties are deducted and are negative to EBITDA. There is nothing in those items that you would add back to EBITDA; they are already deducted from EBITDA. There aren't one-time items in there; they should trend higher as pricing rises.

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

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 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.

Inflationary pressures are present, and diesel prices globally have gone up. Argentina is not immune. Luckily for us, direct diesel costs are <3% of our OpEx, so while there will be some inflationary impact, it is an immaterial piece of our cost structure. In terms of wages, there are fluctuations in how inflation is running versus devaluation and the impact on the dollar-equivalent cost of peso labor expenses, but those are manageable and not material relative to our overall cost profile. We feel very good about our cost profile and our insulation against broader inflationary trends globally.

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

We are evaluating the pros and cons of an Australian listing, which seems to make a lot of sense given the ASX investor base for brine-exposed producers. It is too early to commit to whether we would consider dropping the TSX. We will weigh pros and cons and make a determination in the months to come and provide further updates.

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.