Galan Lithium has tabled a stunning set of numbers in an economic assessment study that shows its Candelas lithium brine project in Argentina will make A$265m a year for at least 25 years for a net present value of A$1.7b at today’s USD exchange rates. The economic evaluation of Candelas adds to Galan’s nearby Hombre Muerto West, or “HMW” lithium brine project where a 40 year mine life has already been envisaged.
Galan says its preliminary economic assessment study at the company’s 100 per cent owned Candelas project says it could churn out 14,000 tonnes of battery grade lithium carbonate equivalent, or “LCE” per annum during the contemplated 25 year initial mine life. A preliminary economic assessment study is similar in nature to an Australian Scoping Study.
A payback period of only four years has been estimated for a capital outlay of US$408m, or A$575m.
Average annual operating costs have clocked in at US$4,277 per tonne of LCE in the study which positions Galan at the low end of the cost curve within the burgeoning lithium industry.
The economic evaluation utilised a long-term average selling price of US$18,594 per tonne of LCE.
An internal rate of return of 27.9 per cent and a USD pre-tax net present value of US$1.225b are predicted in the study.
Galan has already run the ruler over its nearby HMW project with a PEA estimating 20,000 tonnes of annual battery grade LCE production over the 40 year mine life.
Incredibly, that study only considered about 60 per cent of the lithium resources defined so far at the 100 per cent owned HMW project.
HMW is predicted to spit out and estimated EBITDA of US$174 million per annum, or nearly A$250m a year using a long-term LCE price of US$11,687 per tonne.
Capital costs for bringing HMW to production came in at US$438.9m with a payback period forecast at just 4.3 years.
A net present value topping the US$1 billion mark before tax was tabled for HMW.
Notably, HMW and Candelas could be in line to produce a combined 34,000 tonnes of LCE each year, according to the company.
Galan Lithium Managing Director, Juan Pablo Vargas de la Vega said: “We are delighted by the strong and competitive results of the Candelas Project PEA. Our projects continue to show healthy economics and upside despite using a conservative long term price assumption at a time when new lithium projects are scarce. Galan now has two potential production fronts combining for a long-term production rate of 34ktpa of LCE. This rate could be even higher once we finish drilling at our flagship HMW project.
We remain excited about the potential value add for our shareholders once we enter the lithium market with prices expected to be +US25k/t LCE. Our projects would now be among the lowest cost of any future producers in the lithium industry, due to their high grade and low impurity setting, green credentials and a low carbon footprint. Galan is excited to be a part of the solution to the global decarbonisation story.”
Galan has so far defined indicated resources totalling 2.95 million tonnes LCE at 858 milligrams per litre lithium for both HMW and Candelas combined. The two projects lie in the Hombre Muerto salt flat or “salar”, located in the world renowned ‘Lithium Triangle’ of South America.
Incredibly, more than 50 per cent of the world’s identified lithium resources are contained within the Lithium Triangle that stretches across northern Argentina, parts of Chile and southern Bolivia.
Galan says 40 per cent of the world’s annual lithium production comes from the Atacama and Hombre Muerto salars alone.
Both Candelas and HMW lie within a stones-throw of other major lithium brine projects in the region, including New York-listed Livent Corporation’s Fenix project which has been in production for more than 27 years.
Having now delivered a stellar set of numbers for its two lithium projects in the Hombre Muerto salar, Galan appears to be well on its way to becoming the next major player in the hottest of hot lithium regions in the world.
Its predicted EBITDA numbers from the two projects are off the scale and with lithium threatening to replace oil as the major fuel for industries of the future, it may not be too much of a stretch for Galan Lithium to adopt the same name recognition as the Shell’s, BP’s and Caltex’s of the world in 20 years time – particularly as this is one company that clearly knows how to find lithium.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
