Lithium Argentina, a mining company with operations in Jujuy and development projects in Salta, in Argentina, announced its second-quarter results this Tuesday, highlighting significant progress in its Cauchari-Olaroz operation.
By Panorama Minero
Sam Pigott, the company's President and CEO, expressed satisfaction with the progress of the plant's startup, stating that the operation has consistently reached 70% of its design capacity, with record monthly production levels over the past three months. "We are prioritizing maintaining consistent production volumes at these higher rates, which should continue to reduce costs," Pigott said. He also noted that these operational efforts, along with effective cost management, optimized working capital, and a strong financial position, will be crucial to ensuring the company's present and future success.
Pigott also praised the teams in Argentina and North America, whose dedication and expertise have been key to achieving the company's goals and efficiently overcoming challenges. Additionally, he emphasized that the improving financial landscape in Argentina and the country’s efforts to encourage foreign investment provide a favorable environment for continuing to increase the capacity of the Cauchari-Olaroz plant, which aims to become one of the world's largest sources of lithium carbonate.
During the second quarter of 2024, the Cauchari-Olaroz plant produced approximately 5,600 tons of lithium carbonate, representing a 24% increase over the first quarter. The operation is currently running at 70% of its design capacity, which is 40,000 tons annually, occasionally exceeding this level. The company maintains its production forecast for 2024 in the range of 20,000 to 25,000 tons of lithium carbonate.
During this ramp-up phase, production has been primarily sold to Ganfeng Lithium, their project partner. The quality of the lithium carbonate produced during the second quarter averaged 99.5%, and processing costs are expected to decrease as quality improves.
"Despite the current pricing environment, Cauchari-Olaroz is expected to remain cash flow positive in terms of operating cash flow, adjusted for changes in working capital. Unit costs should decrease as production volumes increase and the plant approaches its nominal continuous operation capacity."
Financially, as of June 30, 2024, Lithium Argentina had $96 million in cash and equivalents, along with an unused $75 million credit line with Ganfeng. Regarding the financial situation of Minera Exar S.A., its local subsidiary, the company reported total debt of approximately $315 million at the official exchange rate, or approximately $230 million at the current market exchange rate.
To reduce leverage in Exar, the company plans to use part of the $70 million from the Pastos Grandes transaction, along with contributions from Ganfeng, providing over $100 million in additional liquidity. "We are also exploring long-term financing options to replace short-term debt at Exar," the company concluded.
