Lithium Argentina hits forecast, seeks Milei financing

[Ben Graham]

Lithium Argentina (TSX, NYSE: LAR), the country’s largest producer of the battery metal, achieved its Cauchari-Olaroz brine output target as it advanced second-stage permitting and squeezed costs.

The Switzerland-based company said Tuesday the operation, which started commercial output in 2024, produced about 34,100 tonnes of lithium carbonate last year, within its forecast range of 30,000 to 35,000 tonnes. Production in the three months ended Dec. 31 reached about 9,700 tonnes and averaged 97% of nameplate capacity.

“Cauchari-Olaroz has continued to ramp up production and lower operating costs,” Canaccord Genuity Capital Markets analyst Katie Lachapelle said in a note to investors. “The company continues to be a top idea for exposure to lithium producers.”

Argentina’s portion of the so-called lithium triangle – the high-altitude Andean salt-flat (salar) belt where lithium-rich brines are concentrated spanning northern Chile, southwestern Bolivia and northwestern Argentina – is busy as developers try to lower costs and prove new processing methods. Rio Tinto (NYSE, LSE, ASX: RIO) is expanding its Rincon project in Salta, while France’s Eramet has started ramping up its Centenario direct-lithium-extraction plant.

South Korean industrial giant Posco has also commissioned Argentina’s first commercial lithium hydroxide plant in Salta and China’s Ganfeng has started production at its Mariana project, in the same province.

Shares gain

Lithium Argentina shares reached a new 12-month high Tuesday afternoon in Toronto at C$9.55, up C$1.18, valuing the company at about C$1.6 billion ($1.16 billion). Canaccord Genuity kept a buy rating and a C$10.50 target price on the stock.

The $1 billion first stage Cauchari-Olaroz is run as a joint venture between China’s Ganfeng Lithium with 47% and Lithium Argentina at 45%. Jujuy’s state mining company JEMSE holding 8.5%.

Fourth-quarter cash operating costs were expected to come in below $6,000 per tonne of lithium carbonate sold, down from $6,285 per tonne in the third quarter.

Lithium Argentina said it expected the operation to reduce net debt by $26 million in the fourth quarter after distributing $15 million to each partner, and it finished the year with more than $150 million in liquidity from cash and undrawn debt facilities.

“Strong production through the fourth quarter, together with continued cost reductions, highlights the increasing operational maturity of the business,” CEO Sam Pigott said in a Tuesday press release.

Permit applications

Lithium Argentina said the joint venture submitted applications last month for an environmental permit and for financing under Argentina’s large-investment incentive regime known as RIGI, brought in by President Javier Milei. The company plans to expand lithium carbonate capacity by 45,000 tonnes per year.

Lithium Argentina’s Cauchari-Olaroz aims to triple production by 2029

It is also preparing a RIGI application for the Pozuelos-Pastos Grandes (PPG) project in Salta province, which it expects to submit in this quarter. In a November scoping study, Lithium Argentina outlined a staged build at PPG, starting with a 50,000-tonne-per-year first phase and an initial capital bill of about $1.1 billion. The partners are studying newer processing routes, such as direct lithium extraction, to lift recoveries and lower water use.

The next leg of growth still hinges on permits, financing and lithium prices. Canaccord flagged the usual risks for Argentina-based developers, including jurisdictional uncertainty, funding needs for expansions and the chance that operating hiccups or higher costs could erode cash flow.

Lithium Argentina’s also announced leadership changes as it shifts from ramp-up to expansion planning. Alec Meikle was promoted to president, with responsibility for running the company’s strategy and leading corporate development and capital-markets work. John Kanellitsas moved from executive chairman to chairman of the board.