Lithium Argentina AG Q1 FY2026 earnings call

Core Operational Performance

• Kachari-Olaroz Stage 1 has consistently operated at ~97% of nameplate capacity for the past two consecutive quarters, with strong, consistent cash flow generation
• Over 90% of Q1 2026 adjusted EBITDA is expected to convert to free cash flow by the end of 2026, with cash receipts lagging sales by approximately two months; full cash flow impact will become visible in Q2 and Q3 2026
• The operation relies primarily on low-energy solar evaporation, with direct diesel consumption accounting for less than 3% of direct operating costs, insulating it from global energy price volatility
• Accelerated depreciation and the company's intercompany loan structure boost near-term cash flow, with cash taxes expected to rise only in coming years
• Net project-level debt is less than 0.5x annualized Q1 EBITDA, indicating a very strong balance sheet position

Growth Project Development

• Stage 2 expansion of Kachari-Olaroz targets adding 45,000 tons per year of additional lithium carbonate production capacity. The RIGI regulatory application filed in late 2025 is progressing and could be approved as early as Q2 2026, with environmental permit advancement supported by updated resource estimates and hydrogeological modeling
• The company plans to finalize the Stage 2 development plan by mid-2026, leveraging partner Ganfeng's processing expertise and Chinese modular construction capabilities to optimize timelines and costs
• The PPG long-term growth project plans for a phased buildout to 150,000 tons per year of total production, starting with an initial 50,000-ton phase. RIGI application has been submitted, and phase one permitting is already secured. Management is actively evaluating bringing in a minority project-level investor to fund development, with strong interest from global groups and no expected equity dilution for existing shareholders
• All future growth is planned to prioritize funding from Stage 1 cash flow and low-cost project-level debt, with a goal of minimizing shareholder dilution

Stakeholder and Strategic Initiatives

• The company has built long-standing positive relationships with local communities around Kachari-Olaroz via local hiring, procurement and community agreements, which management expects to support Stage 2 expansion
• Management is planning a secondary listing on the ASX to broaden the global investor base and improve visibility, with no associated IPO or new financing planned, while maintaining the company's existing NYSE listing

Lithium Argentina's sole operating segment is the Kachari-Olaroz lithium carbonate operation. In Q1 2026, the segment produced 9,700 tons of lithium carbonate, operating at 97% of nameplate capacity. Realized lithium prices reached just under $17,000 per ton, up from just over $9,000 per ton in Q4 2025. Adjusted EBITDA (excluding non-cash FX fluctuations) hit $106 million, a three-fold increase quarter-over-quarter from $30 million in Q4 2025. Cash operating costs fell to just under $5,400 per ton, positioning Kachari-Olaroz among the lowest-cost global lithium operations. Sustaining capital expenditure for the quarter came in below normalized levels, at $4-$5 million. Lithium Argentina's attributable share of year-to-date cash distributions from Kachari-Olaroz is $48 million, of a total $100 million distributed to joint venture partners.

• Full-year 2026 production guidance for Kachari-Olaroz is maintained at 35,000 to 40,000 tons, unchanged from prior guidance
• At current lithium market prices of $20,000 to $30,000 per ton, 100% adjusted EBITDA for 2026 is forecast to reach $460 million to $630 million, with substantial upside if market prices continue to rise
• The 6-7% discount to reference market pricing seen in Q1 2026 is expected to decrease over the remainder of 2026 and into 2027 as product quality and consistency improve, with the long-term goal of selling directly to end customers and capturing full market pricing
• Cash operating costs are expected to remain near the $5,400 per ton long-term target, with potential for marginal further reductions over time from ongoing optimization, but no change to the existing target guidance
• Stage 2 of Kachari-Olaroz is not expected to reach a final investment decision until 2027, with only immaterial capital expenditure expected in 2026 even after RIGI approval
• Management expects to provide a detailed update on both Stage 2 development plans and PPG project strategic developments by mid-2026
• The planned ASX secondary listing could be completed as early as mid-2026

• Short-term lithium prices are volatile, and management declined to provide a granular forecast for future price movements, indicating uncertainty around near-term pricing peaks
• RIGI approval and environmental permitting for Stage 2 expansion are required to advance the project, and timing of these regulatory milestones is not guaranteed
• Inflation and currency devaluation in Argentina impact local labor costs, and global diesel price increases affect operational costs, though management notes these impacts are immaterial given the small share of these costs in the overall cost structure
• The company notes that some quarter-to-quarter variability in operating costs should be expected, even as the long-term cost trend is downward
• Geopolitical instability in the Middle East could potentially impact costs and availability of key supplies such as soda ash, though as of Q1 2026 impacts have been limited

Q: What is the expected level of JV cash distributions for the rest of 2026, and how do distributions align with priorities like debt paydown and Stage 2 funding? / A: Management confirms that after allocating cash to early-stage Stage 2 preparation, remaining free cash flow will be prioritized for distributions to JV partners. Net debt is already very low at 0.5x annualized Q1 EBITDA, so the balance sheet can support both expansion investment and ongoing distributions. The company will coordinate with partner Ganfeng to continue distributions throughout 2026, with significant cash generation expected in the final three quarters of the year. Early Stage 2 CapEx in 2026 will be immaterial even after RIGI approval.

Q: How will the 6-7% reference price discount seen in Q1 evolve over the rest of the year, and what is the latest update on the PPG project? / A: Management expects the discount to narrow through 2026 as product consistency and quality improve, with a long-term goal of eliminating the discount by selling directly to end customers without intermediate sales through China. For PPG, permitting for the first 50,000-ton phase is secured, a RIGI application is submitted, and the company is evaluating minority investor options with strong market interest. A full update on PPG is expected by mid-year alongside the Stage 2 development plan update, with no rushed decision to maximize shareholder value.

Q: What is the rationale for an ASX secondary listing, and are there other locations being considered? / A: The ASX was selected as the preferred secondary listing location because it has a strong investor base that values low-cost brine lithium producers and recognizes Argentina's improved risk profile for mining investment. The listing is only to broaden the investor base and improve visibility, with no plans for a new financing or IPO, and the company will maintain its existing NYSE listing. The company is still evaluating the status of its existing TSX listing and will provide updates at a later date.

Q: Is there further room to reduce cash operating costs below the current $5,400 per ton target? / A: The $5,400 per ton long-term target set at the start of 2026 has already been met or slightly beaten at 97% operating capacity in Q1 2026. While ongoing optimization and recovery improvements may deliver marginal long-term cost reductions, management reaffirmed the existing $5,400 per ton target and remains comfortable with this forecast.