Lithium Argentina (LAR) Q3 2024 earnings summary

Executive summary

• Cauchari-Olaroz produced 6,800 tons of lithium carbonate in Q3 2024, a 21% increase from Q2, operating at 75%-80% of nameplate capacity, with expectations to maintain this rate into 2025 and a long-term target of 40,000 tons.

• Achieved commercial production at Cauchari-Olaroz in October 2024; depreciation of certain assets to begin in Q4.

• Closed Pastos Grandes transaction with Ganfeng, reducing Caucharí-Olaroz debt by over $100 million.

• The company is advancing Stage 2 at Cauchari-Olaroz and a regional development plan in Salta Province, leveraging new fiscal incentives under Argentina's RIGI regime.

• Strategic focus remains on operational efficiency, sustainability, and technology investments to strengthen global supply chain positioning.

Financial highlights

• Realized lithium carbonate prices declined to $7,000 per ton in Q3, down 18% from Q2, with prices dropping from $8,000 per ton in Q3 to $7,000 per ton post-quarter.

• Additional processing costs for battery-quality lithium carbonate reduced from $2,000 to $1,500 per ton, positively impacting margins.

• Q3 operations were cash flow positive when adjusted for working capital; Q4 expected to be around break-even at current prices.

• Ended Q3 with approximately $90 million in cash, JV held $14 million, and $65 million was contributed to the JV during the quarter; cash and cash equivalents stood at $92 million as of September 30, 2024, with an undrawn $75 million credit facility.

• Q3 2024 net loss was $2.4 million, compared to net income of $6.6 million in Q3 2023, mainly due to lower gain on convertible notes derivative.

Outlook and guidance

• Production is expected to remain at 75%-80% of capacity through early 2025, with further guidance on volumes and product mix to be provided early next year.

• 2024 production guidance remains at 20,000-25,000 tons, with clarity on 2025 plans and product quality targets expected early next year.

• Regional development plan completion and further details anticipated in early 2025, with a focus on integrating new technologies and environmental improvements.

• No material incremental CapEx is currently anticipated for quality improvements; focus will shift to quality in 2025.

• Company advancing financing options to replace remaining short-term debt and support future growth.