Lithium Argentina AG

Foreign Operations

The Caucharí-Olaroz Project, the Pastos Grandes Project and the Sal de la Puna Project are all located in Argentina. The lithium business in which the Company operates is increasingly affected by political factors, including geopolitical tensions among major world powers and industrial policy promoting the development of domestic electric vehicle and battery production infrastructure. These factors are relevant to both Argentina and Canada. Further, the Company’s Caucharí-Olaroz Project and the Pastos Grandes Project in Argentina exposes the Company to various degrees of political, economic and other risks and uncertainties. Please see “Description of the Business – Risk Factors” and “Description of the Business – Emerging Market Disclosure”.

The economic condition in Argentina has been challenging as of late and its outlook continues to remain challenging. The government, under former President Alberto Fernandez and, since December 2023, under the current President Javier Milei continues to grapple with high levels of inflation, a high deficit and monetary commitments which are contributing to the worsening of inflationary conditions. In addition, Argentina has been subject to severe drought conditions impacting the country’s agricultural and livestock sectors in many regions. Agriculture and livestock are leading industries in Argentina, along with natural resources and manufacturing.

In addition, former President Fernandez’s administration enacted a series of capital controls and foreign exchange regulations that continue to remain in force. To date, these controls and regulations include, but are not limited to: a requirement that the proceeds of exports be repatriated at the applicable official exchange rate; restrictions on payments of dividends and intercompany debt without approval from the Argentine Central Bank; and a request to restructure immediate payments on debt from foreign lenders as well as specific conditions for payment of imports. Capital controls and foreign exchange regulations have had far-reaching implications for Argentina, including limiting imports into the country and restricting access to foreign currency required to service foreign debt obligations.

In November 2023, libertarian candidate Javier Milei won the presidential election and took office on December 10, 2023. His agenda included labour and tax reforms, the privatization of major state-owned companies, capital control reforms and the potential dollarization of the economy. These and other policy changes, if implemented, may cause significant volatility in the political, regulatory, and economic environment and may adversely impact the Company’s operations and financial condition and accuracy of cost estimates and economic analysis of the Company’s projects. Nevertheless, the scope and pace of change, if any, in Argentina is not yet fully known. In addition, potential changes by provincial jurisdictions to existing mining policies, mining and other fees, water use and ownership rights and royalties or other taxation levels, even if seemingly minor in nature, may adversely affect the Company’s operations, plans and financial condition.