Lithium Argentina AG. (TSE: LAR) (NYSE: LAR) and Ganfeng Lithium Group Co., Ltd. have finalized agreements to combine three Argentine lithium projects into a large-scale joint venture.
Ganfeng will also invest USD$180 million in Lithium Argentina through a six-year unsecured convertible note. The companies expect both transactions to close in September, according to a Monday announcement.
The agreements consolidate three neighbouring lithium brine projects in Salta Province under the new Pozuelos-Pastos Grandes joint venture, or PPG JV. Ganfeng will own 67 per cent of the venture, while Lithium Argentina will hold the remaining 33 per cent.
The partners plan to develop the properties as one integrated operation targeting 150,000 tonnes of lithium carbonate equivalent annually. Development would occur across three phases and use shared infrastructure across the combined project area.
Additionally, the companies have already invested about USD$1.8 billion acquiring and developing the properties now included in the venture.
The transaction combines Ganfeng’s Pozuelos-Pastos Grandes project with Lithium Argentina’s Pastos Grandes and Sal de la Puna properties. The companies believe the consolidation creates one of the world’s largest combined lithium brine resource bases.
Ganfeng’s team in Salta will operate the venture. However, a joint technical and financial committee will oversee major decisions.
Both partners must approve key matters, including development plans, financing arrangements and budgets. The structure therefore gives Lithium Argentina significant governance rights despite its smaller economic interest.
Meanwhile, each company will fund development according to its ownership percentage. Annual funding above USD$20 million requires approval from both companies until they complete project-level financing.
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Submitted application covers 150,000 tonne annual development
The partners are already pursuing outside financing for the development. Their options include project debt and potentially bringing in a minority strategic investor.
Additionally, each company will receive lithium offtake rights proportional to its ownership stake. Offtake agreements allow investors or partners to purchase an agreed share of a project’s future production.
The companies submitted an application under Argentina’s Large Investment Incentive Regime during the first quarter of 2026. The application covers the entire planned 150,000-tonne annual development.
They expect authorities to approve the application before the end of 2026.
Once completed, Millennial Lithium B.V. will hold the PPG projects through its Argentine subsidiaries. Ganfeng will own 67 per cent of the Dutch holding company, while Lithium Argentina will own 33 per cent.
The PPG transaction forms part of a much larger lithium partnership between the two companies in Argentina.
Ganfeng and Lithium Argentina have invested more than USD$2 billion combined in the country’s lithium industry during their nearly decade-long relationship. Their existing partnership includes the Cauchari-Olaroz operation in Jujuy Province.
Ganfeng CEO Wang Xiaoshen said the companies have already demonstrated their ability to develop major Argentine lithium assets together. Additionally, he said the latest investment reflects Ganfeng’s confidence in Lithium Argentina’s long-term growth prospects.
The partners ultimately aim to develop more than 200,000 tonnes of annual lithium carbonate equivalent capacity across their operations.
Lithium carbonate equivalent provides a common measurement for comparing different lithium products and projects. It converts various lithium compounds into the equivalent amount of lithium carbonate.
Meanwhile, Ganfeng’s separate USD$180 million investment will help Lithium Argentina address a major near-term debt maturity.
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Ganfeng owns 9.6% of Lithium Argentina’s common shares
Lithium Argentina will issue Ganfeng an unsecured convertible note carrying annual interest of 4.0 per cent. The company will pay interest twice yearly.
The note will mature six years after issuance, placing maturity in 2032 unless the companies convert or redeem it earlier.
Ganfeng can convert the debt into Lithium Argentina common shares at USD$12.50 per share. That price sits about 96 per cent above Lithium Argentina’s five-day volume-weighted average NYSE price through Aug. 21.
A convertible note starts as debt but gives its holder the ability to exchange that debt for shares under specified conditions.
Consequently, Ganfeng could receive 14.4 million additional Lithium Argentina shares if it converts the entire USD$180 million note.
Ganfeng already owns approximately 9.6 per cent of Lithium Argentina’s outstanding common shares. Full conversion would increase its ownership to approximately 16.1 per cent on a fully diluted basis.
However, the agreement caps conversion at 19.99 per cent of Lithium Argentina’s issued and outstanding shares.
The note does not include new offtake rights or other commercial arrangements. It also remains unsecured, meaning Lithium Argentina has not pledged specific assets as collateral.
Additionally, Ganfeng can transfer the note only with Lithium Argentina’s consent. The agreement also restricts hedging and includes customary adjustments protecting Ganfeng from certain forms of share dilution.
Ganfeng will receive a 12-month participation right allowing it to maintain its ownership percentage during qualifying future share issuances.
Lithium Argentina can also redeem the note at face value after its first anniversary under certain market conditions.
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Transactions could strengthen Lithium Argentina’s balance sheet
For that provision to apply, its shares must trade above 130 per cent of the USD$12.50 conversion price. They must remain above that threshold for 20 trading days during any 30 consecutive trading-day period.
The agreement also addresses a potential takeover of Lithium Argentina. Ganfeng could convert before a change of control closes or receive equivalent consideration after the transaction.
Lithium Argentina plans to use the investment to eliminate USD$259 million of convertible debt maturing in January 2027.
The company ended the second quarter with USD$100 million in cash and equivalents. Additionally, it received another USD$27 million in distributions from Cauchari-Olaroz during the third quarter.
Lithium Argentina expects the new investment and existing cash to cover the January debt repayment completely.
Consequently, the financing replaces a looming 2027 obligation with cheaper unsecured capital that does not mature until 2032.
Lithium Argentina will also terminate an existing USD$130 million debt facility when Ganfeng completes the strategic investment. That move will release security attached to the facility and eliminate its preferential offtake rights.
CEO Sam Pigott said the transactions should strengthen Lithium Argentina’s balance sheet while limiting dilution for existing shareholders.
He also said Cauchari-Olaroz currently holds more than USD$300 million of liquidity at the operating level. Management expects that liquidity, low-cost financing and free cash flow to support the operation’s planned second-stage expansion.
Additionally, Pigott said the consolidated PPG structure should strengthen the financing process already underway for the Salta development.
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Ganfeng sees Argentina as major source of lithium growth
The companies designed the venture to combine three previously separate properties into a single basin-wide development. That approach could reduce duplicated infrastructure while allowing the partners to coordinate extraction and processing across the project area.
Lithium brine projects generally pump mineral-rich underground water to the surface before separating and processing its lithium content.
Argentina forms part of South America’s so-called Lithium Triangle alongside Chile and Bolivia. The region contains some of the world’s largest known lithium brine resources.
Lithium remains an important material for rechargeable batteries used in electric vehicles, electronics and energy-storage systems.
Meanwhile, Ganfeng sees Argentina as a major source of future low-cost lithium supply.
Wang said the companies plan to bring additional processing technology, investment and employment into Argentina as they expand production. He also expects the country to become an increasingly important source of global lithium supply growth.
The PPG development still requires substantial financing and construction before reaching its proposed production scale.
Both partners will continue advancing project financing while they wait for the joint venture transaction and strategic investment to close.
Additionally, closing of the USD$180 million note remains subject to customary conditions and approvals from the Toronto Stock Exchange and New York Stock Exchange.
The companies expect to complete the PPG JV during September, at which point the three Salta projects will move under their consolidated ownership structure.
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