Galan Lithium’s Hombre Muerto West (HMW) lithium brine project in Argentina is now full steam ahead after securing all permitting required to clear the way for construction.
The vital approvals from the “Catamarca Ministro – Ministerio de Mineria (Mines Department Minister) clear the way for the development of ponds, plant, a laboratory, a 200-person camp, power supply and other infrastructure to support production. An additional six production wells were also approved at HMW, which is regarded as Argentina’s highest-grade, lowest-impurity lithium brine deposit.
Phase-one production of lithium chloride at HMW is now fully permitted and the company expects it to deliver 5400 tonnes per annum of lithium carbonate equivalent (LCE) in a 40-year period starting in the first half of 2025.
The definitive feasibility study (DFS) for HMW’s second phase is on schedule to be completed next month. It will be based on the production of 20,000 tonnes per annum LCE from the total project resource of 6.6 million tonnes LCE at 880 milligrams per litre lithium.
Galan says the HMW reservoir has highly-homogenous brine quality throughout its tenements, which permits the aggregation of the complete ore body and simplifies future operational and process constraints. The project’s pilot plant confirms the production of a premium quality lithium chloride concentrate product containing 6 per cent lithium.
Galan Lithium chairman Richard Homsany said: “We are excited not only about the robust financial outcomes that HMW has for the benefit of our shareholders and personnel but also for the Catamarca community and stakeholders in the region. We look forward to continuing to work in co-operation with the Catamarca Government to maximise the positive impact of Galan’s mining and processing operations in the community, and ensure it is sustainable and will endure over the longer term.”
The company views the economic case for HMW as compelling, with the first phase of operations showing a post-tax net present value of US$460 million (AU$702.6 million), an internal rate of return of 48 per cent, free cash flow of US$54 million (AU$82.5 million) per year and a payback period of about two years.
Phase-one capital expenditure is US$104 million (AU$158.8 million) before contingency. Operating expenditure of US$3963 (AU$6053.2 million) per tonne of LCE contained in the lithium chloride product, places it in the lower half of the lithium cost curve globally.
The company’s projected sales price for the 40-year period are US$20,252 (AU$30,993) per tonne, leaving what would appear to be a healthy operating margin that should be enhanced further by a phase-two expansion, subject to confirmation in the DFS.
Phase-two projections are for the production of 20,000 tonnes per annum lithium carbonate over a 40-year mine life from 2026. The phase-two DFS will be decisive and follows up preliminary studies showing project annual earnings before interest, tax, depreciation and amortisation (EBITDA) of US$287 million (AU$438.4 million).
HMW is a salar lithium brine deposit. Periodically-flooded dry lakes are called salars and become enriched in minerals through evaporation, forming a brine which collects in nearby host reservoir strata. Until recently, lithium brine formed the bulk of global production, ensuring that the brine reservoir and production technology is well understood.
Galan is now fully permitted for phase-one production, which will provide crucial cash flow to support increasing the production rates fourfold in the project’s second phase.
It is at a time when electrification is progressing unabated – and lithium is a critical element in the process, giving Galan every indication that it will enter lithium production during favourable market conditions.
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By Terry Bates
