20-F/A: Lithium Argentina Amends Annual Report, Details Commercial Production and Resource Revisions Amid Market Headwinds

Lithium Argentina AG filed an amendment to its 2024 annual report, confirming commercial production at its Cauchari-Olaroz project, updating mineral resource estimates for Pastos Grandes, and outlining corporate governance and executive compensation changes.

Summary

• Lithium Argentina AG filed Amendment No. 1 to its 2024 Annual Report on Form 20-F to include the SEC Technical Report Summary for the Pastos Grandes Project, update senior management compensation, and incorporate the audited financial statements of Minera Exar S.A.
• The Cauchari-Olaroz project achieved commercial production on October 1, 2024, and met its 2024 production guidance, producing approximately 25,400 tonnes of lithium carbonate.
• Minera Exar S.A., 44.8% owned by Lithium Argentina, reported a net loss of $32.835 million in 2024, a significant decline from a net income of $129.543 million in 2023, on revenue of $197.685 million.
• The Pastos Grandes Project, 85.1% owned by Lithium Argentina, had its mineral resource estimate updated as of December 31, 2024, reporting Measured & Indicated Lithium resources of 719,000 tonnes (612,000 tonnes attributed to LAR) and Inferred Lithium resources of 205,000 tonnes (174,000 tonnes attributed to LAR).
• This update for Pastos Grandes reflects a 52% decrease in Indicated Resources and a 1% decrease in Inferred resources compared to previous reports, primarily due to the application of a 200 mg/l cut-off grade under S-K 1300 reporting standards.
• Cauchari-Olaroz mineral resources (Measured + Indicated) also saw an 18% decrease from 2023 to 2024 (from 19,852,700 LCE tonnes to 16,217,355 LCE tonnes) due to S-K 1300 reporting, which estimates resources exclusive of mineral reserves.
• Ganfeng Lithium Co. Ltd. acquired a 14.9% interest in PGCo, Lithium Argentina's subsidiary holding the Pastos Grandes Project, for $70 million in August 2024.
• The company completed its corporate migration to Switzerland on January 23, 2025, with its shares beginning to trade under the new symbol 'LAR' on the TSX and NYSE from January 27, 2025.
• New executive compensation programs were implemented for 2024 and beyond, including changes to employment agreements for key executives to remove termination and change of control payments, aligning with Swiss law.

Sentiment

Score: 5

Explanation: The document presents a mixed bag of developments. While achieving commercial production at Cauchari-Olaroz and securing significant investments for Pastos Grandes are positive milestones, the reported net loss for Minera Exar S.A. and the reclassification-driven reduction in reported resources introduce financial and perceptual headwinds. The strategic moves and long-term project economics offer future potential, but current financial performance and market conditions warrant a neutral-to-cautious outlook.

Positives

• The Cauchari-Olaroz project successfully achieved commercial production on October 1, 2024, and met its 2024 production guidance of approximately 25,400 tonnes of lithium carbonate.
• Ganfeng's strategic investment of $70 million in PGCo (Pastos Grandes Project) for a 14.9% interest provides significant capital for project advancement and strengthens the partnership.
• The collaboration with Ganfeng on a regional development plan for the Pastos Grandes basin, including the exploration of Direct Lithium Extraction (DLE) technology, indicates a forward-looking approach to optimize resource extraction.
• The Pastos Grandes Project retains uncommitted offtake rights, offering flexibility to secure new customers and financing to support its development.
• The economic analysis for the Pastos Grandes Project indicates a robust post-tax Net Present Value (NPV) of approximately US$630.796 million (US$1.3 billion pre-tax) at a 10% discount rate, with an Internal Rate of Return (IRR) of 17% (23% pre-tax) and a payback period of 5 years.
• The Pastos Grandes Project is projected to remain profitable even under unfavorable market conditions, demonstrating its economic resilience.
• The company maintains strong internal controls for reviewing and documenting Mineral Resource and Reserve estimates, with information prepared and certified by appropriately qualified independent persons.

Negatives

• Minera Exar S.A. reported a net loss of $32.835 million in 2024, a substantial decrease from a net income of $129.543 million in 2023.
• Minera Exar S.A. recorded a net inventory write-down of $1.013 million in 2024 (after reversing a $5.140 million write-down from 2023), primarily because the product did not meet battery-grade quality specifications.
• The reported Measured & Indicated Mineral Resources for Cauchari-Olaroz decreased by 18% (from 19,852,700 LCE tonnes to 16,217,355 LCE tonnes) from 2023 to 2024, and Pastos Grandes Indicated Lithium resources decreased by 52% (from 118,000 tonnes to 57,000 tonnes), primarily due to the adoption of S-K 1300 reporting standards which exclude mineral reserves and apply a cut-off grade.
• The company's share price declined relative to the S&P/TSX Composite Total Return Index during the 2024 calendar year, attributed to declining lithium commodity prices and macroeconomic factors affecting electric vehicle sales.
• The high altitude of the Pastos Grandes Project (above 3,800 meters above sea level) presents potential challenges for some workers.
• The brine composition at Pastos Grandes has relatively high sulphate and magnesium content, necessitating additional chemical treatment with lime, which adds to operational complexity and cost.
• Weather variations, including higher-than-normal rainfall and long winter periods, could negatively impact the performance of the evaporation cycle in the ponds.
• The remote location of the Pastos Grandes project requires significant energy infrastructure development, adding to capital expenditure and logistical challenges.

Risks

• The company is exposed to significant volatility in lithium prices and market cycles, which are heavily influenced by the rate of electric vehicle adoption and global supply-demand dynamics.
• Operational activities, including geology, drilling, mining, processing, and logistics, require specialized skills and knowledge, and any deficiencies could impact business continuity.
• The company's operations are subject to various national, state, provincial, and local laws and regulations in Argentina, the U.S., Switzerland, and Canada, with potential for changes impacting planned activities.
• Forward-looking statements, including project economics, capital costs, and operating costs, are subject to known and unknown risks and uncertainties, meaning actual results may differ materially.
• Mineral resource estimates are inherently uncertain and may be affected by factors such as aquifer boundaries, continuity of key aquifer zones, presence of fresh/brackish water, uniformity of aquifer parameters, and changes in commodity price assumptions.
• There is a risk that mining properties may not be renewed by provincial authorities, or that necessary licenses and permits may not be obtained on acceptable terms or in a timely manner.
• The company may be unable to meet its obligations for expenditure and maintenance of property licenses, potentially leading to loss of tenure.
• Activities on adjacent properties could potentially impact the company's projects, including hydrological or environmental effects.
• The company faces contingent liabilities related to claims, lawsuits, and other legal proceedings arising in the ordinary course of business.
• Estimates for decommissioning and environmental remediation provisions are subject to change, which could materially impact financial statements.
• Exposure to foreign currency risks, particularly fluctuations in the Argentine Peso (ARS$) against the U.S. dollar, could adversely affect financial position or results.
• Argentine capital controls and foreign exchange regulations, despite recent changes, could still restrict the conversion of foreign currency or the payment of cash dividends out of Argentina.
• The company's share price can be volatile, influenced by market conditions and external factors.

Future Outlook

Lithium Argentina projects an average production rate of 47,700 tonnes per annum (tpa) of Lithium Carbonate Equivalent (LCE) for the Cauchari-Olaroz project over a 40-year pumping period, with an increase to 48,700 tpa LCE after this period. Average annual revenue for Cauchari-Olaroz is projected at US$709 million for 2025-2030 and US$780 million for 2031-2060. The Pastos Grandes Project aims for 24,000 TPY of battery-grade Li2CO3 production. A regional development plan for the Pastos Grandes basin, including the Sal de la Puna and Pozuelos projects, is expected to be finalized in 2025, with a focus on exploring Direct Lithium Extraction (DLE) technology. Argentina's total lithium production is projected to reach 450,000 metric tons of LCE by 2034, driven by existing operations and new projects. Global lithium demand for batteries is projected to reach 3.4 million MT LCE by 2033.

Management Comments

• "The Company believes that the share price performance has been impacted primarily by declining lithium commodity prices and macroeconomic factors affecting electric vehicle sales, such as high interest rates and high inflation."
• "The unique circumstances of the Company in 2023 required a major reconfiguration of our management team and significant efforts of our management which was reflected in our compensation profile, with the development and commencement of production at the Cauchari-Olaroz, the successful acquisition of Arena Minerals, the completion of the Separation Transaction and the financing with GM for the development of the Thacker Pass project."
• "Management reviews its capital management approach on an ongoing basis and believes that, given the relative size of the Company, this approach is reasonable."
• "The Company believes that it has sufficient liquidity to meet the Company's minimum obligations for at least the next 12 months from December 31, 2024."

Industry Context

The lithium market is characterized by significant volatility influenced by global economic cycles and the rapid adoption rate of lithium batteries, particularly in electric vehicles (EVs). While lithium prices reached an all-time high in 2022 due to supply constraints and surging EV demand, they have recently decreased significantly due to rising supply, subdued demand, and a less robust EV market outside of China. A small number of companies, primarily operating brine deposits in South America and spodumene hard-rock deposits in Australia, dominate the production of end-use lithium products. Lithium-ion batteries remain the preferred technology for high-density energy storage. The industry is seeing innovation in cathode types like LMFP, which offers improved energy density and cost efficiency, primarily pioneered in China. Global lithium demand for batteries is projected to grow substantially, with EVs and Battery Energy Storage Systems (BESS) driving the majority of future demand. Argentina is a significant player in global lithium reserves and is projected to substantially increase its production by 2034. Competitive strategies in the market include dynamic pricing, innovation in extraction technologies like DLE, and a strong focus on sustainability and ESG metrics to meet regulatory requirements and attract environmentally conscious investors.

Comparison to Industry Standards

• The Pastos Grandes Project's hydraulic parameters, including drainable porosity values between 0.05 and 0.11 and hydraulic conductivities between 0.5 m/d and 300 m/d, are considered comparable to those of commercially producing lithium brine operations in Salar de Atacama, Chile, and Salar de Olaroz, Argentina.
• The geochemical characteristics of the Pastos Grandes brine suggest that conventional processing techniques, similar to those employed in established lithium brine operations such as Salar de Atacama (Chile), Salar de Olaroz (Argentina), Salar de Cauchari (Argentina), and Clayton Valley (USA), can be effectively utilized.
• The estimated operating cost for the Pastos Grandes Project of US$6,183 per tonne of battery-grade Lithium Carbonate Equivalent (LCE) and for Cauchari-Olaroz of US$6,543 per tonne of lithium carbonate are competitive within the global lithium brine industry.
• The company's executive compensation program is benchmarked against a peer group of public lithium mining companies, other diversified mining companies, and lithium/specialty chemical producers in North America and Australia, aiming for competitive compensation levels within the median range.

Management Changes

Corporate Governance

Related Party Transactions

• Minera Exar S.A. has significant loans payable to Exar Capital B.V. and Proyecto Pastos Grandes S.A. (PGCo), both of which are related parties.
• Exar Capital B.V. provides procurement support to Minera Exar S.A., facilitating the purchase of materials and supplies from international vendors.
• Minera Exar S.A. entered into a loan agreement with Proyecto Pastos Grandes S.A. (PGCo) for a total of $65 million in July 2024.
• The Los Boros Option Agreement involves ongoing quarterly payments of $200,000 and a 3% net profit interest royalty payable to Grupo Minero Los Boros, a company related to the president of Minera Exar.
• Minera Exar S.A. has a construction services contract with Magna Construcciones S.R.L., amounting to $534,000 in 2024, a company related to its president.
• A salt harvesting service contract exists with Servicios Mineros Cauchari S.A., in which Magna holds a 49% stake, with transaction amounts of $22.313 million in 2024.
• Irrevocable commitments were received from Ganfeng and Lithium Argentina (ultimate shareholders of Exar Capital B.V.) in June 2025, stating they would not seek repayment of amounts advanced or loaned to Minera Exar S.A. for 12 months from July 1, 2025.

Stakeholder Impact

• Shareholders: Impacted by the company's financial performance (net loss for Minera Exar), share price volatility, and the reclassification of mineral resources, which may affect investor perception. Executive compensation structure aims to align management interests with shareholder value.
• Employees: Affected by the executive compensation program, including base salaries, short-term and long-term incentives, and changes to employment agreements, particularly the removal of termination and change of control payments for key executives. Health, dental, life, and disability insurance, and wellness benefits are provided.
• Customers: Potential for new customers for the Pastos Grandes Project due to uncommitted offtake rights, which could expand market reach.
• Suppliers: Engaged through standard supply channels and related party contracts for materials, reagents, and services, ensuring operational continuity.
• Creditors: Directly impacted by the company's financial health, its ability to meet loan obligations, and recent debt restructuring efforts, including new loan facilities and negotiable bond issuances.
• Local Communities (Argentina): Benefit from the company's social and economic development programs, local employment opportunities, and community engagement initiatives. Surface rights agreements with aboriginal communities are in place.
• Regulatory Bodies: The company's compliance with SEC, TSX, NYSE, Swiss, Canadian, and Argentine regulations, including financial reporting, corporate governance, and environmental permitting, is crucial for maintaining operational licenses and market access.

Next Steps

• Incorporate lithium resources from AMSA properties into the Pastos Grandes Project resource estimate to inform numerical groundwater flow and transport modeling for final brine production wellfield design and updated reserves.
• Conduct additional geophysical surveys on AMSA properties to enhance the understanding of brine resources in the Salar and marginal areas.
• Perform 30-day pumping tests on AMSA production well PW-1 and existing brine production wells PGPW18-15 and PGPW18-17 to characterize the lower brine aquifer.
• Carry out 7-day pumping tests on water production wells PGMW19-2 and PGPW19-3, along with additional groundwater exploration, to secure future water supply requirements for the Pastos Grandes and Sijes basins.
• Resume numerical modeling with the AMSA-developed 3D FEFLOW groundwater flow and transport model for predictive simulations, evaluation of potential environmental effects, and preparation of updated lithium reserves for the consolidated Pastos Grandes basin.
• Implement systematic hydro(geo)logical monitoring programs for surface water and groundwater features to reinforce baseline characterization of the Pastos Grandes basin.
• Drill 7-10 deep exploration core holes aimed at increasing the lithium resource base of the Pastos Grandes Project.
• Drill four industrial water exploration wells to evaluate resources and optimize the production strategy, including Arena Minerals' blocks to the North and East of the basin.
• Finalize the regional development plan for the Pastos Grandes basin, which includes the Pastos Grandes Project, Sal de la Puna project, and Ganfeng's adjacent Pozuelos project, expected in 2025.
• Explore opportunities to bring in new customers and financing to accelerate and support the development of the global lithium chemical supply chain for the Pastos Grandes Project.
• Continue to investigate measures to leverage the company's experience and learnings from the development of the Cauchari-Olaroz Operation.
• Carry out further Environmental Impact Assessment (EIA) updates as required for Project construction and operations.

Key Dates

Recommendation

Keywords

Lithium, Argentina, Mining, Brine, Cauchari-Olaroz, Pastos Grandes, SEC Filing, 20-F/A, Mineral Resources, Commercial Production, Financial Results, Executive Compensation, Corporate Governance, Exploration, Battery Grade Lithium Carbonate, Ganfeng, Salta Province, Jujuy Province, SEC Technical Report Summary, S-K 1300, Direct Lithium Extraction, EV Batteries