Q2 2026 Lithium Argentina AG Earnings Call

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the Lithium Argentina Q4 2026 earnings conference call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello everyone. Thank you for joining us and welcome to the Lithium Argentina Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kelly O'Brien, Vice President of Investor Relations. Kelly, please go ahead.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Kelly O'Brien, Vice President of Investor Relations.

Speaker #1: Kelly, please go ahead.

Speaker #2: Thank you, Kendra. I want to welcome everyone to our conference call this morning. Joining me on the call today to discuss the Q2 2026 results is Sam Piggett, CEO of Lithium Argentina.

Kelly O'Brien: Thank you, Kendra. I want to welcome everyone to our conference call this morning. Joining me on the call today to discuss the Q2 2026 results is Sam Pigott, CEO of Lithium Argentina. Alex Shulga, our CFO, will also be available for Q&A. Before we begin, I would like to cover a few items. Our Q2 2026 earnings results were released earlier this morning, and the corresponding documents are available on our website. I remind you that some of the statements made during this call, including any production guidance, expected company performance, update on development plans, 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 presentation, MD&A, and news releases. I now turn the call over to Sam Pigott.

Speaker #2: Alec Shoga, our CFO, will also be available for Q&A. Before we begin, I would like to cover a few items. Our Q2 2026 earnings results were released earlier this morning, and the corresponding documents are available on our website.

Speaker #2: I remind you that some of the statements made during this call, including any production guidance, expected company performance, updates on development plans, the timing of our projects, and the market conditions, may be considered cautionary language about forward-looking statements in our presentation, MD&A, and news releases.

Speaker #2: I now turn the call over to Sam Piggott.

Speaker #3: Thanks, Kelly. And thanks, everyone. Good morning. The Q2 was another period of strong execution at Kachari Oleroz, and the results reflect what the operation was designed to deliver.

Sam Pigott: Thanks, Kelly, and thanks everyone. Good morning. The Q2 was another period of strong execution at Caucharí Olaroz, and the results reflect what the operation was designed to deliver: reliability, low cost production, and strong cash generation. Through 2026, the operation has averaged 95% design capacity and remains firmly on track to achieve production guidance. From a cost perspective, costs remain under $6,000 per ton, supporting robust operating margins and driving significant cash flow. Reflecting the significant improvement in Argentina and substantial cash generation, the operation has now distributed $160 million year to date, of which $75 million was Lithium Argentina's share. Finally, we completed two new unsecured debt facilities totaling $220 million at the JV level. This further strengthens the financial position of the operation, supporting our growth plans and providing flexibility to continue to make distributions to de-risk our balance sheet.

Speaker #3: Reliability, low-cost production, and strong cash generation. For 2026, the operation has averaged 95% design capacity and remains firmly on track to achieve production guidance.

Speaker #3: From a cost perspective, costs remain under $6,000 per ton, supporting robust operating margins and driving significant cash flow. Reflecting the significant improvement in Argentina and substantial cash generation, the operation has now distributed $160 million year-to-date, of which $75 million was Lithium Argentina's share.

Speaker #3: Finally, we completed two new unsecured debt facilities totaling $220 million at the JAV level. This further strengthens the financial position of the operation, supporting our growth plans and providing flexibility to continue to make distributions to de-risk our balance sheet.

Speaker #3: Turning to the financial performance at Kachari Oleroz. The operation delivered adjusted EBITDA of approximately $110 million in the Q2, up 4% from the Q1.

Sam Pigott: Turning to the financial performance at Caucharí Olaroz. The operation delivered adjusted EBITDA of approximately $110 million in the Q2, up 4% from the Q1. Stronger realized prices, with prices averaging around $19,500 per ton in the Q2, and continued cost discipline supported these results, with total adjusted EBITDA now over $200 million for the H1 of the year. These financial results are now translating directly into strong cash generation, supporting distributions to the JV partners, debt reductions, and providing flexibility for our next phase of growth. Looking more closely at operations, through 2026, we've averaged 95% of design capacity, demonstrating consistent and stable operations. We were pleased with the results, which included a planned shutdown during the Q2 that allowed us to focus on optimization and debottlenecking efforts.

Speaker #3: Stronger realized prices, with prices averaging around $19,500 per ton in the Q2, and continued cost discipline, supported these results with total adjusted EBITDA now over $200 million for the first half of the year.

Speaker #3: These financial results are now translating directly into strong cash generation. Supporting distributions to the JAV partners, debt reductions, and providing flexibility for our next phase of growth.

Speaker #3: Looking more closely at operations. For 2026, we've averaged 95% of design capacity. Demonstrating consistent and stable operations. We were pleased with the results, which included a planned shutdown during the Q2 that allowed us to focus on optimization and de-bottlenecking efforts.

Speaker #3: For 2026, we are well-positioned to deliver on the full-year production guidance of 35,000 to 40,000 tons. Going forward, our objective is to build on the consistency we are seeing today and support sustained production at rates even above the current 40,000-ton capacity.

Sam Pigott: For 2026, we are well positioned to deliver on the full-year production guidance of 35,000 to 40,000 tons. Going forward, our objective is to build on this consistency we are seeing today and support sustained production at rates even above the current 40,000 ton capacity. Moving to costs, year to date, cash operating costs have averaged around $5,600 per ton. Q2 costs came in modestly higher due to planned shutdown, higher energy costs, and the impact of a stronger peso. Since startup, we have brought costs down from roughly $8,000 per ton to a consistent sub $6,000 level, driven by ongoing process improvements, cost reduction efforts, and the inherent advantages in the design of our brine-based operation. This low-cost position, coupled with higher average prices during Q2, has translated into a meaningful expansion in margins.

Speaker #3: Moving to costs. Year-to-date, cash operating costs have averaged around $5,600 per ton. Q2 costs came in modestly higher due to planned shutdown, higher energy costs, and the impact of a stronger peso.

Speaker #3: Since startup, we've brought costs down from roughly $8,000 per ton to a consistent sub-$6,000 level, driven by ongoing process improvements, cost reduction efforts, and the inherent advantages in the design of our brine-based operation.

Speaker #3: This low-cost position, coupled with higher average prices during the Q2, has translated into a meaningful expansion in margins. During the Q2, the cash operating margin reached 70%, driving strong cash generation from Kachari Oleroz.

Sam Pigott: During Q2, the cash operating margin reached 70%, driving strong cash generation from Caucharí Olaroz. This slide shows exactly how EBITDA is driving free cash flow at the operational level. Starting on the left, the $110 million of adjusted EBITDA generated in Q2 translated into $141 million of free cash flow from operations. Part of this reflected a drawdown of working capital, given the timing of sales made in Q1 that were collected in Q2. Moving to the right, you can see where this cash went. Net debt at the joint venture level declined from $256 million to $142 million, a reduction of $114 million in a single quarter. Importantly, that deleveraging was achieved while continuing to make distributions to the JV partners. Turning to the balance sheet.

Speaker #3: This slide shows exactly how EBITDA is driving pre-cash flow at the operational level. Starting on the left, the $110 million of adjusted EBITDA generated in the Q2 translated into $141 million of pre-cash flow from operations.

Speaker #3: Part of this reflected a drawdown of working capital, given the timing of sales made in the Q1 that were collected in the Q2. Moving to the right, you can see where this cash went.

Speaker #3: Net debt at the joint venture level declined from $256 million to $142 million. A reduction of $114 million in a single quarter. And importantly, that deleveraging was achieved while continuing to make distributions to the JAV partners.

Speaker #3: Turning to the balance sheet, we continue to strengthen our financial position, with improved liquidity at both Kachari Oleroz operations and the Lithium Argentina corporate level.

Sam Pigott: We continue to strengthen our financial position with improved liquidity at both Caucharí Olaroz operations and the Lithium Argentina corporate level. At Caucharí Olaroz, we closed $220 million of new unsecured debt facilities, including $170 million three-year facility closed in early August with a variable interest rate currently under 5%. Combined with strong cash generation, this provides additional balance sheet strength and financial flexibility to support further JV distributions and growth. At the corporate level, we ended the quarter with $100 million of cash and total liquidity of $230 million. This includes $130 million in an undrawn six-year debt facility provided by Ganfeng at SOFR +2.5%, or around 6% today. We also received an additional $27 million in distributions from Caucharí Olaroz subsequent to the quarter end and expect to receive additional distributions in H2, given significant cash flow and liquidity at the operation.

Speaker #3: At Kachari Oleroz, we closed $220 million of new unsecured debt facilities. Including $170 million three-year facility closed in early August, with a variable interest rate currently under 5%.

Speaker #3: Combined with strong cash generation, this provides additional balance sheet strength and financial flexibility to support further JAV distributions and growth. At the corporate level, we ended the quarter with $100 million of cash and total liquidity of $230 million.

Speaker #3: This includes $130 million in an undrawn six-year debt facility provided by GANFANG at SOFR plus $2.5% for around 6% today. We also received an additional $27 million in distributions from Kachari Oleroz subsequent to the quarter end, and expect to receive additional distributions in the second half, given significant cash flow and liquidity at the operation.

Speaker #3: Looking ahead, the chart on the right illustrates the significant earnings capacity of Kachari Oleroz across a range of lithium price scenarios. At current lithium prices, of $20,000 per ton, we estimate 2026 adjusted EBITDA of approximately $460 million on 100% basis.

Sam Pigott: Looking ahead, the chart on the right illustrates the significant earnings capacity of Caucharí Olaroz across a range of lithium price scenarios. At current lithium prices of $20,000 per ton, we estimate 2026 adjusted EBITDA of approximately $460 million on 100% basis. The combination of strong operating cash flow, access to attractively priced debt, and liquidity at both the joint venture and corporate level provides us with significant financial flexibility as we advance our growth plans and de-risk our balance sheet. Another milestone I would like to highlight is the recent independent verification of the carbon footprint at Caucharí-Olaroz. The product carbon footprint for 2025 was only 1.4 tons of CO2 equivalent per ton of LCE on a scope 1 and scope 2 basis under the internationally recognized ISO and GHG protocol standards.

Speaker #3: The combination of strong operating cash flow, access to attractively priced debt, and liquidity at both the joint venture and corporate level provides us with significant financial flexibility as we advance our growth plans and de-risk our balance sheet.

Speaker #3: Another milestone I'd like to highlight is the recent independent verification of the carbon footprint at Kachari Olaroz. The product carbon footprint for 2025 was only 1.4 tons of CO2 equivalent per ton of LCE on a Scope I and Scope II basis.

Speaker #3: Under the internationally recognized ISO and GHG Protocol standards. This result is supported by the fact that approximately 97% of the energy used at the production process comes from solar power, it also highlights one of the key advantages of our brine-based operation, which has a significantly lower carbon footprint than many other, more energy-intensive lithium operations.

Sam Pigott: This result is supported by the fact that approximately 97% of the energy used at the production process comes from solar power. It also highlights one of the key advantages of a brine-based operation, which has a significantly lower carbon footprint than many other more energy-intensive lithium operations. Turning to our growth pipeline, we remain disciplined and are taking a phased approach, building on the strength we've demonstrated at stage 1. At Caucharí-Olaroz, our immediate priority is finalizing the stage 2 development plan with the scoping study results expected around the end of Q3. Following RIGI approval in Q2, we're advancing an early works program, including drilling additional wells, engineering, and de-bottlenecking the existing plant. Much of this work directly benefits the existing operation, helping push production above design capacity while also meeting the needs of the stage 2 expansion.

Speaker #3: Turning to our growth pipeline, we remain disciplined and are taking a phased approach. Building on the strength we've demonstrated at stage one. At Kachari Oleroz, our immediate priority is finalizing the stage two development plan, with a scoping study results expected around the end of the third quarter.

Speaker #3: Following riggy approval in the second quarter, we're advancing an early works program, including drilling additional wells, engineering, and de-bottlenecking the existing plant. Much of this work directly benefits the existing operation.

Speaker #3: Helping push production above design capacity while also meeting the needs of the stage two expansion. For stage two, we are working with our partner on a modular approach.

Sam Pigott: For stage 2, we are working with our partner on a modular approach, a DLE facility targeting an initial capacity of 10,000 tons per annum as the first phase of the broader 45,000 ton per annum expansion. Turning to Pozuelos-Pastos Grandes, we continue to wait for the approval of RIGI, which was submitted in Q1 2026 and is expected later this year. In parallel, we've made significant progress with our partner Ganfeng on the financing plan for Pozuelos-Pastos Grandes, including discussions with potential minority strategic partners. Across both stage 2 and Pozuelos-Pastos Grandes, we're advancing a phased and disciplined approach to growth that leverages our experience with stage 1, our existing cash flow, and access to low-cost capital at the project level.

Speaker #3: A DLE facility targeting an initial capacity of 10,000 tons per annum as the first phase of the broader 45,000-ton per annum expansion. Turning to PPG, we continue to wait for the approval of riggy, which was submitted in Q1 2026 and is expected later this year.

Speaker #3: In parallel, we've made significant progress with our partner GANFANG on the financing plan for PPG, including discussions with potential minority strategic partners. Across both stage two and PPG, we're advancing a phased and disciplined approach to growth that leverages our experience with stage one, our existing cash flow, and access to low-cost capital at the project level.

Speaker #3: In closing, the first half of the year reflects strong execution across the business. And the priorities ahead build directly on that foundation. Operating safely and cost-competitively strengthening our balance sheet, advancing our growth pipeline, and allocating capital with discipline.

Sam Pigott: In closing, the H1 of the year reflects strong execution across the business and the priorities ahead build directly on that foundation, operating safely and cost competitively, strengthening our balance sheet, advancing our growth pipeline, and allocating capital with discipline. Finally, as we continue to broaden our investor base and improve global market visibility, we're evaluating a secondary listing on the ASX, which we believe would complement our NYSE listing and further support long-term shareholder value. Lithium Argentina is well-positioned. High-quality operations, a strengthened balance sheet, and a disciplined approach to growth. We look forward to sharing further updates on our progress in the quarters ahead. And now we'll open the call for questions. Thanks.

Speaker #3: Finally, as we continue to broaden our investor base and improve global market visibility, we're evaluating a secondary listing on the ASX, which we believe would complement our NYSE listing and further support long-term shareholder value.

Speaker #3: Lithium Argentina is well-positioned. High-quality operations, a strengthened balance sheet, and a disciplined approach to growth. We look forward to sharing further updates on our progress in the quarters ahead.

Speaker #3: And now we'll open the call for questions. Thanks.

Speaker #1: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Mohamed Sidibe from National Bank. Mohamed, your line is open. Please go ahead.

Speaker #1: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Mohamed said, from National Bank.

Speaker #1: Mohamed, your line is open. Please go ahead.

Speaker #2: Good morning, Simon Simmons. Thanks for taking my question. It's been good to see the good progress on the affording production front. Just maybe from a modeling standpoint, can you help us understand how we should think about the K&N subproduction into Q3 and Q4?

Mohamed Sidibe: Good morning, Tom and Tim, and thanks for taking my question. Good to see the good progress on the operating production front. Just maybe from a modeling standpoint, can you help us understand how we should think about the cadence of production into Q3 and Q4, any maintenance or shutdown expected, as well as any catch-up in sales, given their lower sales versus production in Q2? Thank you.

Speaker #2: Any maintenance or shutdown expected? And as well as any catch-up in sales given the lower sales versus production in Q2? Thank you.

Sam Pigott: Yeah. On the production question, we don't have any planned maintenance shutdowns, so we expect production to be very strong throughout the back half of the year. On the sales, it's really a timing issue between production when those get translated into sales and depending on when the quarter ends, kind of cuts it off. So I think you'll see stronger sales through the back end of the year as well.

Speaker #3: Yeah, on the production question, we don't have any planned maintenance shutdown, so we expect production to be very strong throughout the back half of the year.

Speaker #3: On the sales it's really a timing issue. Between production when those get translated into sales and depending on when the quarter ends kind of cuts it off.

Speaker #3: So I think you'll see stronger sales through the back end of the year as well.

Speaker #1: Your next question from the line of Joel Jackson with BMO Capital Markets. Joel, your line is open. Please go ahead.

Operator: Your next question from the line of Joel Jackson with BMO Capital Markets. Joel, your line is open. Please go ahead.

Speaker #4: Hi, good morning everyone. Sam, obviously lithium market's volatile at the best of times. We've seen a quite strong rebound in lithium prices. Now things have come down.

Joel Jackson: Hi. Good morning, everyone. Sam, obviously lithium market's volatile at the best of times. We've seen a quite strong rebound in lithium prices. Now things have come down. We have seen some restarts from companies. We've seen companies like yourself and Ganfeng talking about advancing projects. Can you speak to your conviction and your partner's conviction in your different projects here at different lithium price levels, how the market's faring, how assumptions have changed versus six months ago? Thanks.

Speaker #4: We have seen some restarts from companies. We've seen companies like yourself and Ganfeng talking about advancing projects. Can you speak to your conviction, and your partners' conviction, in your different projects here at different lithium price levels—how the market's faring, and how assumptions have changed versus six months ago?

Speaker #4: Thanks.

Speaker #3: I mean, we have a huge amount of conviction in our projects. And then GANFANG and LAR view the expansion at Kachari and PPG as two of the most attractive growth projects in the market today.

Sam Pigott: I mean, we have a huge amount of conviction in our projects. I think Ganfeng and LAR view the expansion at Caucharí and Pozuelos-Pastos Grandes as two of the most attractive growth projects in the market today. That view is largely founded on the success we've had at stage 1. This is a project that we brought online for under $1 billion. Today it's generating on a 100% basis, like $460 million in EBITDA. It's one of the lowest cost producing assets in the world. There couldn't be more conviction in our suite of assets. I think the way we're approaching both is in a disciplined manner. We talked a lot about Pozuelos-Pastos Grandes. Obviously, we have a development plan out on that that shows the economics, really very robust project.

Speaker #3: That view is largely founded on the success we've had at stage one. It's a project that we brought online for under a billion dollars.

Speaker #3: Today it's generating 100% basis, like 460 million dollars in EBITDA. It's one of the lowest cost-producing assets in the world. So there couldn't be more conviction in our suite of assets.

Speaker #3: And I think that the way we're approaching both is in a disciplined manner. So we talked a lot about kind of PPG, obviously we have a development plan down on that that shows the economics really very robust project.

Speaker #3: But we also talked about working with GANFANG on our appropriate financing plan, including a potential minority partner to provide the equity capital. So I mean, our job here at LAR is really to ensure that our shareholders benefit from what we have, which is joint control over two of the largest, highest quality lithium assets in the world.

Sam Pigott: But we also talked about working with Ganfeng on our appropriate financing plan, including a potential minority partner to provide the equity capital. Our job here at LAR is really to ensure that our shareholders benefit from what we have, which is joint control over two of the largest, highest quality lithium assets in the world. Our view is the market is growing in a fairly healthy way. These projects are definitely at the top of the list in terms of projects that should be brought online and will be brought online. I think stage 1 is just evidence of our ability to execute and lends to the conviction in continuing to grow in Argentina with Ganfeng.

Speaker #3: Our view is the market is growing fairly in a fairly healthy way. And these projects are definitely kind of at the top of the list in terms of projects that should be brought online and will be brought online.

Speaker #3: And I think stage one is just evidence of our ability to execute and lends to the conviction in continuing to grow in Argentina with GANFANG.

Speaker #1: Your next question comes from the line of Anthony Tagaleri with Canaccord. Anthony, your line is open. Please go ahead.

Operator: Your next question from the line of Anthony Taglieri with Canaccord. Anthony, your line is open. Please go ahead.

Speaker #4: Hey guys, good morning. Thanks for taking my questions. Maybe just on operating costs. So last quarter we would have talked about sort of full-year operating costs and that mid $5,000 per ton range.

Anthony Taglieri: Hey, guys. Good morning. Thanks for taking my questions. Maybe just on operating costs. Last quarter, we would've talked about full-year operating costs in that mid-$5,000 per ton range. Obviously, there was some cost pressures this quarter, energy costs, that sort of thing. Is this going to be recurring for the rest of the year, or was it more one time for this quarter? How should we think about operating costs for the rest of the year?

Speaker #4: Obviously there was some cost pressures this quarter. Energy costs, that sort of thing. Is this going to be sort of recurring for the rest of the year, or is it sort of more one-time for this quarter?

Speaker #4: How should we think about operating costs for the rest of the year?

Speaker #3: Yeah, I mean, Q2 obviously we had a planned shutdown. Which resulted in, I guess, a few hundred tons less production. So operating at 93% operating capacity.

Sam Pigott: Yeah. Q2, obviously, we had a planned shutdown, which resulted in, I guess, a few hundred tons less production, so operating at 93% operating capacity. That does have an impact on our cost. In terms of structural changes to our cost profile, we don't see anything. There was a small impact shared equally between just energy costs globally, as well as the stronger peso. But I think that mid-$5,000 per ton is still how we're tracking through the rest of the year. I think into next year and the years after, the view is as we continue to debottleneck, push the plant to 40 or above, there's room for those costs to come down even further. So we couldn't be happier with how the operation's running.

Speaker #3: That does have an impact on our costs. In terms of structural changes to our cost profile, we don't see anything. There was a small impact kind of shared equally between just kind of energy costs globally.

Speaker #3: As well as a stronger peso. But I think that mid $5,000 per ton is still kind of how we're tracking through the rest of the year.

Speaker #3: I think into next year and the years after, the view is as we kind of continue to de-bottleneck and push the plant to 40 or above, there's room for those costs to come down even further.

Speaker #3: So I mean, we couldn't be happier with how the operation is running. It is pretty remarkable. And I think the noise quarter over quarter in terms of 8% increase in costs in a quarter we have planned maintenance shutdown, I think is overshadowing the fact that this is a business with 70% operating margins that generated 141 million dollars of free cash flow from operations.

Sam Pigott: It is pretty remarkable and I think the noise quarter-over-quarter in terms of 8% increase in costs in a quarter we have planned maintenance shutdown, I think is overshadowing the fact that this is a business with 70% operating margins that generated $141 million of free cash flow from operations. We couldn't be more pleased with how the operation's going and how our teams at Exar are performing. Just really world-class.

Speaker #3: I mean, we couldn't be more pleased with how the operation is going and how our teams at XR are performing. Just really kind of world-class.

Speaker #1: Your next question from the line of Corinne Blanchard with Deutsche Bank. Corinne, your line is open. Please go ahead.

Operator: Your next question from the line of Corinne Blanchard with Deutsche Bank. Corinne, your line is open. Please go ahead.

Corinne Blanchard: Hi. Good morning, Sam. Good morning, everyone. Maybe can you talk about the timing for stage 2? So I think, one of the study scope on a pre-feasibility study also is now expected end of Q3. I think you already expected for mid-year. So just maybe wondering if there's a slight delay and if that's the case, what caused it? And just in general, what can we expect over the next 6 to 12 months for stage 2? Thank you.

Speaker #5: Hi, good morning. Sam, good morning. Everyone. My decision to talk about the timing for stage two. So I think one of the study scope or pre-feasibility study or so is now expected end of straight Q.

Speaker #5: I think you already expected for like mid-year. So just maybe wondering if there's a slight delay then is that the case? What caused it?

Speaker #5: And just in general, what can we expect over the next 6 to 12 months for stage two? Thank you.

Speaker #3: Yeah, I mean, I don't know. It's really slipped. I think we got it to mid-year, and now we've got it to before the end of Q3.

Sam Pigott: Yeah. I don't know if it's really slipped. I think we got it to mid-year. Now we're got into before the end of Q3. I think we're just aligning with Ganfeng to make sure what we present here is going to be something that we can execute on immediately. A part of it, you'll see in the plan when we put it out, but it'll contain a lot more details in terms of these early works that we're engaging in now to be able to accelerate the expansion in a phased approach, starting with 10,000 tons. I wouldn't flag it as a delay in any sense. Us and Ganfeng are very keen to get moving now with the RIGI approval. A lot of these early works, the spending can apply to that first $80 million of required spend in the first 2 years.

Speaker #3: I think we're just aligning with Ganfang to make sure what we present here is going to be something that we can execute on immediately.

Speaker #3: And part of it will you'll see in the plan we put it out, but it'll be it'll contain a lot more details in terms of these early works that we're engaging in now to be able to accelerate the expansion in a phased approach starting with 10,000 tons.

Speaker #3: So yeah, I wouldn't flag it as a delay in any sense. Us and GANFANG are very keen to get moving. Now with the riggy approval, a lot of these early works, the spending can apply to that first $80 million of required spend in the first two years.

Speaker #3: So, I think they'll be very pleased to see the report. I think the entire market and the industry will be impressed.

Sam Pigott: I think you'll be very pleased to see the report. I think the entire market and the industry will be impressed.

Speaker #1: Your next question comes from the line of Ben Isaacson with Scotiabank. Ben, your line is open. You may now go ahead.

Operator: Your next question from the line of Ben Isaacson with Scotiabank. Ben, your line is open. You may now go ahead.

Speaker #6: Thank you very much and good morning. Sam, can you talk about the de-bottlenecking opportunity at stage one? What exactly is being de-bottlenecked? How much does it cost?

Ben Isaacson: Thank you very much, and good morning. Sam, can you talk about the debottlenecking opportunity at stage 1? What exactly is being debottlenecked? How much does it cost? How long will this take? What are the next bottlenecks, if any, that can keep stage 1 surpassing original nameplate capacity? Thank you.

Speaker #6: How long will this take? And then what are the next bottlenecks, if any, that can keep stage one surpassing original nameplate capacity? Thank you.

Speaker #3: Thanks, Ben. Yeah, the de-bottlenecking effort is a function of us, through experience, being able to push major parts of the plant beyond 40,000 tons.

Sam Pigott: Thanks, Ben. Yeah. The debottlenecking effort is a function of us, through experience, being able to push major parts of the plant beyond 40,000 tons. For instance, the carbonation plant can do a lot more than that. So we have to go further, I guess, upstream in terms of debottlenecking. One example would be putting in a few additional wells to get more brine to push through the plant. So it's not overly expensive. A typical well runs somewhere less than $3 million, about 2.5. And we're talking about maybe the need for two or three of those over the course of the next six to eight months. So it's pretty low-hanging fruit, and it doesn't carry a significant investment. And obviously, if we can make investments that can push production up 2,000 to 3,000 tons, well worth doing. So I hope that answered your question.

Speaker #3: So, for instance, the carbonation plant can do a lot more than that. So, we have to kind of go further, I guess, upstream and, in terms of de-bottlenecking, like one example would be putting in a few additional wells to get more brine to push through the plant.

Speaker #3: So it's not overly expensive. A typical well runs somewhere less than $3 million, about two and a half. And we're talking about maybe the need for like two or three of those over the course of the next six to eight months.

Speaker #3: So it's pretty low hanging fruit. And it doesn't carry a significant investment. And obviously if we can make investments that can push production up two to 3,000 tons, well worth doing.

Speaker #3: So I hope that answered your question. And from a timing perspective, I mean, we're engaging in these early works kind of now. So you'll see very modest kind of capex spend over the next six to 10 months.

Sam Pigott: And from a timing perspective, we're engaging in these early works now. So you'll see very modest CapEx spend over the next six to 10 months. And the results should flow through into 2027, 2028.

Speaker #3: And the results should flow through into 2027, 2028.

Speaker #1: Your final question from the line of Ishan Jane. With HSBC. Ishan, your line is open. Please go ahead.

Operator: Your final question from the line of Ishan Jain with HSBC. Ishan, your line is open. Please go ahead.

Speaker #6: Good morning, everyone. I just have a question around the PPG. You have been looking for a partner or off-tech agreement. Anything for the financing of the project.

Ishan Jain: Good morning, everyone. I just have a question around the Pozuelos-Pastos Grandes. You have been looking for a partner or off-take agreement, anything for the financing of the project. So is there any progress on that front, or you're looking to secure permits before you get into any kind of partnership? Thank you.

Speaker #6: So, is there any progress on that front, or are you looking to secure permits before you get into any kind of partnership? Thank you.

Speaker #3: Yeah, I mean, we've had a lot of progress on that front. I think the major milestone will be the riggy approval for PPG. It's kind of a fundamental piece that de-risks this investment for a third party.

Sam Pigott: Yeah, we've had a lot of progress on that front. I think the major milestone will be the Régimen de Incentivo a las Grandes Inversiones approval for Pozuelos-Pastos Grandes. It's a fundamental piece that de-risks this investment for a third party, and we expect to have that by the end of the year. It's something that we submitted in Q1 2026. The expectation and the dialogue with the authorities is very positive, and we expect to have it by the end of the year, and that will be a key milestone for the process.

Speaker #3: And we expect to have that by the end of the year. It's something that we submitted in Q1 2026. So the expectation and the dialogue with the authorities is very positive.

Speaker #3: And we expect to have it by the end of the year, and that will be a key milestone for the process.

Speaker #1: Another question from the line of MacWhale with ATB Cormac. Mac, your line is open. Please go ahead.

Operator: Another question from the line of Mac Whale with ATB Capital Markets. Mac, your line is open. Please go ahead.

Speaker #7: Hi, good morning. I'm wondering, Sam, when you look at the DLE for phase two or stage two, does that require anything in terms of capex into the pond structure, or are you able to just bring 10,000 tons per year online and not really have to invest at all in the ponds?

Mac Whale: Hi, good morning. I'm wondering, Sam, when you look at the DLE for the stage 2, does that require anything in terms of CapEx into the pond structure? Or are you able just to bring 10,000 tons per year online and not really have to invest at all in the ponds?

Sam Pigott: Some of the infrastructure will borrow from what we've already built with stage 1.

Speaker #3: Some of the infrastructural borrow from what we've already built with stage one.

Speaker #7: Okay. So I guess we'll get more of this when you come out with the actual plan, but I was just curious. As that seems a relatively modest capex to begin with on stage two, relative and timing to get that up and running, right?

Mac Whale: Okay. I guess we will get more of this when you come out with the actual plan, but I was just curious as that seems a relatively modest CapEx to begin with on stage 2.

Sam Pigott: Yeah

Mac Whale: And timing to get that up and running, right?

Speaker #3: Yeah. Yeah.

Sam Pigott: Yeah.

Speaker #7: Yeah. Okay.

Mac Whale: Yeah.

Speaker #3: Yeah. Well, we'll have a lot more obviously information with the development plan, but it is yeah, it is very attractive in terms of capex intensity to get additional tons.

Sam Pigott: Yeah.

Mac Whale: Okay.

Sam Pigott: We will have a lot more, obviously, information with the development plan, but it is very attractive in terms of CapEx intensity to get additional tons.

Speaker #7: Right. And it really allows you to lever all that capex spend on the pond structure, right? So yeah. And then in terms of when you look at distribution, let's assume pricing stays roughly where it is now.

Mac Whale: Right. It really allows you to lever all that CapEx spend on the pond structure, right?

Sam Pigott: Exactly

Mac Whale: Yeah. Then in terms of when you look at distribution, let's assume pricing stays roughly where it is now. Do you expect this level of distributions from Minera Exar back to you? Or how does that play out over the course of the year? Are there other big debt down payments that have to come at the Minera Exar level?

Speaker #7: Do you expect this level of distributions from Minera XR back to you or is that how does that play out over the course of the year?

Speaker #7: Are there big are there other big debt down payments that have to come at the Minera XR level?

Speaker #3: Nope. Nope. Nope. Minera XR has $300 million of liquidity. So we expect distributions. If prices remain where they are, distributions should be similar to the first half, potentially higher.

Sam Pigott: Nope.

Mac Whale: Okay.

Sam Pigott: Minera Exar has $300 million of liquidity. So we expect distributions, if prices remain where they are, distributions to be similar to the H1, potentially higher.

Speaker #7: Right. Okay. Okay, great. That's all my questions. Thanks.

Mac Whale: Right. Okay. Okay, great. That's all my questions. Thanks.

Speaker #3: Okay. Thanks, Mac.

Sam Pigott: Okay. Thanks, Mac.

Operator: This concludes our Q&A. If there are no further questions at this time, this concludes today's call. Thank you for attending. You may now disconnect.