Lithium Americas (Argentina) Q3 Earnings Call Highlights

Key Points

• Cauchari-Olaroz delivered stronger results despite lower lithium prices: Revenue rose 6% to $184 million and adjusted EBITDA increased to $113 million, as sales volumes grew 18%. Production was on track to meet full-year guidance, with fourth-quarter output expected to exceed 9,000 tons.
• The company is advancing expansion plans: A proposed Stage 2 expansion could lift Cauchari-Olaroz capacity to about 85,000 tons per year, with a 10,000-ton direct-lithium-extraction module targeted for 2028, subject to approvals and joint-venture agreement.
• Financing and market conditions remain key considerations: Lithium Argentina repurchased $200 million of 2027 notes and plans to repay the roughly $59 million remaining at maturity. Management described lithium inventories as tight but buyers as cautious amid falling prices, while seeking financing and regulatory approval for the PPG project.

Lithium Americas (Argentina) NYSE: LAAC said its Cauchari-Olaroz operation increased third-quarter revenue and adjusted earnings despite lower realized lithium prices, as higher sales volumes and slightly lower costs helped offset the decline.

CEO Sam Pigott said the operation continued to run at approximately 95% of design capacity, with cash operating costs of about $5,800 per ton and a cash operating margin of 67%. Year-to-date production reached 28,490 tons, keeping the operation on track for its full-year guidance of 35,000 to 40,000 tons.

During the question-and-answer session, Pigott said fourth-quarter production was expected to exceed 9,000 tons and would likely put full-year output above the midpoint of the guidance range. He also expected sales volumes to be around third-quarter levels, subject to shipment timing.

Higher Volumes Offset Lower Prices

Realized lithium prices fell approximately 10% from the second quarter, but sales volumes rose 18%, helping revenue increase 6% to $184 million. Adjusted EBITDA rose to $113 million from $110 million in the previous quarter, Pigott said.

Cauchari-Olaroz generated $95 million in operating cash flow and approximately $92 million in free cash flow from operations during the quarter. The operation distributed $100 million to its joint venture partners, bringing year-to-date distributions to approximately $230 million.

Pigott said C1 operating costs had remained below $6,000 per ton in every quarter of 2026, averaging approximately $5,700 per ton year to date. Asked whether costs could return to the $5,400 per ton achieved in the first quarter, he said higher energy and logistics costs, along with inflation in Argentina outpacing currency devaluation, had created pressure. Lower costs in those areas would be expected to flow through to the operation, he said.

The company sells its technical-grade product at a mid-single-digit discount to a blended China battery-grade lithium carbonate price, excluding value-added tax, Pigott said. He added that pricing in the fourth quarter was declining with the market and that Ganfeng remained eager to take available product.

Debt Transactions and Expansion Plans

At the asset level, net debt increased to $171 million from $142 million as the operation distributed cash to its partners. The joint venture secured a $170 million, three-year syndicated facility in July and a $50 million, two-year facility in June, primarily to replace existing debt and extend maturities at lower interest rates, Pigott said.

On the corporate balance sheet, Lithium Argentina closed a $180 million investment from Ganfeng in September through a six-year unsecured convertible debenture with a 4% coupon and a $12.50-per-share conversion price. The company used that investment and existing cash to repurchase $200 million of its January 2027 convertible notes in October. Approximately $59 million remains outstanding, which the company intends to repay at maturity from more than $100 million in cash on hand, Pigott said.

A scoping study published during the quarter outlined a 45,000-ton-per-year Stage 2 expansion at Cauchari-Olaroz, taking total capacity to approximately 85,000 tons annually. Based on an assumed lithium carbonate price of $18,000 per ton, the study estimated an after-tax net present value of $3.1 billion and an internal rate of return of 28.5%, both on a 100% project basis. Initial capital was estimated at about $1 billion.

The company plans to accelerate an initial 10,000-ton module using direct lithium extraction, or DLE, targeting production in 2028 subject to permits and approvals. Pigott said there is no minimum spending commitment and that material spending or a final investment decision requires joint approval. He expects the module to be financed with project cash and said more details would be available early next year.

Pigott attributed the expansion study’s estimated operating cost of approximately $5,000 per ton primarily to DLE’s potential to reduce reagent consumption and improve recoveries. He said Argentine approval for the modular approach could come before year-end, while a Chinese technology export permit could follow early next year if granted.

PPG Financing and Market Outlook

Lithium Argentina and Ganfeng finalized the consolidation of the PPG project in October. Ganfeng holds 67% of the joint venture and Lithium Argentina holds 33%. A scoping study published last year estimated planned capacity of 150,000 tons per year and an after-tax net present value of $8.1 billion on a 100% basis, using an $18,000-per-ton lithium carbonate price.

Pigott said discussions about potential financing, including an offtake arrangement or a strategic minority investor, were advanced in some cases. The company expects approval under Argentina’s RIGI investment incentive program by year-end, which he described as an important milestone for reducing project risk.

On the broader market, Pigott said the company was taking a wait-and-see approach to 2027 demand. He cited installation bottlenecks and policy changes affecting energy storage projects, while noting that Ganfeng continued to report strong demand. The physical lithium market appeared tight from an inventory perspective, he said, but falling prices were making buyers hesitant.

About Lithium Americas (Argentina) (NYSE:LAAC)

Lithium Americas (Argentina) Corp., formerly known as Lithium Americas Corp. before the company's 2023 separation, is a lithium development and production company focused on assets in Argentina. The company's principal operating asset is the Cauchari-Olaroz lithium project in Jujuy Province, a brine operation that produces lithium carbonate for use in electric vehicle batteries, energy-storage systems and other applications. Cauchari-Olaroz is operated through a joint venture with Ganfeng Lithium.

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