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 and achieving commercial production in October 2024.

• Production guidance for 2024 is 20,000-25,000 tons, with further clarity on 2025 plans and product quality targets expected early next year.

• 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 for Pastos Grandes Basin, with more details to be released in early 2025.

• Depreciation of certain assets to begin in Q4 following commercial production.

Financial highlights

• Realized lithium carbonate prices fell to $7,000/ton in Q3, down from $8,000/ton earlier in the quarter, reflecting continued market price pressure.

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

• Ended Q3 with approximately $90 million in cash, and the joint venture (JV) held around $14 million; undrawn $75 million credit facility with Ganfeng.

• $65 million was contributed to the JV during the quarter, supporting refinancing and working capital.

• 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 into early 2025, with further guidance on volumes and product mix to be provided early next year.

• The company is planning for a "lower-for-longer" lithium price environment and does not anticipate significant capital needs under current conditions.

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

• Regional development plan will incorporate new technologies to enhance recoveries and environmental impact, with financing strategy aligned to avoid overexposure.

• Focus remains on optimizing operations and reducing costs while monitoring market conditions for expansion.