Lithium Argentina reports solid Q3 2025 results, outlines PPG project with $8.2 billion NPV and 33% IRR, signaling strong future growth potential.

Thank you for standing by. My name is JL and I will be your conference operator today. At this time I would like to welcome everyone to The Lithium Argentina third quarter 2025 earnings call and scoping study results. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press STAR followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Now I'd like to turn the conference over to Kelly O'Brien, Vice President, Investor Relations. You may begin.

Thank you for the introduction. I want to welcome everyone to our conference call this morning. Joining me on the call today to discuss TPG scoping study and the Q3 results is SAM Pigott, President and CEO of Lithium Argentina. We are also happy to welcome to the call Wang Shaosheng, Chief Executive Officer of Kampeng Group, Carlos Galli, Vice President of Growth and Innovation at Lithium Argentina and Jason Luaut, President of Gongfang South America to discuss the Pasuelos Pastas Grandes or PPG Consolidated Project. Alex Shoba, Vice President and CFO of Lithium Argentina, will also be available for Q and A. Before we begin, I would like to cover a few items. Our third quarter 2025 earnings and the PPG scoping study results will press release earlier this morning and the corresponding documents are available on Lithium Argentina's website. I remind you that some of the statements made during this call, including any production guidance, expected company performance update on the PPG development plan, 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, MDNA and news releases. I will now turn the call over to Sam Pigott.

Good morning everyone. We have a lot to discuss today. We'll start quickly with third quarter results and want to recognize the incredible work of the global team that continues to collaborate and contribute to the success of the Cauchari Olaroz operation. The third quarter saw continued execution and the impact from our ongoing efforts to optimize our production plan, increase efficiencies in our process and make improvements designed to bring down costs long term. We remain confident in meeting our targets for 2025. While there is still work to do to complete these optimization efforts, we are very pleased with the plant's performance where we are seeing Production rates of 90% capacity sustained over extended periods of time. In October we achieved a new record monthly production volume reaching close to full capacity as we look towards 2026. Our goal is to continue to sustain higher production levels while also taking long term actions to best position the business for the years to come. On the balance sheet, we were pleased to announce a new $130 million six year debt facility from Ganfeng. This new facility gives us added flexibility to enhance our debt profile at the corporate level while preserving shareholder value. Finally, and what matters most is that the operation continues to perform safely and reliably with a committed team driving continuous improvements. I want to pause on what's been one of the most important drivers of our progress. The strong performance at Cauchari Olaroz. And that's our collaborative partnership together. Lithium Argentina and Ganfeng have built a highly successful joint venture in Argentina. With just under a billion dollars in capital investment, we have established one of the largest and most efficient new lithium operations globally with a shared goal of supplying lithium chemicals to a diversified global customer base. If you look at the production profile on this slide, you can see the strength of our execution. 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 Ganfeng. With that, I would like to turn it over to Ganfeng CEO Wang Shaoshen to provide his perspective on our partnership and shared vision for Argentina.

Thank you, Sam. We're proud of our eight years partnership with Lithium Argentina and look forward to growing with ppg. The new joint venture will build on our existing relationship and new technologies to bring low cost growth in Argentina. 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 Cauchari Olaroz to continue to lower costs and use new technologies to grow well. PPG will be one of the largest and lowest cost lithium operations globally. We see an important opportunity for brines where we can apply mature technologies from China to high quality resources in Argentina to reduce costs and minimize environmental impact. Our plan in Argentina is to grow from our existing 60,000 tons of capacity today from Kachari, Otaluza and Mariana to over 250,000 tons.

Following the receipt of the environmental permits at PPG last week and as we begin to prepare our RIGI filings for Stage two and ppg, we expect these growth plans to become a bigger focus for the company. Turning to ppg, we are excited to share the results of our scoping study. The project is located in Salta Province in Northern Argentina and benefits from access to infrastructure, energy and local talent and is located approximately 100 kilometers from Kachari Olaraz. While we agreed to consolidate these three projects in August, the scoping study builds off approximately three years of collaborative partnership with Ganfeng. What makes this project especially compelling is that it combines scale, a proven partnership and technological innovation. These are essential components for successful project execution. Turning to the details of the PPG scoping study, we reiterate the project scale and economics which all support PPG becoming one of the most competitive lithium operations globally. The study outlines a Stage 1 LCE capacity of 50,000 tons per year, expanding to 150,000 tons per year in three phases. Initial capital investment is estimated at 1.1 billion and total life of mine capital is estimated at 3.3 billion. These results confirm the benefits of an integrated PPG as a scalable low cost long life operation. PPG produces a strong after tax NPV of 8.2 billion at an 8% discount rate and an IRR of 33% based on a long term price of $18,000 per ton, a level well supported by long term market fundamentals. It's important to note that even at a very conservative price estimate of $12,000 per ton, close to market prices today, the IRR of the project is still over 20%. The lithium market continues to evolve, but one constant remains strong sustained demand driving the need for new high quality supply. Benchmark estimates that over the next decade roughly 1 million tons of new LTE capacity will be required to meet global demand. This sustained demand supports long term pricing levels necessary to incentivize new project development. Based on the current project pipeline, a price of approximately $18,000 per ton of lithium carbonate would be required to achieve a 15% return for this new supply for PPG. As with Kachari, the combination of attractive capital intensity and low operating costs provides additional flexibility ensuring that projects remain well positioned across a range of market scenarios. I'll now turn it over to Shao Shen to comment further on market conditions.

At Ganfeng, we see shifts in the lithium market driven by demand for LFP from Essential Ganfeng's battery business is running at full capacity. We think the industry is in the early phases of ESSS and believe that this could become as big or bigger market than the EV market in the future. At Gunfirm we are well positioned with low cost lithium resources as well as battery production. We are the largest fully vertically integrated lithium producer and as a result have established a long term relationship with leading industry players across the EV battery supply chain which gives helpful insights and competitive advantages. We have always taken a long term view of the market and for this reason we have been focused on low cost resources in Argentina.

Lithium Argentina brings more than two decades of experience in Argentina advancing projects from exploration through to production. In 2024, the Argentine government implemented the RIGI program to attract long term investment by offering a predictable and competitive fiscal framework. To date, more than $33 billion in new projects have applied under Rigi with roughly 40% already approved for PPG. This framework represents a meaningful value driver providing competitive incentives and importantly greater clarity on foreign exchange regulations that are critical to securing lower cost capital. Following the receipt of the Stage one environmental permit last week, we plan to formally submit our RIGI application for ppg during the first half of 2026. I'll now turn it over to Jason Lowe, President of Ganfeng South America to discuss PPG's targeted cost profile in more detail.

Thanks Sam. Sam's comments described the competitiveness of ppg. Will it combine a good fine asset processing expertise and experience in Argentina to deliver both low capital intensity and competitive operating cost? On the left you can see the breakdown of stage one capital cost. The total investment is about $1.1 billion for 50,000 ton operation. Roughly 41% of that is tied to the process plant including DLE. Here we are able to build in modules of 10,000 tonnes and leverage our supply chain and expertise in China. Next, around 30% goes into Wells and evaporation ponds here. Both Ganfeng and NAR have significant experience building and operating pounds from Mariana in Sarta and at the nearby Cauchari Olaroz. Finally, 22% is for the infrastructure, power, roads and the training facilities for comparisons. Phase one at Cauchari Olaroz was completed for just under a billion dollars. So this represents a comparable scale up of an operation with similar brand and the benefits of new processing technologies to reduce the overall size of pounds and processing needs for all three stages. It's estimated that the total 150,000 pounds will require a total capital investment of approximately $3.3 billion faced over several years on the operating cost structure. PPG is expected to be similar to where Cachali Ala loss is today at around $5,000 per ton. We continue to look for ways to optimize and lower this cost further by leveraging synergies with our existing operations in Argentina. Processing efficiencies and scale. What's important here is that those numbers aren't just competitive, they are based on proving operating experience, new technology optimized bounds to Plan integrate integration and efficient reagent use. All of this keeps both capital and operating cost competitive. We are maintaining flexibility across different lithium price environments. Carlos Galley, VP of Growth and Innovation from Lithium Argentina, will now discuss the PPG resource.

Thank you, Jason. What makes PPG truly unique is it's part of a connected system fed from two adjacent basins, Pozuelos and Pato Grandes, each with similar geology, hydrology and brine chemistry. By combining them, we created a single project with both grade and scale. Over the past three years, our teams have completed one of the most comprehensive exploration programs in the Puna region of Argentina. This combines with experience from previous owners and collaboration with Gamfeng, we have been able to take advantage of different work and methodologies, including that of the oil and gas industry, which is different from typical mining approach to solars. And our studies incorporate these sophisticated and modern techniques. From this data we now understand how these two systems evolved and why they complement each other so well. Patagrandes is a large deep basin that formed around 3 million years ago with substantial and drill potential depth and along its margins. While Pozuelos, on the other hand is shallower and wider Salar which has led to higher lithium grades and good brine availability. Together, these two systems host an exceptionally large and well defined resource. Over 15 million tons of measured and indicated LCD resources, an additional 6.7 million in fer tonnes. Along with these works done to explore the lithium resources, Lithium Argentina and Gampeng have deployed significant efforts to gain a unique understanding of the water system in the basin using innovative and sophisticated methodologies and techniques. This also brings confidence to the possibility of developing in a sustainable way a large scale production system. The key takeaway here is that PPG stands on its own as a remarkably strong geological foundation. This level of technical confidence combined with basic control positions us to move rapidly and ultimately to the risk product execution during development. This chart really puts the scale of the combined PPG project into perspective. It compares the major lithium brand resources by basins across South America. And you can see how Coucher, Laros and now PPG both compared here in Green firmly position our JV projects among the largest brand resources globally. It is also one of the few basins that has been largely consolidated. This kind of scale and brand chemistry is what underpins the strong project economics including low operating costs and low capex and long term growth potential that was highlighted earlier by Jason. It's what enables us to plan for meaningful stage development with significant expansion potential over time. It is also worth emphasizing that while Pozuelos and Patograndes appear as morphologically separate basins. Our upstream geological work has shown that there are remarkably similar geological histories and brine chemistry. Both were shaped by the said tectonic and hydrological processes, meaning that they effectively evolved as part of a single connected geological system. The shared origin is what makes combining the three projects across these two salars into one integrated development such a logical and value driven step, maximizing capital efficiency, enhancing scalability and the risking development on a basin wide scale. We continue to focus on innovation and process improvement, building on the success of Calcia eras while incorporating new technologies for further improving efficiency and sustainability. The new hybrid technology that we are advancing for PPG as well as For Kauchari stage 2 removes the requirement for several processing components that are currently used at our stage one operation. The new design maintains the core advantage of solar evaporation, but it integrates lithium solvent extraction technology to enhance recoveries, reduce water and energy use and simplify the downstream processing needs. The process of PPG will eliminate several intermediate steps from the Caucho Rayros flowsheet, including liming and post liming ponds and multiple purification stages. Instead, it introduces a series of closed loop solvent tanks where lithium is selectively extracted and purified in a more controlled environment. This approach utilizes new BLE technology developed by GANPE in China that has been tested on our brains. While this processing technology for Argentina, they are mature for China and integrate well given our specific grain characteristics and hybrid approach leveraging benefits of our abundant solar radiation. In short, the proposed hybrid DLE process combines the proven benefits of evaporation where it works best with modern extraction techniques, improving efficiency, reducing environmental impact and positioning PPG as a next generation lithium operation.

Over the course of three distinct phases, we expect PPG to become one of the largest lithon operations globally. We are taking a disciplined staged approach, starting with 50,000 tons per year in phase one and ultimately expanding to 150,000 tons of lithium carbonate equivalent as phase two and three come online. Each phase will build on the next, capitalizing on the synergies of the salars and original projects to achieve significant scale with a target of lowering unit cost and optimizing capital efficiency. The processing plant all three phases is designed to be built at Pozuelos, leveraging shared infrastructure. The first phase will use brine from Pasuelos, which is slightly higher grade and advanced in terms of both production wells and permitting the following phases. We are bringing concentrated brine from the larger, fastest, grandest resource as well as water necessary to support our larger scale plants together. By consolidating and integrating these three projects, this provides significant synergies and allow us to optimize for much larger and efficient production scale. As we transition towards execution, our focus is on maintaining a disciplined path towards construction. Leveraging our learning from Cachalianos and Malayana, we are very pleased to have received environmental approval for Stage one of PPG on Friday. This is a critical milestone that Requires a rigorous 14 month review and proves that the PPG project meets the highest environmental and social standards required in Argentina. We engaged early with provincial regulators in CERTA and communities on ppg, ensuring that our studies on designs and new technology meet or accept both Argentina and international standards. All of those steps put us in a strong position to be able to start stage one construction in the second half of 2026 and allow us to achieve first production before 2030. Thanks Jason. As we wrap up, we're excited to begin sharing more details and increasing our focus on long term growth. This does not change our near term priorities, disciplined execution at Stage one and prudent management of our balance sheet. But as we advance our RIGI filings, we see this as a critical step in outlining Lithium Argentina and Ganzang's shared vision and long term value proposition in Argentina on ppg. With the receipt of environmental approvals, we will now work closely to further optimize our plans, de risk our execution strategy and finalize an updated hydrogeological model integrating resources across both basins. In parallel, Lithium Argentina and Ganfeng are advancing a coordinated financing strategy designed to support the next phase of growth. As we move forward, we'll maintain the same disciplined approach, prioritizing shareholder value, prudent capital allocation and strong alignment between partners. This is a pivotal moment for our company. It marks the beginning of a new chapter of Disciplined Growth built on the same focus, collaboration and execution that delivered success at Kachari Olaraz.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And we do ask for today's session that you please limit yourself to one question and one follow up. One moment for your first question. Your first question comes from the line of Joel Jackson of BMO Capital markets. Your line is open.

Hi, good morning everyone.

Good evening.

Josh and Lester in Argentina. I had a question about PPG. So the capital intensity, $22,000 a ton CapEx is very low. It's like half the capital intensity. You look at public project estimates out of other projects in Argentina, let's say Rio Tinto, Rincon or stuff in the States. I was wondering, why is the capital. Intensity half the CAPEX of other greenfield flying projects in Xiao Shen? How would you compare the economics of this project, PPG versus Mariana?

Thanks, thanks for the question, Joel. Maybe I'll start and then pass it over to Xiao Shen. So yeah, the CAPEX intensity is much lower than recent examples of chemical processing outside of China. I think part, part of the explanation here is driven by the quality of the resource. So the first phase of Pozuelos is benefiting from, you know, considerably higher grades, upwards of high 500 milligrams per liter lithium. So most similar to Kachari Olraz. The Capex also reflects the use of new processing technologies which Xiaosheng can elaborate on, including SX based DLE which is designed and built in modular units engineered and constructed in China with the support obviously of Ganfeng. So this, you know, this technology is designed to help reduce pond footprint and simplify purification requirements. So I think those are the two major drivers towards the CAPEX intensity. But Xiaoshan, maybe you can elaborate on that and then also share your experience with Marianne and Kachari.

Yeah, thank you. Thank you. Yeah, you're right. Actually if you look at our projects in everywhere in the world actually we have a relatively lower cap tax density compared with other western companies projects. So that's because of the gunfence. We have our own in house engineering teams and we have in house process. So that's probably one of the reason. And also we have built two projects in Argentina which is not easy place. We have lots of challenges, especially. You. Don'T have to existing human resources for this lithium projects in the region. So we are bringing some of the talents from China and together with our local teams successfully. Okay, yeah. And to your question about comparison we between Mariana and the ppg I would say PPG has higher concentration of the lithium, Mariana has lower. But. But Mariana has a much higher pumping rate. So each one has their own advantage. And so both, both projects are good projects.

Okay. And then following up on that and as it was Casseroa Olos as well, I believe at some point in 2026 you're going to test this hybrid pond plus DLE system with a small plant at Cauchari Olaroz. I think it's 2026. And can you talk about as you. Progress PPG here, will you wait for. Results on that pilot or demo plant. At Cacheira Laros to learn what it looks like in Argentine brine before you. Move out of ppg so you get. More refined estimates for PPG and see how it affects Kashari. All those as well. Thanks. I don't think we have to wait. We don't need to wait. Sorry, sorry. Fan. Go ahead, please.

No, I was just gonna. I was gonna say, you know, the demo plant is obviously a really important de risking step for this new technology being incorporated into our production process both at stage two and ppg. But you know, clearly we expect this to be done in a way that will integrate with the broader construction timeline. But maybe go ahead and you know, you can, you can share on the confidence Ganpeng has in this technology and what's been, what's been done in China.

Yeah, we have a project, commercial project in China using this technology. Technologies already many times, many times test on the PPG brines. So we think PPG brines. We don't have to wait until the final results from the Kochari projects. Do projects, maybe. Jason, you have anything to add?

Yeah, Justin, just as you said, is a proving technology and so we don't have to wait for the demonstration plan from Kachali. And actually this is a hybrid. This is a hybrid process combined with ponds and the soil extraction. So the solvent extraction process is proven in China in commercial scale. And also like actually it's like more a simplified process and we will see like a. Technically, technically it's like a. Even like a simpler and straightforward. So yeah, we are, we are going to just like go ahead to like start the construction once like we have the permitting, financing and other things ready on Kachari on PPG project.

Okay, thank you. I'll go back at the queue.

Your next question comes from line of Katie LaChapelle of Canaccord Genuity. Your line is open.

Hi all. Thanks for taking my questions. First off, congrats on the release of the scoping study and the environmental approval. I was just wondering if you could provide a more detailed overview of the permitting of the asset, what additional permits, if any, are required, and then maybe with having Jason on the call, I'd love to hear his vision about the progression of the PPG project and how you guys balance priorities going forward. PPG versus Kachari Olara's phase Two.

Thanks Katie. Maybe I'll take the second part of that question then turn it over to Jason to comment on permitting. You know, I think from a sequencing perspective, the fact is both these projects, right market needs low cost driven forward by a proven operating team in Argentina. And so for both we're advancing similar RIGI application timelines which is the first half of next year. From a development standpoint, you know, we expect these projects to be broadly comparable, each with distinct advantages. So for ppg obviously it's further ahead. The permit was secured last Friday and also benefits from very significant historical investments that Gantt Banks carried out on well fields infrastructure. And then further benefits from the advantages of Pozuelas being considerably higher grade I'd say for Cauchari Olaroz we're obviously also advancing a RIGI application. We expect to have a development plan similar to that for PPG first half of next year and we'll provide more visibility on the sequencing into 2026. But as you know as a general statement we're confident both assets provide meaningful flexibility optionality to both Lithium Argentina and Ganfeng. The how and the when of this growth is you know, underpinned by responsibility to our shareholders and maximizing shareholder value. So maybe Jason answering the first part of the question which was related to permitting and what else is required to push ahead with the PPG project?

Yeah, Sam, yes, for start the construction of ppg, of course the most important in Sapta Province is to obtain the approval of the diagram which is the environmental permit. As Sam said, we obtained that approval last Friday and we submit the DIA application in September 2024 and it takes us like 14 months to walk through the technical approval and environmental approval and also the community consultation and finally public hearing. So 14 months, you can see it's like a record like fast approval procedure and we have achieved compared with other peers in this region. So we can see this project is technically sound and we are received and supported by the local government and the communities. So looking forward to what else like what other permits do we need? And actually we with this we can start a construction immediately. But there are two more things like important we need to like obtain. One is as Sam said we need like to apply for the regi and we are working on that. We started like the communication with the national government already. So the Reiji application will be submitted in Q1 next year and we anticipate it won't take long to be approved, maybe a few months like by estimation that is one thing without like we can start the construction of the Project. And one more thing is like we need like also to obtain the water permit. And so that's like we are already working on the water balance and we just need like to drill more water wells. And because this solvent extraction process will require much less water consumption, so we don't see it's a problem. Compared with other process, the water consumption is the lowest. So that's like a two more things we need for PPG project on the permit side.

Okay, great. Very clear guys. Thank you.

Your next question comes from the line of Ben Isaacson of Scotiabank. Your line is open.

Thank you very much and good morning. I have a few quick ones if that's okay. So the first question is the Overall capex for PPG is 3.3 billion for all three phases. Exactly one third of that for the first phase. I would have thought there would be. Some economies of scale and phase one would be a little more expensive and two and three would be a little lower. Can you just talk about that?

Thanks, Ben. Yeah. The capex for the entire project in each phase represents the benefits of scale, but the brine characteristics do change over time. So the, you know, the capex for phase one does incorporate infrastructure expenditures that will extend across all three phases. But go to phase two and phase three, which will be sourcing brine from Pastos Grandes, it comes at a lower concentration and therefore the number of well and the size of the ponds increase. So there is a bit of a trade off there. And that explains the.

Great.

That makes sense. Sorry, the second, the second point is on the, the SX plant itself. This is done in like a modular unit. So you don't see the same kind of economies of scale you would see in other projects.

That's helpful. Thanks, Sam, for that one. Moving on, Kawachari, I believe JEMSA has what, an 8.5% interest. What is the likelihood that SALTA would somehow require some stake and is there a negotiation on that? And how should we think about the dilution impact of that?

Maybe, Jason, if you want to take that one.

Yes. So yeah, we know SATA province. Like, no, they have no intention at all to negotiate a stake. And we don't. We didn't like even touch that coin and we didn't like, we have like a good communication with the provincial government and we didn't see the provincial government of Sarta wanted to bring that up to any lithium projects or like mining projects in Sarta so far. Great. And then if I can just switch quickly to Q3. So your cash costs were Just a touch higher, about 3% higher to about 6,300. Production was a couple hundred tons lower. Can you just talk about was the reason had production been stable with the cash costs that have been flat, why did the cash cost increase and why did production take a little dip down? Thank you. Yeah, I mean the two are very much related. So we had slightly lower 200 tons less production than Q2. So that does increase unit costs. I think from a production standpoint, you know, we're still making optimization changes. These are small, but from a month to month basis do increase some variability. I'd say the optimization efforts that we've made in Q3 or, sorry, Q2 have delivered so three in the last four months we've been operating above 90% capacity. And obviously when we're pushing volumes up, we see a kind of a relation to cost down. So on the cost side, yes, slightly higher than Q2 due to, largely due to the slightly less volume, but we're seeing costs continue to trend down.

Great. And if I can just throw one. Last one in there. So just back to the PPG project. Can you just talk about Sam, how. Do you. How do you envision minimizing equity dilution risk for large shareholders in terms of the capital structure and funding. Your 1/3 portion of phase one of PPG?

Thank you. Yeah, I would highlight that Lithium Argentina has a pretty strong track record of executing strategic and disciplined financings. And so if you look at, for example, how we funded the $1 billion investment into stage one, we did this, you know, thoughtfully. We leveraged partnerships, offtakes project level debt to minimize shareholder dilution. We're certainly going to take the same disciplined approach here as we advance our growth plans. You know that one of the differences today obviously is we're doing so from a much stronger position. Having successfully brought on Stage one into operation, having Argentina's RIGI investment framework more mature Lithium market, and more specifically at ppg, under our agreement to consolidate these three PPG assets, Ganfeng and LAR have committed to working together to secure third party capital to finance Stage one development costs. And we'll do this by leveraging Ganfeng's global customer relations and access to low cost financing. So we're obviously going to be very responsible in terms of how we do this. We see a tremendous amount of value in the, in the projects that we have and we'll be very disciplined and careful to ensure that shareholders are rewarded and avoid dilution.

Your next question comes from the line of Corinne Blanchard of Deutsche Bank. Your line is Open.

Hey, good morning. Thank you for taking my question. Sorry if I missed it, but could you talk about what would be the IIR return if you were to be using market price and the $18,000 per kilo of Gaton? And maybe if you can talk also about the rationale of using the 18,000 given where the market is trading at. Thank you.

So, yeah, the sensitivities around that at today's. Well at $12,000 per ton, I think we're close to that today in the spot market in China, the project would, would have a 20 over 20% IRR. I think that the rationale for choosing 18 is 1, it's, it's aligned with third party forecasts and street consensus and it seems to be a level that, that you know, would seem to be required to incentivize enough production over the next decade. So it's a price level at which would result in a 15% IRR for kind of the last marginal project contribute into that 1 million tons. But seeing that we have Shao Shen on the line, you know, maybe I can turn it over to you, Xiao Shen, and just comment on, you know, the use of $18,000 per ton as a long term project price and how that squares with how you're seeing the market today and how you're seeing the lithium market evolving over the next, you know, five to 10 years. I know it's a difficult question, but I think you're pretty well positioned to provide some perspective.

Yeah, thank you. Thank you, Sam. Yeah, I think if you look at it from the demand side and also the supply side, the demand side still a very strong growth and not only the EV, but also the energy storage, this is, we see probably in the future even bigger than EV demands for lithium. So that's one thing from the, from demand side, from supply side, we see lots of uncertainty for those projects on the pipeline and we know that the lead time for develop all those projects takes some quite a longer time. I also talked to some of the people from Chile, in Chile to get environmental permits for a new project, at. Least it takes five years. So that's the reason we think $18,000 is, I think is reasonable, is reasonable for long term pricing even today is still tough. But if you look at China today, the price has been increased 7, 6, 7% already for the lithium carbonate. So we believe 18 is reasonable. If you also consider there's other companies, new projects on the pipeline, for instance in Australia and for some other projects in the US or Canada, all those projects, we believe that they probably will require much even higher price to incentive them to build those projects. Thank you.

Thank you. Maybe if I can ask a second one, just more on the quarter. What about an update on the material quality? So I know that you still have that discount for like purity removal. Can you just talk again what the expectation are in terms of timing to come to like a battery grade here? Thank you.

Yeah, I mean this year was about operating stability. So we're very pleased with what we're seeing at the plant. There has been some, you know, gradual improvement in the quality of the product. And based on the current pricing and reprocessing arrangement we have with Ganfeng, the reprocessing costs are quite, quite low I think. You know, longer term looking out to back end of 26, 27, Ganpeng and Lar are very much aligned in the ability to be able to supply global customers directly. So obviously that would mean that we would need to deliver battery grade products. So it's still in the vision. We're not there yet, but we're making gradual improvements towards that goal.

Thank you. That's it for me.

Your next question comes from the line of David Deckelbaum of TD Cowan. Your line is open.

Congrats to everyone. Thanks for taking my questions today. Just curious, just with the PPG phase development approach, looks like every phase is between 4 and 5 years apart from each other. Is that flow sheet constrained or is that theoretically market and finance constrained? How are you thinking about the timing of phases 1, 2 and 3? And doesn't seem like necessarily there's a change in the assumptions around cadence of bringing projects online post permitting.

Thanks for the question. I think it is theoretical and finance constrained. But Jason, feel free to provide your view.

Yeah, yeah Sam, you made a very good point and just add a few more. Is technically and technically we think like it's like we have one team like continue work on one project, finish and bring down line and check everything, ramp it up and then we move to phase two. That's like more let's say it's more like smooth. So that's just one thing. Another thing is like each phase, for each phase, phase two, phase three. We also need like to obtain the construction permit and the provincial government would like to we construct the phase one first and then move to phase two and then phase three.

Yes, thank you, appreciate that. And then Shaoshen, if I could ask you a question. You remarked earlier that perhaps you could see, you know that we're in the early stages of ess, but you think could Be larger than the EV market. Could you provide some more color around that? When do you think that the market is going to see this grand inflection on demand for energy storage, particularly on the lithium side? Is that something that you anticipate in the next decade or is that something that you think is going to be more impactful sooner?

Yeah, probably. Probably will be sooner. But even for the EV. Today people. Only focus on the passenger cars. But actually China, not only the passenger cars, but all kind of transportation now is becoming electrified or going to be electrified in the next several years. If you look at heavy duty trucks this year, the electrical heavy duty trucks grow more than 100% compared with the same time last year. So we know of course energy storage will have a higher, much higher growth rate. But even for the Maltese batteries also growing and in China the next several years later will be also other new demands for the boat, for the vessels will be also electrified. So it's difficult to predict which year energy storage will be take over the demands. But we see probably within 10 years we believe that will come.

Appreciate the color.

Your next question comes from the line of Mohammed Sidibi of National Bank. Your line is open.

Good morning team and thanks for taking. My question and congrats on the good scoping study here. Just a question in terms of timing. I guess targeting construction by the second half of 2026. Are there anything on the detailed engineering. Front that we should be thinking about. That are on the critical path that would further de risk that 1.1 billion. Capex over the next call it 6 to 12 months.

Thanks for the question. Maybe I'll turn this one over to Jason.

Yes, and so few factors are very critical on the construction timeline and one is like one is engineering. And right now we pretty much finished all the detailed engineering for the pond and well field area. So that has like we will have all the joints by end of this year. So and meanwhile we are working on the process, detailed process. The internal in house engineering team is working on that and we will have that ready early next year. So you will see like on the engineering side we are good and also like another important is like the DIA, the construction permit, the environmental permit, we already have it last week and the next two factors. One is like a financing hopefully like we will have it like the first half next year and also rigi as we discussed and we may have that approval by Q2 end of Q2 or early Q3 next year. Then with all those like key points, key milestones, we are ready to start and that's why we see we're going to start the construction in second half next year. Great, thanks for that.

And then maybe a question for both. Sam and Wong here. Just in terms of privacy, sequencing of. Projects, how should we think about Culture Rio, Laurel Stage two, maybe Mariana Stage two and PPG Stage one in terms. Of sequencing or projects, could this be.

Undertaken at the same time? Or it's more of a phasing approach for each of them, one coming after the other. Sure, I'll answer first but won't comment on Mariana. That's a Ganpeng 100% owned project. Yeah, I mean for XR stage two. Kachario Laurel stage two, the plan right now is to prepare a RIGI application and development plan to align with that RIGI application which would be submitted in the first half of 2026. I think obviously coming back to one of the questions earlier about just how we're going to finance this, it's, you know, it's important to note that you know, for, for ppg we're both looking at third party capital. Likewise for Stage two. You know, I think there are different set of circumstances around options to finance that given that we have an existing operation for Stage one. But underlining it all is like that. The how and the when of growing this. We're going to be extremely responsible for our shareholders. So that's from a financing perspective, from a team's perspective. I mean Jason down in Salta, he's built up an incredible team who just completed Mariana and it's a separate team to xr. So I think from a personnel standpoint we do have a good chance of advancing them in parallel. But obviously we're going to be able to share a lot more early next year around our defining our development plan for XRP and be able to share a lot more in terms of visibility on specific sequencing steps for both projects. I don't know if Jason, you want to share on Mariana. I think there was a question about Stage two.

Yeah, right now Mariana is still working on the ramp up stage for the Stage one and it's going good, it's been good. And regarding Stage two, the first thing we want to share is like Mariana, recently we just updated the resource estimation and the resource increased from $80 million to $13 million up for more than 60%. And we still have a big potential in the deeper horizon because like we did in the trial deep enough right now most of the wells just reached to 350 meters and actually we can feel like much deeper and Mariana is unique because the pumping rate is very big. So the resource is not a bottleneck for Mariana. So yes, indeed, we plan, we are planning the expansions phase two and phase three. And we plan to put a package and apply for Revi. We will present that early next year. And then we were like looking at the market condition and also like the construction, like a progress of other projects such as PPG and Kochali. And then we were like analyzed and finally decide like what will be the. What will be the timeline for the the expansion of stage two and stage three of Mariana.

Thank you with no further questions. This concludes our Q and A session. We thank you for your participation. This concludes today's conference call. You may now disclose.