Construction at Minera Exar's Caucharí-Olaroz development was suspended three weeks ago after two workers tested positive for COVID-19.
Lithium Americas said it had become aware of press reports indicating Jujuy had commenced proceedings related to Minera Exar's implementation of provincial COVID-19 health and safety protocols.
"Minera Exar and the shareholders take these claims seriously and are actively addressing these matters with the province of Jujuy," Lithium Americas said yesterday.
It said Minera Exar's entire workforce had been tested and the site safely demobilised.
"While additional workers tested positive for COVID-19, the company has been advised that the majority of positive cases are asymptomatic," it said, adding about 20% had recovered and three workers were hospitalised and in a stable condition.
"The health and safety of our workers, local communities and the province of Jujuy has always been - and will continue to be - our highest priority," president and CEO Jon Evans said.
China's Ganfeng Lithium is increasing its stake in Minera Exar from 50% to 51%, under a deal which is expected to close this quarter and has earnt a nomination for the Mining Journal 2020 Best Financing/Structured Deal award.
Lithium Americas had said in May any capex increase due to COVID-19 restrictions at the US$565 lithium brine development were expected to be minimal and within contingency, as it resumed activities following a suspension in March in line with Argentina's quarantine measures.
The company also has the feasibility-stage Thacker Pass lithium project in Nevada.
Lithium Americas shares (TSX: LAC) touched a one-year high of C$8.90 yesterday.
They closed up 14.1% to $8.80 to capitalise it at $794 million (US$595 million).