Galan turbocharges Argentinian lithium DFS works

ASX-listed Galan Lithium is steaming ahead with a series of exploration works to feed into an upcoming definitive feasibility study, or “DFS”, at its flagship Hombre Muerto West, or “HMW” lithium brine project in Argentina where a 40 year mine life has been envisaged.

Construction of evaporation ponds for a pilot plant aiming to generate high-grade lithium concentrate has now commenced, whilst a drilling campaign seeking to grow the existing resource base at the project has intensified.

Management says construction of the ponds is on schedule for an operational start-up early in the new year. The ponds will be filled with lithium brine sourced from HMW to test Galan’s evaporation process for producing high-grade and pure lithium concentrate. 

A geophysical survey designed to define new targets for drill-testing at HMW is also underway.

Galan has so far defined a 2.3 million tonne resource of lithium carbonate equivalent, or “LCE”, grading 946 milligrams per litre lithium at the project.

The company recently released a cracking set of numbers from a preliminary economic assessment of HMW where production of 20,000 tonnes per annum of battery grade LCE was projected for 40 years.

Notably, only 60 per cent of the existing resources at HMW were used in the assessment.

The study estimated an impressive EBITDA of US$287 million per annum using a long-term average price of US$18,594 per tonne of LCE.

According to Galan, operational costs for the project will fall in the lowest quartile of the global lithium cost production curve at US$3,518 per tonne of LCE.

A paltry 2.75 year pay-back period was estimated in the study for a US$439m capital outlay required to bring HMW to life.

Galan is now looking to conduct a more comprehensive evaluation of lithium production at HMW and is planning to formally launch a DFS on the proposed venture.

The company is also smashing out the drill metres in anticipation of an updated resource estimate for HMW, planned for release next year.

The drilling aims to confirm and expand the existing resource base at the project. It will also test the dynamics of brine flow rates and define a maiden reserve estimate for the DFS.

Galan says it has now locked in a second rig to fast-track the drilling and has secured access to a third rig if required. It plans to wrap-up the campaign in the first half of 2022.

The company is also on the search for more lithium brines and plans to run a geophysical survey across its entire HMW tenure to pinpoint new targets for drill-testing.

Management says data generated from the drilling and geophysics will play a pivotal role in the upcoming DFS.

Galan Lithium Managing Director, Juan Pablo Vargas de la Vega said: “We are very excited with the great progress we are making at HMW. Our efforts and vision are solely focused on getting the Project online and becoming a lithium producer as soon as technically possible.”

Galan also recently released results from a preliminary economic assessment of its nearby Candelas lithium brine project.

The study for Candelas forecasts 14,000 tonnes of battery grade LCE production per annum over a 25 year mine life.

Annual EBITDA for Candelas clocked in at US$188 million.

The study envisaged capital costs of US$408m with only four years required to pay back the outlay.

HMW and Candelas potentially combine for the production of 34,000 tonnes a year of LCE.

Galan has been a star performer in 2021 with its share price surging from about $0.40 at the start of the year to more than $1.60 in recent trading. The Perth-based company now appears set for a big 2022 as its Argentinian lithium adventure shifts to higher gear.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au