Lithium Argentina (TSX:LAR,NYSE:LAR) closed a US$180 million investment from Ganfeng Lithium (HKEX:1772,OTCPL:GNENF) this week (September 15) to fund the expansion of its South American operations.
Ganfeng structured the capital injection as an unsecured convertible note carrying a 4.0 percent annual coupon. The debt converts into Lithium Argentina common shares at US$12.50 per share.
The Swiss-based miner will combine the net proceeds with cash on hand to fully repay US$259 million in existing convertible notes due in January 2027.
“With the funds from the Strategic Investment and cash distributions from Cauchari-Olaroz, Lithium Argentina now has a materially stronger balance sheet, with lower net debt, a six-year maturity profile and a low cost of capital,” Lithium Argentina CEO Sam Pigott said in a recent press release.
Ganfeng currently holds a 9.6 percent stake in Lithium Argentina. If the note is fully converted, the Chinese lithium producer will acquire an additional 14.4 million common shares, increasing its ownership to approximately 16.1 percent on a fully diluted basis.
The financing runs parallel to a physical consolidation of the companies’ assets. By the end of September 2026, Lithium Argentina and Ganfeng expect to finalize a joint venture integrating the Pozuelos-Pastos Grandes (PPG) project in Argentina’s Salta province.
The company’s flagship Cauchari-Olaroz joint venture, located in Jujuy province, delivered high output according to its recent Q2 report.
Despite a planned maintenance shutdown in May, the site produced 9,280 tons of lithium carbonate in the second quarter. The operation averaged 95 percent of its design capacity over the first half of 2026 and remains on track to hit its full-year guidance of 35,000 to 40,000 tons.
Cauchari-Olaroz also generated US$141 million in free cash flow from operations during the second quarter, enabling a US$114 million reduction in net debt.
The strong cash generation is directly funding early development for the Cauchari-Olaroz Stage 2 expansion, which targets an additional 45,000 tons per annum of capacity.
In May 2026, the Argentine government approved Stage 2 under the Regimen de Incentivo para Grandes Inversiones (RIGI), which provides long-term fiscal stability along with foreign exchange and tax benefits.
To execute Stage 2, Ganfeng and Lithium Argentina are engineering a phased, modular direct lithium extraction (DLE) approach. The partners will construct an initial 10,000-ton-per-annum facility, utilizing Ganfeng’s proprietary processing equipment to accelerate production timelines.
Lithium Argentina expects to release an updated development plan for the expansion around the end of the third quarter.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
