Lithium Americas Corp.: Form 10-Q for the period ended Mar 31, 2025

The following Management’s Discussion and Analysis (“MD&A”) provides information concerning the financial condition and results of operations of the Company and should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements and notes thereto for the three months ended March 31, 2025 and audited consolidated financial statements for the years ended December 31, 2024 and 2023 (“FY 2024” and “FY 2023,” respectively), together with the notes thereto. The financial information contained in this MD&A is derived from the consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). The Company uses certain non-GAAP financial measures. For a detailed description of each of the non-GAAP measures used, please refer to the discussion under “Use of Non-GAAP Financial Measures and Reconciliations.” This item should be read in conjunction with the Company’s consolidated financial statements and the notes thereto included in this Form 10-Q.

On June 28, 2024, the Company determined that it no longer met the definition of a Foreign Private Issuer, and therefore no longer is entitled to rely on the foreign private issuer exemptions. As a result, beginning on January 1, 2025, the Company became required to report as a domestic U.S. filer, including filing annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements under Section 14 of the Exchange Act.

In prior periods, the Company prepared its consolidated financial statements in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board. As a consequence of becoming a domestic issuer as of January 1, 2025, the Company is required to present its financial information in US GAAP. The financial information discussed herein has been prepared in accordance with US GAAP for all periods presented, except as otherwise indicated. The financial information should not be expected to correspond with financial information previously presented under IFRS® Accounting Standards.

The consolidated financial statements reflect (i) the activities of the Company from and after the Separation (as defined below) and (ii) the activities of LAC North America (as defined below) on a “carve-out” basis prior to that date. Prior to Separation, LAC North America did not operate as a separate legal entity. The assets, liabilities and results of operations prior to October 3, 2023 represent those specifically identifiable to LAC North America (as defined below) including assets, liabilities and expenses relating to Thacker Pass, specified investments, transactions and balances arising from an original investment from General Motors Holdings LLC (“GM”), as well as an allocation of certain costs relating to the management of those relevant assets, liabilities and results of operations. Such costs have been allocated from the shared corporate expenses of Lithium Americas Corp. (“Old LAC”) based on the estimated level of involvement of Old LAC management and employees with LAC North America.

The Company’s fiscal year is the 12-month period ending December 31. All references to “Q1 2025” and “Q1 2024” are to the fiscal quarters for the three-month periods ended March 31, 2025 and March 31, 2024 respectively. Amounts stated in this MD&A are in United States dollars, unless otherwise indicated.

COMPANY BACKGROUND

Lithium Americas Corp. (the “Company”) is principally focused on development of Thacker Pass (“Thacker Pass” or the “Project”) a sedimentary-based lithium deposit located in the McDermitt Caldera in Humboldt County in north-western Nevada, U.S. Thacker Pass is owned by Lithium Nevada LLC (“LN”), a wholly owned subsidiary of Lithium Nevada Ventures LLC (“Lithium Nevada Ventures”), the joint venture (“JV”) between GM and the Company (together, the “JV Partners”). The Company owns a 62% interest in Thacker Pass and will manage the Project (the “Manager”), and GM owns a 38% interest in Thacker Pass. The JV is consolidated in the consolidated financial statements of the Company.

The Company was incorporated on January 23, 2023 under the Business Corporations Act (British Columbia).The Company’s common shares are listed on the New York Stock Exchange (“NYSE”) and on the Toronto Stock Exchange (“TSX”) under the symbol “LAC.” The Company accounts for the business in one segment and one geographical area.

The Company was initially formed for the sole purpose of acquiring ownership of the North American business assets and investments (“LAC North America”) of Old LAC, which is now named Lithium Argentina AG (formerly Lithium Americas (Argentina) Corp.) (“Lithium Argentina”), pursuant to a separation transaction (the “Separation”) that was undertaken on October 3, 2023. Upon consummation of the Separation, the Company changed its name from 1397468 B.C. Ltd to Lithium Americas Corp. Following the Separation, Lithium Argentina and the Company became independent public companies. The Separation was completed pursuant to a statutory plan of arrangement between the Company and Old LAC (the “Arrangement”). Upon completion of the Separation, Old LAC contributed to the Company, among other assets and liabilities, its interest in Thacker Pass, its investments in Green Technology Metals Limited (“GT1”) and Ascend Elements Inc. (“Ascend Elements”), certain intellectual property rights, its loan to 1339480 B.C. Ltd., and cash of $275.5 million, including $75 million to establish sufficient working capital (non-GAAP). The Company then distributed its common shares to shareholders of Old LAC in a series of share exchanges. The Separation was pro rata to the shareholders of Old LAC, so that the holders maintained the same proportionate interest in Old LAC (upon the Separation, Lithium Argentina) and the Company both immediately before and immediately after the Separation.

The Company’s head office and principal address is Suite 3260, 666 Burrard Street, Vancouver, British Columbia, Canada, V6C 2X8.

Q1 2025 OPERATING AND FINANCIAL HIGHLIGHTS

• As of March 31, 2025, the Company had approximately $446.9 million in cash and restricted cash.
• During the quarter ended March 31, 2025, $78.2 million of construction capital costs and other project-related costs were capitalized.
• Subsequent to Q1 2025 on April 1, 2025, the Company closed the previously announced strategic investment of $250 million from fund entities managed by Orion Resource Partners LP (collectively, “Orion”), for the development and construction of Phase 1 of Thacker Pass (“Orion Investment”). With the Orion Investment, Lithium Americas has achieved fully funded status for the development of Phase 1 of Thacker Pass at the project and corporate level for the duration of construction.
• Contemporaneously with closing the Orion Investment on April 1, 2025, the JV Partners announced the final investment decision (“FID”) for construction of Phase 1 of Thacker Pass. On declaring FID, GM and Lithium Americas contributed $100 million and $191.6 million in cash to the JV, respectively.
• The Company currently expects to make the first draw on the previously announced $2.26 billion loan from the Department of Energy (“DOE” / the “DOE Loan”) sometime in the third quarter of 2025 (“Q3 2025”).
• Completion of Phase 1 of Thacker Pass is targeted for late 2027. Project engineering and procurement continue in line with the project schedule to support construction.
• Major construction has begun at Thacker Pass, with earthworks almost complete and permanent concrete placement in the processing plant area commenced in early May 2025.
• As of March 31, 2025, detailed engineering is currently over 60% design complete and expected to increase to over 90% design complete by year end 2025. The higher level of detailed engineering at the early stages of construction helps de-risks execution in terms of project schedule and cost.
• In April 2025, fabrication of the structural steel to be used to build the facilities at Thacker Pass commenced. First steel installation is targeted to commence in September 2025.
• Manufacturing of all long-lead equipment awarded continues to advance with expected delivery in line with the project schedule.
• During Q1 2025, the first modular housing units were installed at the workforce hub, the Company’s all-inclusive housing facility for construction workers in Winnemucca (the “Workforce Hub” or “WFH”). First occupancy of the Workforce Hub is targeted for the second half of 2025.
• The Company recently submitted a Plan of Operations to the Bureau of Land Management (“BLM”) to build a limestone quarry named Western Quarry, approximately one hour drive from Thacker Pass via national and state highways. Western Quarry is being planned as a source of local, lower cost limestone, a reagent used in the Thacker Pass processing flowsheet to produce battery-quality lithium carbonate.

MATERIAL RELATIONSHIPS AND RELATED AGREEMENTS

DOE ATVM Loan Program

On October 28, 2024, the Company closed the $2.26 billion DOE Loan from the U.S. DOE Loan Programs Office (“LPO”) under the Advanced Technology Vehicles Manufacturing (“ATVM”) Loan Program, for financing the construction of Phase 1 processing facilities at Thacker Pass. The $2.26 billion DOE Loan includes principal of $1.97 billion and capitalized interest during construction, which is estimated to be $290 million over a three-year period. The DOE Loan has a 24-year maturity (from the date of first draw on the DOE Loan) with interest rates fixed from the date of each monthly advance for the term of the loan at applicable U.S. Treasury rates, without any additional credit spread. Other key terms include customary covenants and events of default for a project finance loan facility and customary conditions precedent to loan effectiveness and advances for a project finance loan facility.

The Company currently expects to make the first draw on the DOE Loan sometime in Q3 2025. Conditions precedent to first draw include project finance model bring down.

General Motors Equity Investment, Joint Venture and Offtake

Prior to the Separation, on January 30, 2023, Old LAC had entered into a purchase agreement with GM, pursuant to which GM agreed to make a $650 million equity investment (the “2023 Transaction”), the proceeds of which were to be used for the construction and development of Thacker Pass. The 2023 Transaction was comprised of two tranches, a first tranche investment of $320 million (“Tranche 1 Investment”) and a second tranche investment of up to $330 million (the “Tranche 2 Investment”). Tranche 1 closed and the Phase 1 offtake agreement was executed on February 16, 2023, when GM subscribed for 15,002,000 subscription receipts of Old LAC, which were automatically converted into 15,002,000 units, comprising 15,002,000 shares and 11,891,000 warrants of Old LAC, which became 15,002,000 common shares of the Company post-Separation. The subscription proceeds were paid to Old LAC, and the remaining unspent proceeds were distributed to the Company on October 3, 2023, pursuant to the Arrangement.

On October 3, 2023, pursuant to the Separation, the full amount of the remaining unspent proceeds of Tranche 1 Investment were included in the net assets distributed by Old LAC to the Company.

As the Separation was completed before the closing of the Tranche 2 Investment, the agreement for the Tranche 2 Investment in Old LAC was terminated and replaced by a corresponding subscription agreement between GM and the Company whereby the proceeds of the Tranche 2 Investment were to be received by the Company.

On October 15, 2024, the Company entered into an investment agreement (the “Investment Agreement”) with GM to establish a JV with GM for the purpose of funding, developing, constructing and operating Thacker Pass (the “JV Transaction”). Prior to closing the JV Transaction on December 20, 2024, the Company transferred its interest and certain other assets into Lithium Nevada Ventures. In connection with the JV Transaction, the Company also closed an amendment to the DOE Loan to accommodate changes relating to the JV Transaction.

Under the terms of the Investment Agreement, GM acquired a 38% asset-level ownership stake in Thacker Pass for $625 million in total cash and letters of credit, including $430 million of direct cash funding to the JV to support the construction of Phase 1 and a $195 million LC Facility that can be used as collateral to support reserve account requirements under the DOE Loan. The key terms of the JV Transaction are summarized below:

• Lithium Americas has a 62% interest in Thacker Pass and will manage the Project (the “Manager”) on behalf of the JV Partners.
• GM has a 38% interest in Thacker Pass and has committed $625 million in cash and letters of credit to the JV:
• $330 million cash was contributed to the JV upon closing of the JV on December 20, 2024;
• $100 million cash was contributed to the JV at FID for Phase 1 on April 1, 2025; and
• $195 million LC Facility to be posted by GM prior to first draw on the DOE Loan.
• Lithium Americas has contributed $330 million of cash to the JV for its 62% ownership in the Project:
• $138 million was contributed to the JV upon closing of the JV on December 20, 2024; and
• $191.6 million was contributed to the JV at FID for Phase 1 on April 1, 2025.
• The LC Facility provided by GM to the JV as part of its consideration for its equity interest will have no interest and a maturity consistent with DOE Loan requirement that will be withdrawn once replaced with cash that is generated by Thacker Pass.
• A Board of Directors was established at the JV level to oversee the JV and approve the Project’s budgets and business plans, and implement policies to align with GM’s vendor requirements, including GM’s Human Rights Policy.

As part of the Investment Arrangement, the agreement to supply GM with lithium carbonate production from Thacker Pass (the “Offtake Agreement”) was assigned by Old LAC to the Company. GM agreed to extend its existing Offtake Agreement for up to 100% of production volumes from Phase 1 of Thacker Pass to 20 years to support the maturity of the DOE Loan. On closing of the JV Transaction, GM also entered into an additional 20-year offtake agreement for up to 38% of Phase 2 production volumes and will retain its existing right of first offer on the remaining Phase 2 production volumes.

The Company and GM terminated the Tranche 2 Investment subscription agreement concurrent with the execution of the JV Investment Agreement.

Orion Resource Partners

Subsequent to Q1 2025 on April 1, 2025, the Company closed the strategic investment of $250 million from fund entities managed by Orion, for the development and construction of Phase 1 of Thacker Pass (“Orion Investment”), previously announced on March 6, 2025. Orion has purchased Notes in the aggregate principal amount of $195 million and paid the Company $25 million for a Production Payment Agreement (“PPA”) for payments corresponding to the minerals produced and gross revenue generated by Thacker Pass. Orion also committed to purchase an additional $30 million in aggregate principal amount Notes within two years (the “Delayed Draw Notes”), subject to the satisfaction of certain conditions precedent, upon request by the Company.

The Notes will mature on April 1, 2030 and bear an initial conversion price of $3.78 per share, which represents a 43% premium to Lithium Americas’ 5-day VWAP on the New York Stock Exchange ended on March 5, 2025. Lithium Americas will initially pay interest on the Notes in-kind or in cash at a rate of 9.875% per annum until the maturity of the Notes. Under the terms of the PPA, Orion will receive fixed payments of $128 per tonne ($152 per tonne assuming draw of the Delayed Draw Notes) of the total lithium produced each year at Thacker Pass for a period of 72 quarters after first production. Orion will receive additional variable payments of 0.96% of total gross revenue (1.14% of total gross revenue assuming draw of the Delayed Draw Notes) for the life of the mine. Both fixed and variable payments will only apply to the first 41,500 tonnes of lithium produced each year and are subject to certain adjustments relating to total Phase 1 project costs. The production payments are also subject to certain adjustments related to the tonnage of battery-grade lithium carbonate equivalent sold. The variable payments are also subject to certain adjustments related to the future price of lithium.

Lithium Americas has granted Orion the right to designate an Independent Engineer and an Independent Environmental and Social Consultant to a newly established technical committee of the Company’s management team to monitor development.

RESULTS OF OPERATIONS

The Three Months Ended March 31, 2025 compared with the Three Months Ended March 31, 2024

The following tables provide a summary of the Company’s condensed consolidated results of operations for the three months ended March 31, 2025 (“Q1 2025”) compared with the three months ended March 31, 2024 (“Q1 2024”).

The selected consolidated financial information set out below has been derived from the Company's audited consolidated annual financial statements and unaudited condensed consolidated interim statements and should be read in conjunction with those consolidated financial statements and the related notes thereto.

General and administrative expenses for Q1 2025 increased to $6.5 million, compared with $5.8 million in Q1 2024, due to higher professional fees in Q1 2025, reflecting the ongoing costs of the Company's transition to domestic filer as well as increased reporting obligations associated with the DOE Loan and formation of the JV.

Transaction costs for Q1 2025 increased to $4.3 million (Q1 2024 - $0.9 million) due to financing activities that concluded with the closing of the Orion Investment. Transaction costs in Q1 2024 primarily related to negotiating and advancing the DOE Loan.

The Loss on financial instruments measured at fair value includes the losses on the Company’s investments in GT1, Ascend Elements and, in Q1 2024, the GM Tranche 2 liability. The loss on change in fair value of the investment in GT1 of $0.2 million for Q1 2025 was lower than the loss of $1.3 million for Q1 2024, reflecting the publicly-listed share price of GT1 at these respective dates. The loss on change in fair value of the investment in Ascend Elements for Q1 2025 of $1.7 million compared with no change in Q1 2024, reflecting the overall downturn of the battery recycling market in late 2024 that continued into Q1 2025. The loss on change in fair value of the GM Tranche 2 liability of $0.2 million for Q1 2024 reflects the increase in the market value of the Company’s share price during that time and a decrease in the volatility assumption. The Tranche 2 Investment agreement that included the GM Tranche 2 liability was terminated on October 15, 2024.

The difference between other income of $1.3 million for Q1 2025 compared with $1.9 million for Q1 2024 was primarily due to higher interest earned on cash investments in Q1 2024 compared with Q1 2025.

In Q1 2025, total assets decreased due to the payment of accrued liabilities at December 31, 2024 related to transaction costs, as well as cash used to fund operating costs in Q1 2025. Mineral properties, plant and equipment increased due to the capitalization of Thacker Pass construction costs, including engineering, earthworks, procurement and the commencement of installation of WFH units.

In Q1 2025, total liabilities decreased primarily due to the payment of accrued liabilities at December 31, 2024.

LIQUIDITY AND CAPITAL RESOURCES

The Company has recurring net losses and negative operating cash flows and expects to continue to operate at a loss for the foreseeable future, which includes the period that Thacker Pass Phase 1 is under development. As the Company develops Thacker Pass, it will not generate revenues from operations and there is no expectation to generate any revenue from operations until Thacker Pass begins production. Thacker Pass is targeting completion in late 2027 with ramp up during 2028.

As at March 31, 2025, the Company had cash and restricted cash of $446.9 million (December 31, 2024 - $594.2 million); and working capital (non-GAAP) of $405.9 million (December 31, 2024 - $543.9 million).

On April 1, 2025, the Company closed a strategic investment by Orion for $195 million in Notes and $25 million for a PPA. In addition, subject to certain conditions precedent, Orion agreed to purchase an additional $30 million in Delayed Draw Notes within two years upon request by the Company.

On October 28, 2024, the Company closed the $2.26 billion DOE Loan under the ATVM Loan Program, for financing the construction of Phase 1 processing facilities at Thacker Pass. The $2.26 billion DOE Loan, with a 24-year maturity, includes principal of $1.97 billion and capitalized interest during construction of $290 million, with interest rates fixed from the date of each monthly advance for the term of the loan at applicable U.S. Treasury rates, without any additional credit spread. Lithium Americas has guaranteed the full and timely payment of costs to complete the construction of Thacker Pass and has guaranteed payment of any amounts borrowed under the DOE Loan.

On October 15, 2024, the Company and GM entered into the Investment Agreement to establish the JV for the purpose of funding, developing, constructing and operating Thacker Pass. The JV Transaction delivers $625 million of cash and letters of credit from GM to Thacker Pass. Under the terms of the Investment Agreement, the Company and GM terminated the Tranche 2 subscription agreement and GM acquired a 38% asset-level ownership stake in Thacker Pass. Upon closing of the JV on December 20, 2024, GM contributed cash of $330 million to the JV and also entered into an additional 20-year offtake agreement for up to 38% of Phase 2 production volumes while retaining its existing right of first offer on the remaining Phase 2 production volumes.

On April 22, 2024, the Company completed the Offering for aggregate gross proceeds to the Company of $275 million or net proceeds of approximately $262 million after deducting fees and share issuance costs.

At March 31, 2025, the Company's net assets of $935 million included $815 million held in the JV (inclusive of GM's non-controlling interest), of which $485 million were held by LN. The DOE Loan imposes certain restrictions on the transfer of assets from LN to the Company, including prohibitions on dividend payments and loans from LN to the Company, the making of other payments to the Company, and transfers of any assets comprising part of the collateral package. Exceptions to such restrictions are possible upon the satisfaction of certain conditions, including attainment of certain construction milestones. The DOE Loan also requires LN to maintain a certain amount of working capital (non-GAAP) sufficient to cover project-related costs. Under the terms of the JV there are certain additional restrictions on asset transfers from LN to the Company, including transfers of material assets outside of the ordinary course of business or transfers involving assets with a value of greater than $5 million (subject to certain exceptions, including for sales of lithium in the ordinary course of business or sales of non-productive assets with a value of less than $10 million).

The Company believes that it will have sufficient cash resources to carry out its business plans, including the currently planned development activities at Thacker Pass, for at least the next 12 months. Over the long-term, the Company expects to meet its obligations and fund the development of Thacker Pass through the financings it has secured, which are described above; however, due to the conditions associated with such financings, there can be no assurance that the Company will successfully complete all of its contemplated financing plans. Additionally, the Company may, from time to time, and on an opportunistic basis as market conditions permit, engage in capital markets transactions to provide additional financing to support its capital and operating needs. The Company does not engage in currency hedging to offset any risk of currency fluctuation.

The Company has entered into long-term purchase agreements related to long-lead equipment, infrastructure and services related to the construction of the processing plant as well as development and mining services at Thacker Pass. These agreements contain certain fixed and determinable cost components that are variable based on time and materials. There were no commitments under these agreements at March 31, 2025.

The Company’s contractual obligations, commitments under long-term purchase agreements and other commitments as at March 31, 2025 are disclosed in Notes 7, 8 and 14 of the condensed consolidated interim financial statements for the three months ended March 31, 2025.

Cash Flow

Operating Activities

Cash used in operating activities during the three months ended March 31, 2025 increased to $18.9 million compared with $2.2 million during the three months ended March 31, 2024, which is primarily attributable to changes in working capital (non-GAAP).

Investing Activities

Cash used in investing activities for the three months ended March 31, 2025, was $117.9 million compared with $46.1 million for the three months ended March 31, 2024, which reflects a higher level of construction activity at Thacker Pass in Q1 2025 compared with Q1 2024. Construction activity increased at Thacker Pass subsequent to the closing of the DOE Loan and JV.

Financing Activities

Cash used in financing activities for the three months ended March 31, 2025 increased to $10.5 million compared with $nil for the three months ended March 31, 2024, reflecting financing fees of $9.3 million relating to the DOE Loan, which were deferred commencing on October 28, 2024, the date that the DOE Loan was closed. The remaining $1.2 million increase was due to an increase in principal payments on finance lease obligations for equipment used for earthworks.

OFF-BALANCE SHEET ARRANGEMENTS

As at March 31, 2025, the Company has no off-balance sheet arrangements that have or are reasonably likely to have a material effect on its financial condition, results of operations, or liquidity.

DECOMMISSIONING PROVISION AND RECLAMATION BOND

The carrying value of the liability for decommissioning relating to exploration and development activities at Thacker Pass as at March 31, 2025 is $0.3 million (December 31, 2024 - $0.3 million). The Company has a $1.7 million reclamation bond payable to the BLM guaranteed by a third-party insurance company with $0.3 million accepted and obligated for exploration projects. In February 2025, a $73 million reclamation bond payable to the BLM was put in place for Thacker Pass, with $13.7 million accepted and obligated for initial earth work construction.

CRITICAL ACCOUNTING ESTIMATES

The March 31, 2025 condensed consolidated interim financial statements have been prepared in accordance with US GAAP. The preparation of condensed consolidated interim financial statements requires management to make estimates that affect the reported amounts of assets, liabilities, and expenses. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While significant accounting policies are more fully described in Note 2 to the FY 2024 audited consolidated financial statements, the Company has provided below the accounting policies and estimates critical to its business operations and understanding of its financial results.

Also included below are the key judgments and sources of estimation uncertainty that management has determined could have the most significant impact on the amounts recognized in the condensed consolidated interim financial statements for the three months ended March 31, 2025.

Accounting for the Agreements with General Motors

Accounting for the agreements with GM requires management to make judgments in determining that no portion of the investment proceeds by GM were attributable to the Offtake Agreements, which management concluded contained a market pricing structure. The Company’s assessment was informed by a competitive process for the investment and offtake agreements on a combined basis.

The fair value of the Tranche 2 Investment Agreement with GM as of January 1, 2023 and December 31, 2023 involved estimation, which was determined using Monte Carlo simulation. The simulation of the fair value required significant assumptions, including expected volatility of the Company’s share price, a risk- free rate and no expected dividends. On October 15, 2024, the Company and GM terminated the Tranche 2 subscription agreement concurrent with the execution of the JV Investment Agreement.

Assessment of Impairment of Thacker Pass

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Once it is determined that impairment exists, an impairment loss is measured as the amount by which the asset carrying value exceeds its fair value. For asset groups where an impairment loss is determined using the discounted future net cash flows method, future cash flows are estimated based on quantities of recoverable mineralized material, expected lithium prices (considering current and historical prices, trends and related factors), production levels, operating costs, capital requirements and reclamation costs, all based on life-of-mine plans. The term “recoverable mineralized material” refers to the estimated amount of lithium or other commodities that will be obtained after considering losses during processing and treatment. The Company’s estimates of future cash flows are based on numerous assumptions and uncertainties. It is possible that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, lithium and other commodity prices, production levels and costs of capital are each subject to significant risks and uncertainties.

Accounting for Joint Venture with GM

The Company determined that the JV is a variable interest entity due to its reliance on additional financing to complete Phase 1 of the development of Thacker Pass. The Company has determined it is the primary beneficiary of the joint venture due to the relative decision-making power of the parties over the most significant activities of the joint venture. As a result, the Company has consolidated Lithium Nevada Ventures in its consolidated financial statements.

Royalties and Production Payments

Royalties on future production or sales are reported based on their underlying characteristics. When indicated by their terms, royalties and production payments are treated as financial liabilities, such as those subject to call options for a specified price or those sold on proven properties and settleable with cash flows in which the Company has significant continuing involvement.

Accounting Developments

For a discussion of Recently Adopted and Recently Issued Accounting Pronouncements, refer to Note 2 in the audited consolidated financial statements for the year ended December 31, 2024.

USE OF NON-GAAP FINANCIAL MEASURES AND RECONCILIATION

The Company makes reference to certain non-GAAP measures. These measures are not recognized measures under US GAAP, do not have a standardized meaning prescribed by US GAAP and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those US GAAP measures by providing further understanding of the Company's liquidity from management’s perspective. Accordingly, these measures are not intended to represent, and should not be considered as alternatives to other performance measures derived in accordance with US GAAP as measures of liquidity. In addition to results determined in accordance with US GAAP, the Company uses “working capital”, a non-GAAP measure. This non-US GAAP measure is used to provide investors with a supplemental measure of the Company's liquidity and thus highlight trends in the core business that may not otherwise be apparent when relying solely on US GAAP measures.

“Working capital” is the difference between current assets and current liabilities. It is a financial measure that has been derived from the Company’s consolidated financial statements and applied on a consistent basis as appropriate. Various assets and liabilities fluctuate significantly from month to month depending on short term liquidity needs. The Company discloses this financial measure because it believes it assists readers in understanding the Company’s financial position and provides further information about the Company’s liquidity to investors.

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The Company's exposure to market risk is described in Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk of the annual report on Form 10-K for the year ended December 31, 2024. We believe the Company's exposure to market risk has not changed materially since then.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of March 31, 2025. Based on the foregoing, the CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in reports that are filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and such information is accumulated and communicated to management, including the Company’s CEO and CFO, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting that occurred during the most recent quarter, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

Except as set forth below, there has been no material changes to the risk factors disclosed in Part I. Item 1A. Risk Factors of the Company's annual report on Form 10-K for the year ended December 31, 2024.

Changes in U.S. trade policy and the impact of tariffs could adversely affect the Company's business, results of operations and financial condition.

The Company's business and results of operations may be adversely affected by uncertainty and changes in U.S. trade policies, including tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments. For example, on March 12, 2025, the U.S. government imposed a 25% tariff on steel imports, and on April 2, 2025, the U.S. government announced a 10% tariff on product imports from almost all countries and an additional individualized reciprocal tariff on the countries with which the U.S. has the largest trade deficits, including China and other southeast Asian countries where the Company does business and source equipment. Several tariff announcements have been followed by announcements of limited exemptions and temporary pauses. These actions are unprecedented, have caused substantial uncertainty and volatility in financial markets.

The Company's business requires access to steel and other raw materials for use in the construction of Thacker Pass. Any imposition of or increase in tariffs on imports of steel or other raw materials, as well as corresponding price increases for such materials available domestically, could increase the Company's construction costs and negatively impact the Company's ability to complete the construction of Thacker Pass on budget. Higher materials costs could also diminish the Company's ability to develop new projects at acceptable returns, particularly during times of economic uncertainty, and limit the Company's ability to pursue growth opportunities that may otherwise be available to the Company.

The imposition of further tariffs by the U.S. on a broader range of imports, or further retaliatory trade measures taken in response to additional tariffs, could increase costs in the Company's supply chain or reduce demand for the Company's or the Company's customers’ products, either of which could adversely affect the Company's results of operations. To the extent any such tariffs remain in place for a sustained period of time, or in the event of a global or domestic recession resulting therefrom, the Company's customers could decide to delay currently planned growth projects or forego them entirely, each of which could result in decreased demand for the Company's products and adversely affect the Company's results of operations and financial condition.

Changes in tariffs and trade restrictions can be announced with little or no advance notice. The adoption and expansion of tariffs or other trade restrictions, increasing trade tensions, or other changes in governmental policies related to taxes, tariffs, trade agreements or policies, are difficult to predict, which makes attendant risks difficult to anticipate and mitigate. The ultimate impact of these trade measures on the Company's business operations and financial results is uncertain and may be affected by various factors, including whether and when such trade measures are implemented, the timing when such measures may become effective, and the amount, scope or nature of such trade measures, and the Company's ability to execute strategies to mitigate the potential negative impacts resulting therefrom. If the Company is unable to navigate further changes in U.S. or international trade policy, it could have a material adverse impact on the Company's business and results of operations.