Lithium Argentina AG

6. INVESTMENT IN CAUCHARI-OLAROZ PROJECT

As at September 30, 2025, the Company, Ganfeng, and JEMSE hold 44.8%, 46.7%, and 8.5% equity interests, respectively, in Minera Exar, the company that holds all rights, title, and interest in the Cauchari-Olaroz project, located in the Jujuy province of Argentina.

JEMSE acquired its 8.5% equity interest in Minera Exar in April 2021, which was divided as 4.2% from the Company and 4.3% from Ganfeng. The right to acquire this 8.5% interest was initially granted under a letter of intent signed in 2012, in compliance with the Province of Jujuy's regulations concerning government participation in mineral projects. As part of the closing of the JEMSE transaction in April 2021, JEMSE agreed to reimburse the Company and Ganfeng their pro-rata share of $23,496 (8.5%) for the equity financing provided for the construction of the Cauchari-Olaroz project in prior years. This amount reflected the reimbursement obligation as measured at the initial transaction date, subsequent changes in the expected recoverable amount of this receivable were recognized during the three months ended September 30, 2025, as described below. This reimbursement will be made through the assignment of one-third of the dividends otherwise payable to JEMSE in future periods. Annual dividend distributions by Minera Exar to all shareholders, including JEMSE, will only be considered once Minera Exar has met all project debt commitments for the Cauchari-Olaroz project.

The Company’s operations related to Cauchari-Olaroz are conducted through its equity investees, Minera Exar and Exar Capital, which are governed by a shareholders’ agreement between the Company and Ganfeng. The shareholders’ agreement regulates key aspects of the governance of the project and provides the Company with significant influence over Minera Exar. Under this agreement, the Company and Ganfeng are entitled to the project’s production offtake on a 49%/51% basis. Construction costs were also shared on the same 49%/51% pro rata basis between the Company and Ganfeng.

The Company and Ganfeng are 49% and 51% shareholders, respectively, in Exar Capital, a company that provides shareholder financing to Minera Exar. Minera Exar and Exar Capital are accounted for using the equity method of accounting (the investment in Minera Exar and investment in Exar Capital together, the “Investment in Cauchari-Olaroz project”).

During the nine months ended September 30, 2025, as part of a restructuring of loans (the “Restructuring”), the Company and Ganfeng amended and restated loan agreements relating to loans advanced to Exar Capital. Concurrently, Exar Capital amended and restated agreements relating to the loans advanced to Minera Exar (collectively, the “Amendments”), revising interest rates to market levels effective for fiscal year 2025 and subsequent periods and extending the maturity dates. These modifications were treated as an extinguishment of the existing loans and the issuance of new loans at market rates of interest.

As part of the Restructuring, on August 27, 2025, Exar Capital assigned certain loan receivables from Minera Exar to the Company and Ganfeng. The total carrying value of the loans assigned was $208,121, with the Company’s portion amounting to $101,979. In exchange, the Company cancelled loans owed by Exar Capital with carrying value of $99,422. The assigned loans receivable from Minera Exar were subsequently settled through a capital contribution by the Company and Ganfeng to Minera Exar. The difference was recognized as an increase in the Company’s investment in the Cauchari-Olaroz project, reflecting the equity nature of the transaction between shareholders.

Because the Restructuring resulted from transactions between shareholders rather than with external parties, the Company determined that the net effect represented a transaction between owners in their capacity as owners.

Accordingly, the capitalization of loans was recorded as an increase in the Company’s investment in the Cauchari-Olaroz project, with no gain or loss recognized in the statement of comprehensive loss.

In connection with the Restructuring, JEMSE retained its ownership interest in Minera Exar in exchange for an agreement to reimburse the Company and Ganfeng through the assignment of one-third of dividends otherwise payable to JEMSE in future periods, up to an additional $8,271 and $8,609, respectively. This reimbursement will occur after the previous dividend assignment has been fully repaid.

Prior to the Restructuring, the Company recorded an adjustment to the carrying value of the previous JEMSE receivable based on revised cash flow estimates, and recognized a corresponding loss of $3,382, presented as “Loss on JEMSE receivable” in the statement of comprehensive loss.

The Company recognized its portion of the additional JEMSE receivable at fair value of $2,789 and recorded a reduction in its investment of $8,668, resulting in a loss of $5,879, included in “Loss on JEMSE receivable”. As at September 30, 2025, the carrying value of the two long-term receivables from JEMSE was $7,885 (2024 – $7,935).

Investment in Cauchari-Olaroz Project

Changes in the Investment in Cauchari-Olaroz Project are summarized below:

For the nine months ended September 30, 2025, the Company recognized its share of losses from the Cauchari-Olaroz project totaling $53,422 in the statement of comprehensive loss. This amount includes current year losses of $27,379 and previously unrecognized losses of $26,043 from 2024, which were recognized following the capitalization of loans to Minera Exar that increased the carrying amount of the Company’s investment.

As of October 1, 2024, Minera Exar determined that commercial production had been achieved for the Cauchari-Olaroz project after reaching elevated production levels for a sustained period. As a result, the Cauchari-Olaroz project’s assets were considered ready for their intended use, and depreciation of these assets commenced on October 1, 2024.

The following is the condensed financial information of Minera Exar on a 100% basis, as amended to reflect the Company’s accounting policies.

As of September 30, 2025, Minera Exar’s outstanding third-party debt amounted to $285,122 (2024 – $210,400), while its cash balance was $53,685 (2024 – $11,190). The total debt includes the following:

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Approximately $220,000 in loans from major international banks, secured by guarantees and standby letters of credit arranged by Ganfeng, which are due within twelve months from September 30, 2025. The Company has provided a guarantee to Ganfeng for its 49% share, amounting to $107,800, in respect of these loans. The Company and Ganfeng have negotiated a three-year extension of the maturity of $100,000 of these loans, which has been approved by the regulatory authority and is in the process of implementation. Included within these loans is $120,000 in bank debt facilities closed in the second quarter of 2025 and fully drawn in the third quarter of 2025 to refinance maturing short-term loans and for other purposes. These loans were competitively priced at an approximately SOFR plus 2.5%, including fees, reflecting Exar’s ability to access credit on favorable terms. A portion of these debt proceeds remained in Exar’s cash balance as of September 30, 2025.

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$10,000 in loans secured by local bank guarantees arranged by Minera Exar, due in 2025.

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Approximately $50,000 in unsecured bonds issued by Minera Exar in November 2024, carrying a contractual interest rate of 8% with semi-annual interest payments. The bonds’ principal will mature in two tranches: the first tranche of $25,000 on May 11, 2027, while the second tranche of $25,000 on November 11, 2027.

In October 2025, Exar acquired $30,000 of promissory notes issued by Litio Minera Argentina S.A., a wholly owned subsidiary of Ganfeng, to optimize the return on Exar’s temporary excess liquidity. The notes mature on December 15, 2025.

Minera Exar has to settle certain loans provided by Exar Capital and PGCo in US$ with sufficient Argentine Pesos (“ARS$”) at the implied market exchange rate. This settlement mechanism requires Minera Exar to repay the loans with more US$ at the official exchange rate. Since the repayment mechanism for the USD loans provided by Exar Capital and PGCo to Minera Exar is linked to the implied market foreign exchange rate in Argentina rather than the official foreign exchange rate, it results in an embedded derivative in the loans payable by Minera Exar. The fair value of this embedded derivative fluctuates with changes in the spread between the implied market exchange rate and the official exchange rate). During the nine months ended September 30, 2025, changes in Argentine foreign exchange regulations caused the implied exchange rate to converge with the official rate, resulting in a fair value gain of $51,288, which was recognized within other (loss)/income in Minera Exar’s condensed statement of comprehensive (loss)/income.

During the period, other loss in Minera Exar’s condensed statement of comprehensive (loss)/income primarily comprises of interest expense and other costs related to intercompany and third-party borrowings and selling, distribution, and administrative expenses, partially offset by the gain on change in fair value of the embedded derivative described above.