LITHIUM AMERICAS CORP.LAC

LITHIUM AMERICAS CORP. Fair Value Disclosure

10-KFiled Mar 19, 20265 min read
20.
FAIR VALUES OF FINANCIAL INSTRUMENTS
(a)
Financial instruments not measured at fair value

Except as disclosed below, the carrying value of the financial assets and liabilities, where the measurement basis is other than fair value, approximate their fair values due to the immediate or short-term nature of these instruments considering there have been no significant changes in credit and market interest rates since original date. Cash and restricted cash, receivables, accounts payable, royalty obligations, Notes, PPA, and DOE Loan are measured at amortized cost.

(b)
Measurement of fair value

Financial instruments recorded at fair value on the Consolidated Balance Sheets and presented in fair value disclosures are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

 

•
Level 1 - Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities;
•
Level 2 - Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and
•
Level 3 – Inputs for assets and liabilities that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified in the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.

The following table identifies the Company’s assets and liabilities measured at fair value on a recurring basis by level within the fair value hierarchy. The carrying value is equal to the fair value at each date reported.

 

 

 

 

Fair Value at

 

 

Category

 

December 31,
2025

 

 

December 31,
2024

 

Financial assets

 

 

 

 

 

 

 

 

Investment in GT1 (Note 6) 1

 

Level 1

 

$

365

 

 

$

537

 

Investment in Ascend Elements (Note 6) 2

 

Level 3

 

 

4,498

 

 

 

3,615

 

 

 

 

$

4,863

 

 

$

4,152

 

Financial liabilities

 

 

 

 

 

 

 

 

LAC warrant obligation (Note 3) 3

 

Level 3

 

$

83,796

 

 

$

-

 

JV warrant obligation (Note 3) 4

 

Level 3

 

 

150,295

 

 

 

-

 

Embedded Derivative - conversion feature (Note 11) 5

 

Level 3

 

 

102,368

 

 

 

-

 

 

 

 

$

336,459

 

 

$

-

 

 

1
A loss on change in fair value of $0.2 million (2024 - $2.0 million) was recognized in the Consolidated Statements of Loss for the year ended December 31, 2025.
2
The fair value was based on a review of Ascend Elements’ business development, financings and trends in the share prices of other companies in the same industry sector. A gain on change in fair value of $0.9 million (2024 - loss of $5.0 million) was recognized in the Consolidated Statements of Loss for the year ended December 31, 2025.
3
The fair value of the LAC Warrant at inception on October 7, 2025 and at December 31, 2025 was calculated using Level 3 inputs and represents the intrinsic value using a share price of $4.36 at December 31, 2025 ($8.27 at October 7, 2025), assumed exercise price of $0.01 per share and estimates of the impact of increases to equity prior to the number of shares being fixed at the time of issuance of the warrant certificates. A gain on the change in fair value of $59.6 million was recognized in the Consolidated Statement of Loss for year ended December 31, 2025.
4
The fair value of the JV Warrant inclusive of the Put, Call and Exchange Agreement obligations at inception on October 7, 2025 and at December 31, 2025 was calculated using Level 3 inputs including the implied value of the underlying Non-Voting Units, calculated by reference to the market capitalization of the Company's common shares and the estimated fair value of assets and liabilities of the Company other than its interest in Lithium Nevada Ventures (at the valuation dates, as well as an estimate of time value based on the assumed exchange ratio of 7.82% at October 7, 2025 and at December 31, 2025 and estimated impacts of anticipated future increases in net assets above the JV). A gain on change in fair value of $100.4 million was recognized in the Consolidated Statements of Loss for year ended December 31, 2025.
5
The fair value of the conversion derivative was determined using a Partial Differential Equation method with the following inputs and assumptions at December 31, 2025: expected volatility of 47%, share price of $4.36, risk-free rate of 3.66%, and no expected dividends. The fair value at inception on April 1, 2025 was determined using the following inputs: expected volatility of 35.2%, share price of $2.76, risk-free rate of 3.9%, and no expected dividends. A loss on change in fair value of the embedded derivative of $166.7 million was recognized in the Consolidated Statements of Loss for the year ended December 31, 2025 (Note 11).

The Company has, where appropriate, estimated the fair value of financial instruments for which the amortized cost carrying value may be significantly different than the fair value. At December 31, 2025 and December 31, 2024, this includes the following:

 

 

 

December 31, 2025

 

 

December 31, 2024

 

 

Carrying Value

 

 

Fair Value

 

 

Carrying Value

 

 

Fair Value

Royalty obligation (Note 11) 1

 

$

21,160

 

$

13,699

 

$

20,715

 

$

15,563

Production payment obligation (Note 11) 2

 

 

29,684

 

 

32,717

 

 

-

 

 

-

Convertible Debt host (Note 11) 3

 

 

57,649

 

 

62,367

 

 

-

 

 

-

DOE Loan (Note 3) 4

 

 

350,987

 

 

301,630

 

 

-

 

 

-

Total

 

$

459,480

 

$

410,413

 

$

20,715

 

$

15,563

 

1
The estimated fair value involved Level 3 inputs and was determined using a discounted cash flow with a discount rate of 26.1% at December 31, 2025 (2024 - 12.3%).
2
The estimated fair value involved Level 3 inputs and was determined using a discounted cash flow with the following inputs and assumptions: average lithium production of 41,500 tonnes per year, average lithium price of $15,082 per tonne and discount rate of 26.8%.
3
The estimated fair value involved Level 3 inputs and was determined using a discount rate of 26.1%.
4
The estimated fair value involved Level 3 inputs and was determined using a discounted cash flow with a discount rate of 8.0% at December 31, 2025.

Historical Timeline

Fiscal YearFiled
2025Mar 19, 2026Showing above
2024Mar 28, 2025

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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