Lithium Argentina (LAR) Q3 2025: PPG Scoping Study Targets $1.1B Capex, 33% IRR on Next-Gen Brine Expansion
Lithium Argentina’s Q3 call pivoted the narrative from steady Kachari-Olaroz execution to the unveiling of the PPG project, with a scoping study outlining a staged, low-cost, high-scale brine operation leveraging new hybrid DLE technology. Management emphasized disciplined capital allocation, strategic partnerships, and Argentina’s evolving investment framework as key to de-risking multi-phase expansion, while Q3 operations reflected ongoing process optimization and cost focus. Investor attention now turns to PPG’s permitting, financing, and technology scale-up as the next growth inflection point.
Summary
- PPG Project Sets Ambitious Expansion Path: Multi-phase brine project aims for 150,000 tons LCE, leveraging modular DLE technology and basin consolidation.
- Operational Discipline Remains Central: Kachari-Olaroz sustained 90%+ capacity, with ongoing cost and process optimization despite minor Q3 production dip.
- Argentina Policy and Capital Strategy in Focus: RIGI framework and joint-venture financing structure are positioned as critical to minimizing shareholder dilution and project risk.
Performance Analysis
Q3 operations at Kachari-Olaroz demonstrated continued progress on process optimization, with the plant sustaining production rates above 90% of capacity for most of the quarter and achieving a monthly production record in October. Management cited minor production variability and a 3% uptick in cash costs, attributed to slightly lower volumes and ongoing optimization efforts. These factors are expected to normalize as higher production levels are sustained.
On the balance sheet, the company secured a $130 million, six-year debt facility from Ganfeng, enhancing liquidity and providing flexibility for upcoming growth initiatives. Leadership emphasized the importance of collaborative partnerships—particularly with Ganfeng— in driving both operational execution and access to capital, with the joint venture model credited for Kachari-Olaroz’s rapid ramp and efficiency.
- Production Stability Achieved: Three of the last four months saw >90% capacity utilization, supporting downward cost trends.
- Cost Sensitivity to Volume: Unit cash costs rose slightly in Q3, directly tied to temporary production dip; optimization is expected to reverse this trend.
- Strategic Debt Facility: New $130 million loan from Ganfeng strengthens the funding base for project development and reduces dilution risk.
Operational execution remains robust, but the company’s future valuation will increasingly hinge on the successful execution and de-risking of the PPG project and the ability to maintain cost leadership as new capacity comes online.
Executive Commentary
"Within 12 months following the completion of the lithium chemical plant, we were able to steadily increase production, reaching close to our targeted capacity. That reflects the quality of our resources, team, and collaborative partnership with Ganseng."
Sam Piggott, President and CEO
"We continue to expand in Argentina, reflecting our confidence in its high-quality resources, experienced local workforces, and improved investment framework with RIGI. We expect Cotorreo La Luz to continue to lower costs and use new technologies to grow. Well, PVG will be one of the largest and the lowest-cost lithium operations globally."
Wang Xiaoshan, Chief Executive Officer, Ganfeng Group
Strategic Positioning
1. PPG Project: Scale, Technology, and Capital Efficiency
The PPG (Pozuelos Pastos Grandes) project is positioned as a next-generation lithium brine development, targeting 50,000 tons per year in stage one and scaling to 150,000 tons across three phases. Initial capex of $1.1 billion and a projected IRR of 33% at $18,000/ton long-term price signal a highly competitive cost structure. The use of modular, China-proven hybrid DLE (Direct Lithium Extraction) technology is central to lowering capital intensity and simplifying processing, with the project leveraging basin consolidation for resource scale and operational synergies.
2. Technology De-Risking and Process Innovation
Hybrid DLE technology, combining solvent extraction with traditional evaporation, is a cornerstone of the PPG cost advantage. Executives highlighted that this approach, already commercialized in China, reduces water and energy consumption and eliminates several processing steps, enabling a lower environmental footprint. While a demonstration plant at Kachari-Olaroz is planned, management and Ganfeng expressed confidence in immediate PPG deployment, citing extensive brine testing and operational experience.
3. Argentina’s RIGI Program and Permitting Milestones
The RIGI (Regimen de Incentivo para Grandes Inversiones) program, launched by Argentina in 2024, provides a stable fiscal and regulatory framework for large-scale resource projects. PPG’s recent environmental permit approval and planned RIGI filing in H1 2026 are key de-risking steps, with management emphasizing the importance of predictable FX and tax treatment in attracting low-cost project finance.
4. Capital Structure and Dilution Control
Leadership underscored a disciplined approach to capital allocation, pointing to the Kachari-Olaroz funding model—leveraging partnerships, offtakes, and project-level debt—to minimize equity dilution. For PPG, LAR and Ganfeng have committed to securing third-party capital, utilizing Ganfeng’s global customer relationships and access to low-cost financing, and emphasizing the improved risk profile from operating cash flow and Argentina’s policy reforms.
5. Market Positioning and Demand Tailwinds
Long-term lithium demand is expected to be driven by both electric vehicles (EV) and energy storage systems (ESS), with Ganfeng’s CEO arguing that ESS could eventually surpass EV demand. Benchmark forecasts call for one million tons of new LCE capacity by 2035, supporting management’s use of $18,000/ton as a realistic long-term price anchor for project economics.
Key Considerations
This quarter marks a strategic pivot for Lithium Argentina, with management moving decisively from optimization at Kachari-Olaroz to a multi-phase, technology-driven growth strategy centered on PPG. Investors must weigh the operational credibility demonstrated to date against the complexity and execution risk of scaling up a new integrated basin project using advanced processing technology.
Key Considerations:
- Technology Transfer Risk: While hybrid DLE is proven in China, large-scale deployment in Argentina’s brines remains untested at full capacity and will be closely watched by the market.
- Permitting and Fiscal Certainty: Recent environmental approval for PPG and the RIGI framework are positive, but water permitting and timely RIGI approval are critical path items for 2026 construction start.
- Capital Intensity and Funding Mix: Management’s track record and joint-venture model reduce dilution risk, but $1.1 billion for stage one and $3.3 billion total capex require disciplined execution and access to global capital.
- Commodity Price Sensitivity: Project IRR remains robust even at $12,000/ton, but sustained low prices would pressure returns and potentially slow expansion sequencing.
- Operational Execution: Kachari-Olaroz’s optimization progress and cost management provide a solid operational base, but future valuation depends on scaling new projects without major delays or overruns.
Risks
Execution risk is elevated as LAR transitions from proven plant optimization to multi-phase greenfield expansion at PPG, with technology scale-up, permitting, and capital markets all representing potential bottlenecks. Commodity price volatility and potential shifts in Argentina’s policy environment could impact project returns and financing terms. Water permitting and demonstration of battery-grade product quality are additional critical milestones for derisking both PPG and Kachari-Olaroz’s direct sales ambitions.
Forward Outlook
For Q4 and into 2026, Lithium Argentina guided to:
- Continue sustaining Kachari-Olaroz at near-full capacity, with ongoing cost optimization.
- Advance PPG detailed engineering, RIGI application, and coordinated financing strategy in H1 2026.
For full-year 2025, management maintained its operational targets and capital discipline:
- Disciplined execution at both Kachari-Olaroz and PPG, with shareholder value and prudent capital allocation as top priorities.
Management highlighted several factors that will drive the next phase:
- Timely receipt of RIGI approval and water permits for PPG construction start.
- Ongoing process innovation and demonstration of hybrid DLE efficiency and product quality.
Takeaways
Lithium Argentina’s Q3 marks a shift from operational optimization to transformative growth, with the PPG project’s scale, technology, and capital structure set to define the company’s trajectory through the decade.
- PPG as Growth Catalyst: The integrated, multi-basin project—leveraging modular DLE and basin consolidation—positions LAR for long-term cost leadership and scalable expansion, provided execution risks are managed.
- Capital Discipline and Partnership Model: The joint-venture approach with Ganfeng and access to Argentina’s RIGI incentives are central to minimizing dilution and unlocking low-cost financing.
- Execution Milestones in Focus: Investors should monitor permitting, engineering, and technology demonstration progress through 2026 as gating items for the next leg of value creation.
Conclusion
Lithium Argentina delivered solid operational results in Q3, but the spotlight is now firmly on the PPG project’s ability to deliver scalable, low-cost growth using next-generation technology. Disciplined capital allocation, strong partnerships, and a favorable policy environment underpin the company’s ambitious expansion, but execution and market risk remain front and center.
Industry Read-Through
Lithium Argentina’s strategy signals a broadening shift in the lithium sector toward integrated basin-scale operations, modular DLE process adoption, and capital-light expansion models. Argentina’s RIGI incentives and permitting reforms could accelerate project pipelines across the country, attracting global capital and technology transfer. Cost discipline, technology de-risking, and access to stable fiscal regimes will increasingly differentiate winners as lithium markets evolve, with lessons for both upstream brine and hard rock developers facing similar scale and capital allocation challenges.