Operator:

Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lithium Argentina Third Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise, and after the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. And I would now like to turn the conference over to Kelly O'Brien, Vice President, Investor Relations and ESG. You may begin. Kelly O'Brien: Thank you, Abby. I want to welcome everyone to our earnings conference call this morning. Joining me on the call to discuss the third quarter results is Sam Pigott, President and CEO. Alex Shulga, VP and CFO, will also be available during the Q&A session. Before we begin, I would like to cover a few items. Our third quarter earnings press release was issued last evening and the corresponding documents are available on our Company website. I remind you that some of the statements made during this call, including any production guidance, expected Company performance, Ganfeng and strategic investment in Pastos Grandes, the timing of our projects, and market conditions may be considered forward-looking statements. Please note the cautionary language about forward-looking statements in our MD&A and news release that was filed last night. I will now turn the call over to Sam. Sam Pigott: Thanks, Kelly. Good morning, everyone, and thank you for joining us today. We appreciate your interest in our Company and your ongoing support as we progress Cauchari-Olaroz and navigate the evolving landscape of the lithium market. We are cautiously optimistic on the future of lithium, particularly as we assess market conditions, our operational capabilities, and positive changes we are seeing in Argentina. Last night, we published our third quarter results and we're pleased to announce that during the third quarter, Cauchari-Olaroz produced approximately 6,800 tons of lithium carbonate, a 21% increase from the second quarter of the year. The plant is currently operating at 75% to 80% of nameplate capacity, and while we expect this level to be maintained into 2025, we are confident that we will be able to reach 40,000 tons in the future. Given production year-to-date and targets for the fourth quarter, we are well-positioned to meet our production guidance of 20,000 tons to 25,000 tons of lithium carbonate this year. As mentioned in the earnings release last night, the additional processing cost-to-achieve battery quality lithium carbonate has been reduced from $2,000 to $1,500 per ton. While this change had a positive impact on margins, market prices of lithium continued to see downward pressure during the third quarter. The most recent realized prices for Cauchari-Olaroz fell to approximately $7,000 per ton following the decline in lithium prices. Looking forward, we continue to work closely with our partner, Ganfeng to determine the optimal product mix and quality to address the evolving needs of lithium battery customers and to maximize our overall operating margin. We expect to provide clarity on our 2025 production plans and product quality targets early in the new year. We are pleased with the work being done to advance Stage 2 at Cauchari-Olaroz and the regional development plan around Pastos Grandes in Salta Province. The work on the regional development plan is ongoing and should be completed in the coming months. We believe that the newly passed RIGI regime will provide a number of very attractive fiscal incentives to support large-scale investments in the country and will help support the development of our comprehensive growth pipeline. We expect to release more information related to the regional development plan in early 2025. In closing, we remain optimistic about our strategic positioning in the lithium market and the long-term demand driven by the ongoing energy transition. Our operations in Argentina continue to demonstrate strong production capabilities and we are committed to enhancing our efficiency and sustainability practices. As we move forward, we believe our investments in technology and partnerships will further solidify our role as a key player in the global supply chain. We look forward to updating you on our progress in the coming quarters. And with that, we'll open the floor to questions. Operator: Thank you. [Operator Instructions] And your first question comes from the line of Ben Isaacson with Scotiabank. Your line is open. Apurva Kilambi: Good morning, everyone. Thanks for taking my question. This is Apurva on for Ben. So my question is that in prior quarters, you've disclosed that Cauchari will be cash flow positive even at current spot levels. And you mentioned that both spot prices have come down as have some of your additional processing costs. So is this still the case, or will Cauchari still be cash flow positive ex that working capital at spot? Sam Pigott: Thanks for the question. So during the third quarter, we were operating cash flow when adjusted for working capital. As you point out and we pointed out in our press release, prices have declined. There was about an 18% decline from the second quarter averaged carbonate price to the third quarter. The most recent realized sales price from Exar was about $7,000. I would say that while the prices have declined, we've also seen costs come down as we reach higher levels of production and also aim to optimize operations. So for the fourth quarter, we expect to be around breakeven at close to current prices. And we're working with Ganfeng on our production plant for next year as well as additional disclosures on cost, and we'll have that available for investors early in the new year. Apurva Kilambi: Understood. Thank you. And my kind of follow-up question. At what point in 2025 are you folks expecting production levels to increase meaningfully? I know you mentioned you're still kind of having those conversations with Ganfeng, but are there challenges still in sustaining that quality at the higher production levels right now? Sam Pigott: No. I think, we're genuinely pleased with how volumes have progressed throughout this year. So currently at 75% to 80%, what we've said is that we expect to exit the year around those run rates into early 2025. Again, we are working with Ganfeng on the production plan for next year, and we'll have that available to all -- to our investors early in the new year. Apurva Kilambi: Thank you. Operator: And your next question comes from the line of Corinne Blanchard with Deutsche Bank. Your line is open. Corinne Blanchard: Hey, good morning, Sam and team. Just maybe the first question on pricing. So you got about $8,000 per ton for this quarter and then you mentioned $7,000 as report that's what you sold -- you saw in October. Can you just give a little bit more detail because I think the average price in China was about $10,005 since early October? Is that the price that you are referencing minus the VAT and minus the $1,500 for other entry fees? Or how should we think about that? Sam Pigott: No, that's correct. So the China price -- the reference price that most people see in China is inclusive of VAT. So that needs to be stripped out as well as the additional processing fee. Corinne Blanchard: Okay. And then on the processing fee like do you think -- like should we model out further like $1,500, or is there like a good churn that maybe you dropped back below the $1,000 through 2025? Sam Pigott: I mean, I think it's something that we're evaluating just in terms of how the quality has progressed. Like obviously, this year, the focus has very much been on volumes and there we've -- I think we've certainly achieved our expectations. And so as quality becomes more of a focus next year, certainly, we'll kind of continue to update the market and investors on what that means in terms of our realized pricing. I think carrying out through the rest of the year using $1,500 is probably the right number to use. But going into next year, when we come out with our production guidance on volumes, we're also going to come out with guidance on product mix. Corinne Blanchard: Okay. That makes sense. Maybe just as a follow-up. So can you talk about the convert? What you're thinking about doing with them? So it's a big topic of conversation with investors so I just wanted to get clarity on this. Sam Pigott: Sure. I mean, for us, the focus is really on the Cauchari Stage 1 and refinancing Exar's short-term debt. I think the convert -- it's due in January 2027. It has a very attractive interest rate of 1.75%. So we're in contact with the convert holders and we're very confident we'll be able to refinance when the time is right, but certainly closer to maturity. I don't know, Alex, if you have anything further to add on that point. Alex Shulga: Hey, Sam. No, I think you hit the response here. I think at the current interest rates, 1.75% looks very attractive, and we feel confident we'll be able to refinance this, but we don't want to jump ahead. And we will deal with this when we are kind of closer to its maturity. We still have some -- a little less than two years. We'll focus on this next year. Corinne Blanchard: Okay, great. Thank you. Operator: And your next question comes from the line of Joel Jackson with BMO Capital Markets. Your line is open. Joel Jackson: Good morning, everyone. And look at your financials and Exar's financials, looks like you ended the quarter around $90 million of cash, the JV around $14 million, you put in $65 million to JV across the quarter. If we're kind of breakeven here, can you talk about like what are you thinking about for your cash needs, the JV's cash needs, and if you've got to maybe think about getting some buffer or cushion in the near future? Sam Pigott: So we brought down Exar's debt level to approximately $200 million, and we are actively engaged along with Ganfeng on replacing that with longer-term debt. So I think from the joint venture level, I think we're in a very good position. I'd say at the project, where prices are today and we've kind of taken a look, there is some improved sentiment in China, but we're really building this business and planning for this business based on lower-for-longer pricing. And what we're seeing today is this business does not draw a lot of capital to sustain operating needs. And I think that's going to be continually supported by what we're seeing in terms of where operating costs are headed. So I think we're in a very strong position today, not just from what we've been able to achieve, delevering the joint venture and efforts to kind of term out some of the short-term debt there. I think lacks cash balances sustained in a healthy position today. And in terms of what we see needing to support this business under a lower-for-longer scenario, we have no immediate needs to kind of buffer -- create a buffer. Joel Jackson: Okay. And then can you help us, Sam, with some sensitivity around costs? So if the JV can do 25,000 tons, 30,000 tons, 35,000 tons, 40,000 tons over time, how might cost scale down? Is it just simply linear? Is it better than linear? Can you give us a bit of mall markers and granularity on how to think about it? Sam Pigott: I mean, certainly, volumes help. They don't tell the entire story. As we've carried on of advancing this operation hitting higher production levels. Once we reach a more steady state of production, there are going to be ways to optimize our cost structure in Argentina. And so you can take kind of two obvious buckets of costs. One, kind of reagents so price and specific consumption, so price times volume. And I think as we better understand the plan and it's operating more consistently, I think we'll be able to improve certainly in terms of the specific consumption. And then the other bucket of cost is labor, and certainly, there will be areas to kind of improve our cost structure there. And it's really just a function of kind of getting into the steady-state operation. So it's a combination of both. Joel Jackson: Thank you. Operator: And your next question comes from the line of David Deckelbaum with TD Cowen. Your line is open. David Deckelbaum: Thanks for taking my question, Sam, and for the update today. I'm hoping that maybe as you look into next year, given -- in the context that we're expecting this just a regional development plan update what should investors expect to learn from that update? And I guess put it in the context of what -- how you're thinking about Lithium Argentina's capital needs for next year once you're at the point now where Cauchari Phase 1 is relatively ramping towards capacity, but how much incremental sort of capital cost will there be for next year? Sam Pigott: I mean, I think we understand very well that the market conditions today are putting a lot of focus on Company's balance sheet. Our approach from the beginning has to been to advance our two attractive growth plans, the regional development plan, as well as kind of doing some preparation work around a potential expansion without spending much money. And so the regional development plan really benefits from a tremendous amount of work, money and resources that went into both a feasibility study on Pastos Grandes and then obviously, Ganfeng has spent a lot of time and money developing Pozuelos. These assets will all be put into a regional development plan. We certainly are cognizant of being able to advance these projects only when there is a rationale that benefits our shareholders. And so today really the focus is getting this plan advanced, finalized, and delivering it to the market. I think what it will show is a new way to think about how to incorporate new technologies that enhance recoveries and improve kind of the environmental impact. In terms of the financing strategy, listen, I think we're very aligned with shareholders here and we obviously, don't want to overexpose ourselves to capital commitments that the current market wouldn't support. David Deckelbaum: I appreciate that helpful color. And then just as a follow-up, just on the clarification on next year and sort of thinking about running at 80% of capacity as we go into 2025. You talked about product mix elections with your partner Ganfeng. How do we think about that evolving over time? I mean, is there -- are you seeing that there is a greater desire to kind of produce a technical grade longer-term versus the original plan for the sake of efficiency? Or is it more a case of -- is there more desire on Ganfeng as part for you to be producing technical quantities for a longer period of time? Sam Pigott: I think it's in part just a reflection of how dynamic the market is. Specifications for certain segments of the battery market have tightened considerably, I would say, and so it's just -- looking at our operations and trying to optimize them to maximize the operating margin. So that is potentially producing a product at a lower cost, better efficiencies, and really just a trade-off calculation. Cauchari-Olaroz was designed to produce a battery-grade spec. That will continue to be a potential target, but we're really working with Ganfeng to just ensure that we're optimizing the margin at the project. And so I'd say one further comment is like both shareholders are very much aligned in maximizing margin. I don't think this is not a scenario where Ganfeng is telling us to produce a certain product and we're going ahead with it. Ultimately, this is a project will produce a product that can either be sold into China or outside of China. And so that's the long-term view. And we'll have more to disclose around product mix with the production plan and guidance for 2025 early in the next year. David Deckelbaum: Appreciate that, Sam. Thank you. Operator: And your next question comes from the line of Seth Goldstein with Morningstar. Your line is open. Seth Goldstein: Good morning. Thanks for taking my questions. I wanted to follow up on an earlier question and ask about Cauchari Phase 2. What price makes sense to move forward? You said it could be a pretty low incremental investment, but how are you thinking about that in relation to prices? Sam Pigott: Yes. I'd just say on Cauchari, obviously, the focus is Stage 1. We do have a separate team there working on Phase 2 planning. I think part of that is obviously, evaluating some advances that particularly Ganfeng has made around processing technology that can build off of what we've been able to demonstrate around Stage 1 in terms of enhancing recoveries, lowering the environmental impact. And in terms of like pushing the go button and advancing that plan. First, we have to finalize the plan. Second, I think we have to be able to assess where we are in the market and look at what the existing cash flow from Cauchari is, evaluate our financing options that would be available to support that growth, and then ensure obviously, it integrates well into the RIGI program in Argentina. So I think that's how I'll leave that answer for now. Seth Goldstein: Okay, fair enough. And then in order to take the $1,500 extra processing fee down significantly to $1,500 or even eventually zero, would you need to make a material additional investment to improve the quality? Or is that -- would it be not as much incremental CapEx? Sam Pigott: I mean, at this point, we have not identified the need for material incremental CapEx. Partly as a function of getting to more steady-state production, that will deliver two things. One, it will allow us to hone in on those -- the impurities that are currently outside of the acceptable spec sheet. The other big part, of course, is kind of maintaining a more steady-state production is the variability within those impurities will be much easier to manage. So it's something that we're evaluating. Obviously, this year, the focus is very much on production volumes. At the same time, we have seen improvements that's been reflected in this lower reprocessing, or additional processing cost in China. So it's really something that we continue to monitor and going into next year, the focus will, as we've said before, pivot towards quality. But at this point, we don't see a material investment associated with quality improvements. Seth Goldstein: Okay, great. Thanks for taking my questions. Operator: And your next question comes from the line of Mohamed Sidibe with National Bank Financial. Your line is open. Mohamed Sidibe: Good morning, guys, and thanks for taking my questions. First question would be just on the quarter-over-quarter increase in production. Sam, could you give us maybe some color on what drove that increase? Was it brine well availability? Was it on grade? Was it on recovery? Any color would be appreciated. Sam Pigott: I mean, I think it's a function of the team knowing how to operate the plant better, improving uptime, reliability. You know it's, it's a large plant, somewhat complex, a lot of moving pieces. And so it's natural that it takes the team some time to understand how it operates. The user manuals are one thing. Operating it in real time is another. And so I think that's been a large contributor to the increase in production. I'd say going forward, that will probably remain the case. It's about pushing into higher production levels and being able to sustain them. Maintenance is a big thing, identifying preventative maintenance, being able to identify things before the breaker risk creating any downtime. So I think that that's been kind of the most broad and significant contributor to the production levels increasing. Mohamed Sidibe: Okay, great. Thank you. And then just a follow-up question on the cost front. You mentioned that, of course, as volume increases, that would benefit costs. But as you would look to optimize costs either on reagents and labor, can you remind us of what percentage of your costs are coming from labor and reagents, if possible? Sam Pigott: I don't know, Alex, if you have rough numbers along those lines. Alex Shulga: Sorry. Yes, I think reagents would be the most substantial part of our costs that there is some kind of variability as the plant is kind of ramping up. I don't think we -- we're ready to provide you kind of a guidance and sort of those percentages that will come out next year as we provide a full guidance. I just wanted to say, I guess if you refer to our technical report, that would give you an idea of those percentages. So reagents would be kind of 30%, 40% ish or so. But again, it depends on the level of production. I think we'll be in a better position to provide this outlook early next year with our guidance. Mohamed Sidibe: Sounds good. Thank you. And just my follow-up question, Sam, if I may. Just on the GM lock-up that expired in October, do you have any color on that, or have you had any conversation with them in terms of their ownership? Sam Pigott: Yes, yes. I mean, we've maintained a dialog with GM since the separation. Yes, I mean the lock-up is no longer in place. I think GM has, as you probably all know, been fairly focused on increasing their investments with Lithium Americas in Thacker Pass. But we have a good ongoing dialogue. I don't think we're in a position to speculate as to how they view their shares in Lithium Argentina from a strategic perspective, but it's -- we certainly have an ongoing and open dialog with GM. Operator: And ladies and gentlemen, that concludes our question-and-answer session, and this will conclude today's call. We thank you for your participation and you may now disconnect.