Phase-one construction of Galan Lithium’s first 205,000-square-metre solar evaporation pond has kicked-off at the company’s Hombre Muerto West (HMW) project in Argentina’s renowned “Lithium Triangle”.
Management expects the pond to be complete and filled with brine by next year’s first quarter and then to be producing a 6 per cent lithium chloride concentrate by the first half of 2025. The first phase of the project is expected to produce 5400 tonnes of lithium carbonate equivalent (LCE) per year.
The new earthworks follow-on from approvals granted by the Catamarca Ministro – Ministerio de Mineria (Mines Department Minister) just last month and Galan says further equipment is scheduled to arrive at the site in the next week to increase its earth-moving capacity.
Galan Lithium managing director Juan Pablo Vargas de la Vega said: “This is the beginning of our construction journey to production. I would like to congratulate the global Galan team for their continued support to make this happen. This is also testimony to our desire to work locally with the community and contractors whilst receiving full support from the provincial government of Catamarca, Argentina. We have come a long way since our early days, considering Galan only obtained the original Hombre Muerto assets just over 5 years ago, and with all the delays experienced during Covid-19. This feels more real than ever for everyone at Galan. We will continue to give our best focused efforts to become a new lithium producer by H1 2025.”
The company also reports that further construction activities are underway to upgrade site services at the 200-person camp, in addition to upgrades to diesel storage facilities and water supply infrastructure.
Management says it is involved in discussions regarding third-party offtake agreements for its product, while concurrently progressing its phase-two definitive feasibility study (DFS) for HMW, which is expected to be completed next month. The DFS will address the upscaling of production rates to a full 20,000 tonnes of LCE per year for a 40-year mine life from 2026.
The phase-one DFS focused on the production of about 5400 tonnes of LCE per year for 40 years and is governed by current production permits. It delivered a post-tax net present value of $696 million, representing an internal rate of return of 36 per cent, with an average annual free cash flow of $81 million per year.
It estimated phase-one capital expenditure at $158.8 million before contingency, with an operating expenditure of $6053.2 million per tonne of LCE, placing HMW in the lower half of the lithium cost curve globally.
The company’s projected sales price for the 40-year period is about $30,993 per tonne of LCE, leaving what would appear to be a healthy operating margin that should be enhanced further by a phase-two expansion, subject to confirmation via the DFS.
Galan says HMW has the highest-grade, lowest-impurity lithium brine deposit in Argentina. It features a current resource of 6.6 million tonnes of LCE at a concentration of 880 milligrams per litre lithium.
The 5954-hectare project sits on the west coast of Hombre Muerto salt flat and comprises seven concessions – Pata Pila, Rana de Sal, Deceo III, Del Condor, Pucara, Santa Barbara and the recently-consolidated Catalina tenements.
Galan believes its Catalina tenements could add an exploration upside of between 500,000 and 1.5 million tonnes of LCE at between 953 and 988mg/l to the HMW project.
Last month, the company announced it had achieved the production of a six per cent lithium chloride concentrate product, equivalent to 13 per cent lithium oxide or 31.9 per cent LCE, with low levels of impurities from the HMW pilot plant.
Galan now seems poised to take full advantage of the Argentinian summer as it gets closer to moving subsurface pay into its first pond, where the sun will then do the hard work.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Andrew Duffy
