Special Report: Institutional and sophisticated investors are demonstrating confidence in Galan Lithium (ASX:GLN) and its Hombre Muerto West lithium project by committing $10m via private placement.

Firm commitments were received for the oversubscribed placement of 20 million shares priced at 50c each.

That includes $4m from Luxembourg green energy fund, Thematica Future Mobility.

Thematica has exposure to companies that are focused or will substantially benefit from the transition to clean and sustainable transportation and energy storage solutions.

Proceeds from the placement will be used to accelerate and enhance studies for the HMW lithium brine project in Argentina which will include drilling, piloting and resource work.

It will also fund initial exploration at the Greenbushes South lithium project in Western Australia.

“On the back of the compelling PEA (preliminary economic assessment) results, to have a green fund of the calibre and standing of Thematica to lead the way on this placement is truly transitional,” managing director Juan Pablo Vargas de la Vega said.

“They have been solid supporters of Galan and will now become a substantial shareholder which means they believe in Galan, the HMW Project and the Galan team, just as much as we do.”

 

Lithium projects

Under the PEA, which is equivalent to a JORC scoping study, Galan’s HMW project is expected to have pre-tax net present value and internal rate of return – both measures of a project’s profitability – of $US1bn and 22.8 per cent respectively.

This is thanks to cash costs of about $US3,518 ($4,540) per tonne of lithium carbonate, one of the lowest in the industry.

HMW is expected to produce 20,000tpa of lithium carbonate for 40 years, to generate average life-of-mine annual earnings before interest, taxes, depreciation and amortisation (EBITDA) of $US174m.

Capital costs are estimated at $US439m though this includes a 30 per cent contingency that could be reduced through further optimisation.

The company recently acquired a 80 per cent stake in the Greenbushes South project, which is just 3km south of the world-class Greenbushes lithium mine owned by Talison Lithium – a joint venture between Tianqi Lithium Corporation (currently selling a share of its stake to IGO) and Albemarle.

Little exploration has been done on Greenbushes South though a number of WA government MINEDEX database shows occurrences of lithium, beryl, tin feldspar tourmaline and mica in the area.

Galan says this potentially indicated lithium-caesium-tantalum mineralisation associated with pegmatites.

Pegmatites are prospective for spodumene – the hard rock lithium-hosting mineralisation these sorts of projects are known for.

 

This article was developed in collaboration with Galan Lithium, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

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