TSX- and NYSE-listed Lithium Argentina has secured an investment of $180-million from the world's largest lithium metals producer Ganfeng Lithium Group, with the companies having entered into definitive agreements to finalise a joint venture (JV) on and consolidation of the Pozuelos-Pastos Grandes (PPG) projects, in Argentina.

The investment comprises a six-year unsecured convertible note with a 4% coupon and is convertible into Lithium Argentina shares at a price of $12.50 apiece.

Lithium Argentina will use the proceeds, together with its cash on hand, to fully repay a $259-million convertible debt that is due in January 2027, which extends the company's debt maturity profile and strengthens its balance sheet.

Ganfeng currently owns 9.6% of Lithium Argentina's issued and outstanding common shares. Assuming conversion of the note in full, Ganfeng would receive 14.4-million additional common shares and would own about 16.1% of Lithium Argentina's common shares on a fully diluted basis.

"These transactions strengthen our balance sheet and minimise dilution for our shareholders, while positioning both Cauchari-Olaroz and PPG to deliver significant value. At Cauchari-Olaroz, with over $300-million of liquidity at the operation, access to low-cost financing and substantial free cash flow generation, we are strongly positioned to fund [a planned] Stage 2 expansion organically and accelerate our growth plans.

"At PPG, the consolidated JV brings together three complementary projects into a single large-scale operation - strengthening our joint financing process already underway and preserving every option to unlock its full value for shareholders," says Lithium Argentina CEO Sam Pigott.

In turn, Ganfeng CEO Wang Xiaoshen comments the PPG JV and Ganfeng's strategic investment reflect the strength of a partnership built over nearly a decade and more than $2-billion of combined investment in Argentina’s lithium sector.

"At Cauchari-Olaroz, the largest lithium brine operation in Argentina, we have demonstrated what our companies can achieve together, and this latest investment reflects the strong long-term value Ganfeng sees in Lithium Argentina and our confidence in the growth we are building.

"Together, we are advancing a shared vision to grow to more than 200 000 t/y of lithium carbonate-equivalent capacity - bringing advanced processing technologies, jobs and investment to make Argentina the leading source of growth in low-cost, environmentally responsible lithium chemicals production," Xiaoshen explains.

JV TERMS

The PPG JV brings together three adjacent projects in the Salta province of Argentina - Ganfeng's Pozuelos-Pastos Grandes project, Lithium Argentina's Pastos Grandes and Sal de la Puna projects - as a single consolidated basin-wide development.

The PPG JV is advancing an integrated development plan targeting 150 000 t/y of lithium carbonate-equivalent across three phases, leveraging shared infrastructure and one of the largest consolidated lithium brine resource bases globally. The plan is expected to be ready for approval by the end of the year.

Ganfeng holds 67% of the JV and Lithium Argentina 33%, however, key decisions such as development plans, financings and budgets require the approval of both companies.

Ganfeng's team in Salta will act as the operator of the projects with a joint technical and financial committee due to provide oversight of all key decisions.

Both partners will fund the PPG JV in proportion to their ownership interests and both partners are entitled to offtake in proportion to their ownership interests.

The PPG JV is expected to become effective in September, during which the PPG projects will be consolidated under "Millennial Lithium" - a Dutch holding company owned 67% by Ganfeng and 33% by Lithium Argentina, which will indirectly own 100% of the Argentine entities holding the PPG projects.