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Introduction & Market Context
Lithium Argentina (NYSE & TSX:LAR) shares surged over 22% following the company’s Q2 2025 earnings presentation on August 11, as investors responded positively to production gains and cost reductions despite ongoing lithium price volatility. The company highlighted its operational improvements at the Cauchari-Olaroz project while outlining ambitious growth plans targeting significant capacity expansion in Argentina.
The presentation comes amid a recovering lithium market, with prices climbing 14.7% in the past month according to data shared by the company, though still below historical highs. Lithium Argentina noted that a "substantial share of global lithium production is operating below breakeven level," positioning its cost-cutting initiatives as strategically important in the current market environment.
Quarterly Performance Highlights
Lithium Argentina reported Q2 2025 production of approximately 8,500 tonnes of lithium carbonate equivalent (LCE), representing an 18% increase from Q1 2025 and operating at approximately 85% of capacity. The company remains on track to meet its 2025 production guidance of 30,000-35,000 tonnes.
Revenue reached $64 million in Q2, up 10% from $58 million in the previous quarter, despite an 8% decrease in average sales price to $7,400 per tonne. Cost of sales increased 17% to $63 million, reflecting higher production volumes.
As shown in the following chart of quarterly production and financial results:
The production profile demonstrates consistent growth over the past year, with Q2 2025 volumes reaching the highest level since the project began operations. The company has nearly doubled its quarterly production compared to Q2 2024 (5,600 tonnes), showing the successful ramp-up of the Cauchari-Olaroz facility.
Cost Optimization Success
A key highlight of the presentation was Lithium Argentina’s success in reducing production costs. The company achieved Q2 operating costs of $6,100 per tonne, now below its original Feasibility Study estimates and representing an 8% reduction from Q1 2025 and a 14.4% decrease from FY 2024 levels.
The company attributed these improvements to enhanced brine efficiency, optimized reagent use, and contract renegotiations, describing them as "structural changes to cost base" that position the operation for long-term competitiveness.
The following chart illustrates the company’s cost optimization progress:
This cost reduction trajectory is particularly significant given the volatile price environment in the lithium market. The company emphasized that these improvements reinforce its status as a "resilient, low-cost producer" that can withstand price fluctuations.
Growth Strategy
Lithium Argentina outlined an ambitious growth strategy targeting more than 200,000 tonnes per annum (ktpa) of LCE capacity by combining Stage 2 expansion at Cauchari-Olaroz with regional assets development. The company is making progress toward formalizing a new joint venture to develop the Pozuelos-Pastos Grandes ( PPG (WA:IBSP)) project, which is expected to add 150,000 tpa of capacity.
The company’s growth pipeline is illustrated in this capacity expansion chart:
The growth strategy includes:
1. Regional Growth: Targeting 150,000 tpa capacity with a Feasibility Study expected by year-end. The project will have flexibility to produce both lithium carbonate and lithium chloride.
2. Stage 2 Expansion: Targeting an additional 40,000 tpa with a 5,000 tpa demonstration plant currently being engineered in China and installation in Argentina planned for 2026.
The company noted that it is exploring financing options with its partner Ganfeng and highlighted that Argentina’s RIGI incentive program supports further investment in the country.
Forward-Looking Statements
Lithium Argentina emphasized three key initiatives to power continued growth:
1. Progressing consolidation of Pozuelos-Pastos Grandes by advancing joint development plans with Ganfeng
2. Continuing cost reduction efforts while targeting 85% capacity utilization and meeting 2025 production targets
3. Strengthening its financial position by securing additional low-cost credit lines in Q2 and pursuing non-dilutive funding options
The company highlighted its strengthened financial position at Cauchari-Olaroz, with $120 million in new bank financing secured during the quarter. This improved liquidity provides additional flexibility as the company pursues its expansion plans.
As the lithium market shows signs of recovery with recent price increases, Lithium Argentina appears well-positioned to capitalize on growing demand from energy storage systems (ESS) and electric vehicle (EV) sectors, while maintaining focus on operational efficiency and strategic growth initiatives.
Full presentation:
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