Q4 2023 Lithium Americas Argentina Corp Earnings Call

So you're not disclosing what sales volumes were out of XR lack for the fourth quarter, but.

It looks like you are talking about 2000 $21 million gain from the JV from XR in the fourth quarter.

Speaker Change: Could you talk about are you able to give a little color about what kind of sales run rates are and when you give production guidance and if it's $20 million that wouldn't seem to imply that you had some healthy profits on these times, even if the quality wasn't quite what you want yet and then <unk>.

Speaker Change: Giving a 2025 5000 ton production guidance out of <unk> This year.

Speaker Change: We assume that's what the sales would be volumes also out of the fishery.

Speaker Change: Maybe I'll take your second part of that question first.

Speaker Change: So yes. The guidance is 2000 25000 metric tons of production this year.

Speaker Change: This reflects the variability in a typical ramp up.

Speaker Change: I think things are going very well and there is room to improve there, but obviously that guidance.

Speaker Change: As a reflection of what we believe is achievable today and incorporate some of the <unk>.

Speaker Change: <unk> ramp up issues that are typical in a project like this.

Speaker Change: I think for the first part of your question.

Alex Sugar: Ill turn it over to Alex sugar.

Alex Sugar: To answer around the $20 million Alex.

Alex Sugar: Thanks Sam.

Alex Sugar: Alex.

Alex Sugar: Paul.

Alex Sugar: The 610 million for the full year.

Alex Sugar: Is not only large share of the joint venture operating profit. It doesn't include <unk> share of JV results of operation, but in addition to that it includes other elements.

Alex Sugar: <unk>, a significant noncash foreign exchange gain on some of the local.

Alex Sugar: Peso denominated totaled an inter company loans.

Alex Sugar: Because of the significant deflation in the end of 2023, the JV recognized a noncash unrealized foreign exchange gain on such loans in accounting.

Alex Sugar: The 16, new and reflects a large share of this of dedicated.

Alex Sugar: For more details on disclosure Parker disclosure note eight.

Alex Sugar: On page number four and plan to file.

Alex Sugar: The company's financial statements and happy to follow up or email if you have any more detailed questions.

Speaker Change: Okay I'll ask one more question.

Speaker Change: Sam and team can you talk about the trade off there.

Speaker Change: Youre looking at for.

Product quality. So you got to look at what kind of quality can you got battery grade if theres different floating definitions of battery grade technical grade and you've got to look at how much volume you can get out.

Speaker Change: We know all arose their phase III across the road. There is just focusing on technical grade how will the tradeoff in trying to push as much volume as possible.

Speaker Change: But maybe deciding maybe more technical grade might be the optimal path and upgrading it to battery grade later, sorry elsewhere, maybe began phone just talk about the trade off that you're sort of looking about it as we start to ramp the operation and trying to maximize profit.

Speaker Change: Sure.

Speaker Change: I think I'll start by just saying that the plant is designed to produce battery battery grade.

Speaker Change: And our focus today is on ramping up volumes.

Speaker Change: As they as a function of increasing volumes, we also expect quality to improve.

Speaker Change: As we reach higher and higher rates at steady state will be less variability flowing into the product.

So the intention right now is the move to battery grade.

Speaker Change: Obviously, we will do whatever is in the best interest of shareholders and maximizing value and we consistently kind of review that with our joint venture partner, but the plan is to.

Speaker Change: Production volumes.

The increased improvement in product quality.

Speaker Change: And move towards battery grade.

Speaker Change: Our next question will come from the line of Ben Isaacson with Scotiabank. Please go ahead.

Ben Isaacson: Thank you very much and good morning, everyone and congrats on the first call and Sam Congrats as well.

Ben Isaacson: First question is can you talk about the weather related power disruptions.

Ben Isaacson: And.

Ben Isaacson: What is.

Ben Isaacson: What exactly happened and how long has it been going on for and what is the mitigated going forward.

Ben Isaacson: Sure.

Ben Isaacson: I'd say in the first couple months of this year really February and March the Pune area in Argentina experienced really unusual number of electrical storms.

Ben Isaacson: Which impacted some of the reliability of our power to the site.

Ben Isaacson: So this is something that we're working on to.

Ben Isaacson: To mitigate going forward just increasing.

Ben Isaacson: Increasing the support systems, they're improving and redundancies and it's something that we are.

Ben Isaacson: We're well advanced and taken care of.

Ben Isaacson: So it was.

Ben Isaacson: Unusual weather.

Speaker Change: So how should we is there still risk and will that risk be eliminated entirely when youre done like in a quarter or whenever.

Speaker Change: I mean, the plan is yet to mitigate these power related issues.

Speaker Change: Sure.

Speaker Change: I would say that as we push throughput through the plant.

Speaker Change: It obviously puts more strain on the power system, but we've we've identified what needs to be fixed and.

Speaker Change: We're pursuing.

Speaker Change: <unk>.

Speaker Change: Perfect and then my follow up question is you talked in the press release about expectations for positive cash flow from operations. This year can.

Can you give us just some color on your assumptions in terms of the economics to achieve positive CFO, what kind of pricing are you thinking about et cetera.

Speaker Change: When we're thinking about recent pricing so maybe just take an average of the.

Speaker Change: Year to date.

Speaker Change: Our next question will come from the line of David <unk> with TD Cowen. Please go ahead.

Speaker Change: Right.

David: Good morning, everyone and congrats again, Sam and team on the first inaugural call here.

David: Perhaps just to dig into the weeds, a little bit more I was hoping just on the guidance side, if you might opine on what.

David: Your expected operating costs now is on a per ton basis sort of ex X D. DNA.

David: In this first year and then what you're thinking now as you get to capacity relative to your original expectations.

So I mean, I think as most people who appreciate we're in the middle of a ramp up of Qatari all of ours.

David: Costs are largely tied to volumes.

David: And as we reach steady state who will provide more more details I would say on the cost side of things. We're also going through a transition from construction to development and so the cost.

We'll change the cost structure will change.

So I think it's too early to provide you with any of that guidance, but when when we have.

David: A cleaner sense once we reach more steady state production will obviously be providing that information along with our partner Genzyme.

David: But in terms of in terms of operating costs I mean, what we have said is that we expect to be operating cash flow positive in 2024 based on recent pricing, which Ben's question is kind of an average of.

David: Battery quality, China year to date.

Speaker Change: Yes, I appreciate that.

Speaker Change: Maybe just further into some of the guidance details.

Speaker Change: I'm trying to get a sense of.

Speaker Change: Thank you all announced that in light of the current environment Youre, reducing.

Speaker Change: You're reducing corporate overhead spend by 25%.

Speaker Change: Obviously, as we think about the Qatari expansion it seems like Thats, a wait and see how do we think about the capital that.

Speaker Change: That youre looking to spend this year I know that you know that youre going to do away with sort of excessive exploration work at pastas Grande.

Speaker Change: But how do you see this base capex evolving this year or is it kind of iterative right now as you are considering multiple different opportunities that are out there.

Speaker Change: Yes, I mean, I'd say that we're in a very fortunate position.

Speaker Change: To not have material capital commitments going through this year.

Speaker Change: Disclosed in our documents, we have $13 million of Capex remaining to be spent.

Speaker Change: The priority for us is to get through ramp up at the steady state production.

Speaker Change: Stage.

Speaker Change: <unk> two will follow that but will follow a successful completion once we get up to near nameplate capacity by the end of this year.

In terms of our decision to cut back on other corporate expenses.

Speaker Change: It is in part related to the transaction with <unk> and the development plan that they will be laid in for the past those grant us region.

Speaker Change: So we didn't anticipate when we don't anticipate spending material capital on that plan given that we already have a wealth of information from the work that's already been done by by Us and our predecessors.

Speaker Change: On the past subscribers.

Okay.

Speaker Change: Your next question will come from the line of Santos <unk> with HSBC. Please go ahead.

Santos: Yes, hi, good morning, everyone.

Santos: And congratulations on your new role so I have a couple of questions. Here. Firstly can you provide some timeline on the ramp up to battery grade specifications.

Santos: Because I was under the impression that Debottlenecking kcl plant.

Santos: Help you achieve higher production rates as for less battery grade products.

Santos: I see your production rates are increasing but you are still producing technical grade products. So if you can provide some color on that that will be helpful.

Speaker Change: Yes, I mean, I think the priority.

Speaker Change: Alright.

Speaker Change: Sorry, the second question, Yes go ahead.

Speaker Change: I'll wait for the second part of the question.

Speaker Change: Okay.

Speaker Change: Yes, the priority for us is ramping up volumes.

Speaker Change: And getting to the study.

Speaker Change: That is near nameplate capacity by the end of the year.

Speaker Change: Volume or poor quality will improve as we as we push through production.

Speaker Change: As we increase throughput and achieved.

Steady state production that ever greater throughput.

Speaker Change: It's going to help with the variability of our product and the product quality will improve the battery plant that is designed to do battery quality specification.

Speaker Change: Yes.

Speaker Change: Great and how to think about the pricing discount to your JV partner gang thing given the product quality differences.

Speaker Change: Yes.

Speaker Change: Yes, the pricing today.

Speaker Change: We receive is tied to battery quality prices sure then adjusted based on product quality and the cost to further process this product by dancing in China.

Speaker Change: As the product improves.

Speaker Change: Which we've already seen the discount to battery quality that we received as expected to narrow.

Speaker Change: And.

Speaker Change: Yeah, So it's tied to battery grade.

Speaker Change: The adjustment for product quality, which is improving.

Speaker Change: Our next question will come from the line of Noel Parks with Tuohy Brothers. Please go ahead.

Noel Parks: Hi, good morning.

Noel Parks: Sorry.

Noel Parks: Already address this but I was just wondering.

Noel Parks: At this stage of production and operations.

No.

Noel Parks: Page one.

Noel Parks: I was just wondering do you have any any rough sense of sort of the delta.

Noel Parks: In terms of cost inflation.

Noel Parks: Now live in production versus.

Noel Parks: What sort of the original plan.

Noel Parks: Levels were.

Noel Parks: And a sense of where kind of where we've come versus kind of your original the original studies.

Speaker Change: I mean, I'd say that.

Speaker Change: The largest.

Cost on an operated basis for any Brian project.

Speaker Change: Are the reagents and reagent prices have been very volatile.

Speaker Change: There has been.

Speaker Change: Quite a bit of inflation since the technical report was was announced.

Speaker Change: But we expect that our.

Our costs will be.

Speaker Change: On a steady state basis.

Speaker Change: Reflective of other operations.

Speaker Change: In the vicinity.

Speaker Change: Great and just looking at looking ahead, I guess, just further expands our resources, including personnel and so forth.

Speaker Change: As the region continues to build out.

Speaker Change: Hi.

Several different areas with new.

Speaker Change: New projects getting off the ground.

Speaker Change: Do you have any sense of any particular strength.

Speaker Change: Source constraints.

Speaker Change: Just looking out over the next few phrases the next few years.

Speaker Change: I mean human capital is hugely important.

I think as we all know Argentina is very active in terms of lithium projects.

Speaker Change: So we're very happy that we've built the team along with Dan thing within the joint venture project.

Speaker Change: But that's certainly an area that I think.

Speaker Change: The country will will face challenges attracting appropriate talent.

Speaker Change: I think in our case, we're very fortunate to have a joint venture partner and again, saying that access to their <unk>.

Speaker Change: World class expertise in and commissioning and operate in these very large lithium chemical plants.

Speaker Change: I mean, the other area is kind of logistics there is a lot of a lot of reagents.

Speaker Change: Move through.

Speaker Change: The northwest part of Argentina, and that will just increase as more projects come online and this is part of the thinking around our.

Speaker Change: Are the investments <unk> made to pass those ground us in kind of assessing our regional development plan for <unk>, where we can be better coordinated with our existing joint venture partner at the charter, which is kind of thing.

Speaker Change: Okay.

David: Our final question is a follow up from the line of David <unk> with PD Cowen. Please go ahead.

David Cowen: Sorry to come back for a second here, but I was hoping to ask.

David Cowen: Just sort of what information we might expect to receive with this regional development plan.

David Cowen: What's going to be included in that around the planning and disclosures and.

David Cowen: Should we think about this as a fulsome development plan for Qatari process Grande and beyond.

David Cowen: Like the next several years and will there be additional feasibility studies that go into that.

Speaker Change: Uh huh.

Okay.

Speaker Change: The plan right now is for again same to lead that this renewable development plan focused on the asset bulker that would include.

Speaker Change: As well as past those ground as Pat described us in double of Qunar.

Speaker Change: We expect to have.

More information towards the end of the year.

Speaker Change: Okay fair enough. Thank you guys.

Speaker Change: With that I'll hand, the call back over to Kelly for any closing remarks.

Kelly: And thank you I wanted to thank everyone for joining the call today and we look forward to your participation next quarter have a great day.

Speaker Change: Thank you all for joining this will conclude today's meeting you may now disconnect.

Speaker Change: Okay.

Speaker Change:

Speaker Change: [music].