Galan Lithium has upped the ante, with its phase-two definitive feasibility study (DFS) into its Hombre Muerto project in Argentina projecting an annual average EBITDA of US$374 million (AU$588 million) for an astounding 40 years, tipping it into “tier-one” territory.
Hot off the heels of its phase-one DFS tabled in July this year, which projected an annual average EBITDA of US$83 million (AU$130 million), the company is now looking to ramp up production from 5370 tonnes per annum of lithium carbonate equivalent (LCE) to a significant 20,000 tonnes.
Galan’s revision of key metrics is estimated to return a whopping US$2 billion (AU$3.1 billion) net present value, up a mind-boggling 430 per cent from its phase-one estimate of US$460 million (AU$723 million).
The phase-two expansion will require a moderate incremental capex of US$278 million (AU$437 million) tallying up to a combined US$382 million (AU$600 million) during the two phases, delivering an impressive internal rate of return of 43 per cent and payback period just shy of three years.
Long-term price modelling, courtesy of industry experts Wood McKenzie, spears the average lithium chloride selling price at about US$22,841 (AU$35,902) per tonne.
Refinements to Galan’s production flowsheet have reduced its average annual operating cost from US$3963 (AU$6230) per tonne LCE to US$3510 (AU$5520), placing the Humbre Muerto West project squarely at the lower end of the industry’s cost curve and leaving management in the enviable position of being able to ponder how to spend the difference.
The company beefed up its total mineral resource estimate earlier this year to 6.6 million tonnes LCE averaging 880 milligrams per litre lithium. The phase two DFS production schedule is modelled on a combined proven and probable reserve of 806,400 tonnes of LCE at an average grade of 864 milligrams per litre lithium.
Galan Lithium managing director Juan Pablo Vargas de la Vega said: “The release of Phase 2 DFS for Hombre Muerto West clearly demonstrates the world-class nature of Galan’s 100% owned Project. The production volumes and low cost of production from HMW mean it is truly worthy of being considered a tier-one lithium brine project. These results fully support our DFS re-evaluation process and long-term production strategy, delivering a high-quality lithium chlorite product into the market and providing Galan with strong early cash flows.”
With phase one fully permitted, Galan is on the ground constructing its first 205,000-square-metre solar evaporation pond, which is expected to be completed and filled with brine by the first quarter of next year.
The pond will feed the existing pilot plant with concentrated brine to produce a lithium chloride end product. Recent testing from the company’s HMW pilot plant achieved the production of a 6 per cent lithium chloride concentrate product, equivalent to 13 per cent lithium oxide or 31.9 per cent LCE, with low levels of impurities. Management says the plant is expected to deliver its next batch of concentrate later this month and it is progressing with discussions regarding third-party offtake agreements for the product.
The company also reports that further construction activities are underway to upgrade site services at the 200-person camp, in addition to improvements to diesel storage facilities and water supply infrastructure.
Initial construction is expected to be completed by the final quarter of next year, with 6 per cent lithium chloride production expected to begin in the first half of 2025. Phase-two production is slated to commence in 2026, with anticipated cash flow from phase one going a long way towards funding the expansion.
Galan has two world-class operations in the South American region known as the “Lithium Triangle” – its Hombre Muerto West and Candelas projects on the Hombre Muerto salar, known to host the highest grade and lowest impurity levels of all lithium brines in Argentina.
On top of all that, the financial metrics the company has revealed today should add healthy doses of both momentum and credibility.
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By Helen Barling
