Galan Lithium is set to grow its coffers by whopping A$50m after receiving firm commitments from institutional and sophisticated investors for a placement that will see the company fast-track exploration and development works across its Hombre Muerto West and Candales lithium brine projects in Argentina.
The projects are located in the Salar del Hombre Muerto salt pan in the world renowned ‘lithium triangle’ of South America.
Upon settlement, the two-stage capital raise will see the company’s cash balance lift to a hearty A$65m.
Management says the proceeds will be used to convert existing resources to reserves and establish well fields for production at its flagship Hombre Muerto West project. The company will also look to drill out reserves at Candelas, located about 25km to the south-east.
The two projects combine for a total indicated resource currently of about 2.95 million tonnes of lithium carbonate equivalent, or ‘LCE’, at an average grade of 858 milligrams per litre lithium.
Importantly, feasibility studies for both projects are also on the cards as Galan looks to advance its Argentinian operations towards production.
Exploration works at the company’s Greenbushes South lithium tenure in Western Australia are also envisaged.
Galan Lithium Managing Director, Juan Pablo Vargas de la Vega said:“We are delighted to announce the completion of the placement which has enabled us to introduce a number of high-quality institutions to Galan’s register. This represents a significant milestone in the history of the company and the recognition from these leading investors provides significant external validation for Galan’s extensive portfolio of strategic lithium projects.”
The 100 per cent owned Hombre Muerto West project already boasts some 2.3Mt LCE in resources at a grade of 946mg/l lithium. Galan is looking to fast-track the project to production and recently launched into foundation works to feed into a detailed feasibility study.
A recent scoping study and pre-economic assessment that looked into a proposed mining operation for the project laid out a potential mine life of more that 40 years, with only 60 per cent of the resources considered. A 20,000 tonne per annum LCE production was projected with operating cash costs of lithium carbonate production running at an average US$3,518/t, which Galan says places Hombre Muerto West in the lowest quartile of the global lithium cost curve.
The capital costs of developing the project are forecast at US$438.9 million with a capital payback period of just 4.3 years. A net present value before tax topped the US$1 billion mark.
Intriguingly, management sees a path to further improvements beyond the proposed 20,000tpa LCE production with operational and capital cost reductions also possible.
Acquisition of more ponds and tenure since the study was released could potentially grow the proposed operation. According to the company, a new two-stage evaporation pond design over a larger land area may increase production to as much as 25,000tpa of LCE and reduce capital costs.
Two new evaporation trials have also been conducted with both returning lithium in chloride concentrate at 6 per cent or higher. One test utilised a modified process which potentially reduces reagent costs and in turn, the operational costs.
At the nearby Candales, a recently launched scoping study is expected to be completed during the December quarter this year.
The project area takes in an existing lithium brine resource estimated to contain about 685,000 tonnes LCE.
Curiously, both Candelas and Hombre Muerto West lie within a stones-throw of other major lithium brine projects, including ASX-listed Galaxy Resources’ flagship Sal de Vida project where a 32,000tpa LCE production capacity is being evaluated through a feasibility study.
Galaxy, whose market capitalisation tops more than A$2.8 billion, is currently in the process of merging with ASX-listed lithium brine producer, Orocobre that will see the duo create what Galaxy claims will be a top five chemicals lithium company in the world.
Orocobre, whose market capitalisation weighs in at around A$3.4 billion, has been churning out lithium brine from its Olaroz facility in Argentina since 2015.
In the South West region of Western Australia, Galan has consolidated a significant package of exploration ground taking in about 396 square kilometres. The landholdings lie near the ‘world-class’ Greenbushes mine owned and managed by private company, Talison Lithium.
According to Galaxy, Talison’s project is regarded as one of the largest and highest-grade hard rock spodumene deposits in the world. The mine has been producing lithium minerals for more than three decades from several open cut pits.
With big plans and an equally large wallet, Galan appears well placed now to muscle its way onto the watch lists of the lithium bulls as it begins to unravel the secrets of its slice of the South American lithium triangle.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
