Argentina Lithium & Energy : Earnings Document

Argentina Lithium & Energy Corp.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited - Expressed in Canadian Dollars)

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

In accordance with National Instrument 51-102 Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of these condensed consolidated interim financial statements they must be accompanied by a notice indicating that these condensed consolidated interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company's management. The Company's external auditors have not performed a review of these condensed consolidated interim financial statements.

Argentina Lithium & Energy Corp.

(An Exploration Stage Company)

Consolidated Interim Statements of Financial Position

(Unaudited - Expressed in Canadian Dollars)

		March 31,	December 31,
		2024	2023
	Note	$	$
ASSETS
Current assets
Cash and cash equivalents	13	4,944,639	6,132,851
Restricted cash	13	1,521,166	5,721,535
Accounts receivables		99,008	70,269
Prepaid expenses	3	49,319,205	49,501,966
Total current assets		55,884,018	61,426,621
Non-current assets
Exploration and evaluation assets	4	22,612,498	19,078,864
Investments	5	1,355,000	1,322,600
Total non-current assets		23,967,498	20,401,464
Total Assets		79,851,516	81,828,085
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	10	1,359,972	1,585,576
Derivative liability	7	2,241,846	4,364,167
Total liabilities		3,601,818	5,949,743
EQUITY
Share capital	6	38,529,490	38,179,047
Reserves	6	14,859,334	14,882,277
Obligation to issue shares	7	170,175	122,460
Retained earnings		10,475,476	10,252,054
Total shareholders' equity		64,034,475	63,435,838
Non-controlling interest	7	12,215,223	12,442,504
Total equity		76,249,698	75,878,342
Total Equity and Liabilities		79,851,516	81,828,085

NATURE OF OPERATIONS AND GOING CONCERN (Note 1)

COMMITMENT (Notes 4 and 12)

SUBSEQUENT EVENTS (Note 15)

These consolidated financial statements are authorized for issue by the Board of Directors on May 27, 2024. They are signed on the Company's behalf by:

"Nikolaos Cacos"	, Director
"Martin Burian"	, Director

The accompanying notes are an integral part of these consolidated financial statements.

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Argentina Lithium & Energy Corp.

Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited - Expressed in Canadian Dollars)

		Three months ended March 31,
		2024	2023
	Note	$	$
Expenses
Consulting fees	10	172,377	196,554
Corporate development and investor relations		378,368	424,852
Exploration	4	1,325,946	1,045,029
Legal and professional fees		324,865	36,848
Management fees	10	62,000	29,400
Office and sundry	10	43,597	13,039
Rent, parking and storage		11,522	4,327
Share-based compensation	6, 10	-	55,683
Transfer agent and regulatory fees		13,521	9,126
Travel		9,424	15,652
Loss from operating activities		(2,341,620)	(1,830,510)
Other income (expense)
Foreign exchange gain (loss)		164,766	(379,687)
Gain on sale of marketable securities	9	94,950	994,442
Fair value adjustment of derivative liability	7	2,074,607	-
Interest income		3,438	49,287
Total other income		2,337,761	664,042
Total loss and comprehensive loss		(3,859)	(1,166,468)
Income (loss) attributable to:
Shareholders of the Company		223,422	(1,166,468)
Non-controlling interest		(227,281)	-
Total loss and comprehensive loss		(3,859)	(1,166,468)
Basic and diluted loss per common share	8	0.00	0.01

The accompanying notes are an integral part of these consolidated financial statements.

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Argentina Lithium & Energy Corp.

Consolidated Interim Statements of Cash Flows

(Unaudited - Expressed in Canadian Dollars)

	Three months ended March 31,
	2024	2023
	$	$
Cash flows from operating activities
Loss for the period	(3,859)	(1,166,468)
Adjustments for:
Fair value adjustment of derivative liability	(2,074,607)	-
Share-based compensation	-	55,683
Foreign exchange gain	164,766	-
Changes in non-cash working capital items:
Increase in accounts receivables	(28,739)	(12,586)
Decrease in prepaid expenses	182,761	33,797
Decrease in accounts payable and accrued liabilities	(225,604)	(1,369,377)
Net cash used in operating activities	(1,985,282)	(2,458,951)
Cash flows from investing activities
Expenditures on exploration and evaluation assets	(3,303,634)	(269,720)
Net cash received used in investing activities	(3,303,634)	(269,720)
Cash flows from financing activities
Warrants exercised	97,500	37,500
Net cash received from financing activities	97,500	37,500
Foreign exchange effect on cash, cash equivalents, and investments	(197,165)	-
Net decrease in cash, cash equivalents, and restricted cash during the period	(5,388,581)	(2,691,171)
Cash, cash equivalents, and restricted cash at beginning of period	11,854,386	8,130,147
Cash, cash equivalents, and restricted cash at end of period	6,465,805	5,438,976

SUPPLEMENTARY CASH FLOW INFORMATION (Note 13)

The accompanying notes are an integral part of these consolidated financial statements.

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Argentina Lithium & Energy Corp.

Consolidated Interim Statements of Changes in Equity

(Unaudited - Expressed in Canadian Dollars)

	Share capital			Reserves
					Equity settled		Obligation	Retained	Total
				Contributed	share-based		to issue	earnings	shareholders'	Non-controlling
	Number	Amount		surplus	payments	Warrants	shares	(deficit)	equity	interest	Total equity
	of shares	$	$	$	$	$	$	$	$	$
Balance at December 31, 2022	129,311,985	37,611,102	5,308,607	3,267,659	6,298,895	151,000	(38,979,065)	13,658,198	-	13,658,198
Shares issued for property option (Note 4(c))	461,667	138,500	-	-	-	(138,500)	-	-	-	-
Warrants exercised	250,000	46,324	-	-	(8,824)	-		37,500	-	37,500
Share-based compensation	-	-	-	55,683	-	-		55,683	-	55,683
Stock options expired	-	-	1,058,216	(1,058,216)	-	-	-	-	-	-
Total comprehensive loss for the period	-	-	-	-	-	-	(1,166,468)	(1,166,468)	-	(1,166,468)
Balance at March 31, 2023	73,853,505	37,795,926	6,366,823	2,265,126	6,290,071	12,500	(40,145,533)	12,584,913	-	12,584,913
Shares issued for property option (Note 4(c))	41,667	12,500	-	-	-	(12,500)	-	-	-	-
Contributions from Stellantis transaction (Note 7)	-	-	-	-	-	-	95,174,377	95,174,377	22,497,729	117,672,106
Obligation to issue shares (Note 7)	-	-	-	-	-	122,460	-	122,460	-	122,460
Warrants exercised	1,093,330	370,621	-	-	(63,371)	-	-	307,250	-	307,250
Share-based compensation	-	-	-	23,628	-	-	-	23,628	-	23,628
Total comprehensive loss for the period	-	-	-	-	-	-	(44,776,791)	(44,776,791)	(10,055,225)	(54,832,016)
Balance at December 31, 2023	131,158,649	38,179,047	6,366,823	2,288,754	6,226,700	122,640	10,252,054	63,435,838	12,442,504	75,878,342
Shares issued for property option (Note 4(c))	766,667	230,000	-	-	-	-	-	230,000	-	230,000
Obligation to issue shares (Note 7)	-	-	-	-	-	47,715	-	47,715	-	47,715
Warrants exercised	650,000	120,443	-	-	(22,943)	-	-	97,500	-	97,500
Total comprehensive loss for the period	-	-	-	-	-	-	223,422	223,422	(227,281)	(3,859)
Balance at March 31, 2024	132,575,316	38,529,490	6,366,823	2,288,754	6,203,757	170,175	10,475,476	64,034,475	12,215,223	76,249,698

The accompanying notes are an integral part of these consolidated financial statements.

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Argentina Lithium & Energy Corp.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars Unless Otherwise Noted)

1. NATURE OF OPERATIONS AND GOING CONCERN

Argentina Lithium & Energy Corp. (the "Company" or "Argentina Lithium") was incorporated on April 11, 2000 in the Province of British Columbia and was transitioned under the Business Corporations Act (BC) on June 17, 2004. In September 2016, the Company changed its name to Argentina Lithium & Energy Corp. (formerly Iron South Mining Corp.) trading on the TSX Venture Exchange ("TSX-V) under the symbol

"LIT". The address of the Company's registered office is Suite 411 - 837 West Hastings Street, Vancouver, BC, Canada V6C 3N6.

The Company is a natural resource company engaged in the acquisition and exploration of resource properties in the Americas and Argentina. The Company presently has no proven or probable reserves and, on the basis of information to date, it has not yet determined whether these properties contain economically recoverable ore reserves. Consequently, the Company considers itself to be an exploration stage company.

The amounts shown as exploration and evaluation assets represent costs incurred to date, less option payment proceeds and amounts amortized and/or written off, and do not necessarily represent present or future values. The underlying value of the exploration and evaluation assets is entirely dependent on the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, the ability of the Company to obtain the necessary financing to advance the properties beyond the exploration stage, and future profitability of the properties.

These condensed consolidated interim financial statements have been prepared in accordance with IFRS Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") applicable to consolidated financial statements and to a going concern, which assume that the Company will realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

The Company has experienced recurring operating losses and has accumulated retained earnings of $10,475,476, working capital of $52,282,200, and shareholders' equity of $64,034,475 at March 31, 2024. In addition, the Company has negative cash flow from operating activities of $1,985,282 for the three months ended March 31, 2024. Working capital is defined as current assets less current liabilities and provides a measure of the Company's ability to settle liabilities that are due within one year with assets that are also expected to be converted into cash within one year. These factors create material uncertainties that may cast significant doubt about the Company's ability to continue as a going concern. The Company's continued operations, as intended, are dependent upon its ability to raise additional funding to meet its obligations and commitments and to attain profitable operations. Management's plan in this regard is to raise equity financing as required. There are no assurances that the Company will be successful in achieving these goals.

The Company's business may be affected by changes in political and market conditions, such as interest rates, availability of credit, inflation rates, changes in laws, and national and international circumstances. Recent geopolitical events, and potential economic global challenges such as the risk of the higher inflation and energy crises, may create further uncertainty and risk with respect to the prospects of the Company's business.

These condensed consolidated interim financial statements do not include adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

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Argentina Lithium & Energy Corp.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars Unless Otherwise Noted)

2. MATERIAL ACCOUNTING POLICIES

Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting and using accounting policies in full compliance with IFRS issued by the IASB, and accordingly, certain information and note disclosure included in the annual consolidated financial statements prepared in accordance with IFRS have been omitted or condensed. These condensed consolidated interim financial statements should be read in conjunction with the Company's December 31, 2023, audited annual financial statements.

Basis of preparation

These consolidated financial statements have been prepared on a historical cost basis except for financial instruments measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its subsidiaries as follows:

	Place of Incorporation	Principal Activity	Ownership Interest
			2023	2022
Amera-Chile S.C.M.	Chile	Holding company	100%	100%
Argentina Litio Y Energia S.A.	Argentina	Exploration company	80.1%	100%
Hierros Del Sur S.A.C.	Peru	Holding company	-	100%

On November 21, 2023, the Company deregistered Hierro Del Sur S.A.C. in Peru.

Inter-company balances and transactions, including unrealized income and expenses arising from inter- company transactions, are eliminated in preparing the consolidated financial statements.

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Non-controlling interest

A non-controlling interest ("NCI") represents the equity in a subsidiary not attributable, directly or indirectly, to the Company. NCI is recognized at its proportionate share of the value of identifiable net assets acquired on initial recognition.

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Argentina Lithium & Energy Corp.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars Unless Otherwise Noted)

2. MATERIAL ACCOUNTING POLICIES (continued)

Significant Accounting Estimates and Judgments

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates.

These condensed consolidated interim financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the financial position reporting date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:

Critical accounting judgments and significant estimates

1. Presentation of the consolidated financial statements which assumes that the Company will continue in operation for the foreseeable future, obtain additional financing as required, and will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.
2. The analysis of the functional currency for each entity of the Company. In concluding that the Canadian dollar is the functional currency of the parent and its subsidiary companies, management considered the currency that mainly influences the cost of providing goods and services in each jurisdiction in which the Company operates. The Company received a significant investment of Argentina Pesos during the year, but the valuation of the investment was made using the official exchange rate with US dollars. As no single currency was clearly dominant the Company also considered secondary indicators including the currency in which funds from financing activities are denominated and the currency in which funds are retained.
3. The net carrying value of each mineral property is reviewed regularly for conditions that suggest impairment. This review requires significant judgment. Factors considered in the assessment of asset impairment include, but are not limited to, whether there has been a significant adverse change in the legal, regulatory, accessibility, title, environmental or political factors that could affect the property's value; whether there has been an accumulation of costs significantly in excess of the amounts originally expected for the property's acquisition, development or cost of holding; and whether exploration activities produced results that are not promising such that no more work is being planned in the foreseeable future. If impairment is determined to exist, a formal estimate of the recoverable amount is performed, and an impairment loss is recognized to the extent that the carrying amount exceeds the recoverable amount.
   During the three months ended March 31, 2024, management has determined there were no impairment indicators present with respect to the Company's exploration and evaluation assets.

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Argentina Lithium & Energy Corp.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2024 and 2023

(Unaudited - Expressed in Canadian Dollars Unless Otherwise Noted)

2. MATERIAL ACCOUNTING POLICIES (continued)

1. The identification of components on the partial sale of the Company's subsidiary, Argentina Litio
   Y Energia S.A ("ALE") is based on interpretations of the substance of the contractual arrangement and therefore requires judgment from management. The potential Common Share issuances in regard to top-up rights are considered derivative liabilities and therefore measured at fair value through profit or loss. The Company uses the Black Scholes pricing model to estimate the fair value of such top-up rights at inception, and subsequently at year end. The key assumption used in the model is the expected future volatility of the price of the Company's Common Shares. The impact of changes in these key assumptions is described in Note 7.

New and amended IFRS standards that are effective for the current period:

Amendments to IAS 1, Classification of Liabilities as Current or Non-current (effective January 1, 2024) provide a more general approach to the classification of liabilities based on the contractual arrangements in place at the reporting date. This amendment is not expected to have any impact on the Company's consolidated financial statements.

New Accounting Standards and Interpretations not yet effective

The following new standards, amendments and interpretations have been issued but are not effective for the three months ended March 31, 2024 and accordingly, have not been applied in preparing these condensed consolidated interim financial statements.

Amendments to IAS 21, Lack of Exchangeability (effective January 1, 2025) requires companies to provide more useful information in their financial statements when a currency cannot be exchanged into another currency. The amendments respond to stakeholder feedback and concerns about diversity in practice in accounting for a lack of exchangeability between currencies. The amendments will help companies and investors by addressing a matter not previously covered in the accounting requirements for the effects of changes in foreign exchange rates. These amendments will require companies to apply a consistent approach in assessing whether a currency can be exchanged into another currency and when it cannot, in determining the exchange rate to use and the disclosures to provide.

1. PREPAID EXPENSES
   On October 9, 2023, the Company entered into an agreement with AGV Falcon Drilling SRL and prepaid $51,791,411 for drilling services of up to 15,500 meters at its Antofalla and Rincon West properties.
2. EXPLORATION AND EVALUATION ASSETS
   The schedules below summarize the acquisition costs and all exploration expenditures incurred to date for each exploration and evaluation asset that the Company holds title to as at March 31, 2024 and 2023.

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