The share price of lithium darling Galan (ASX:GLN) went on a rollercoaster this past week.
One of the top performing stocks over the past year first spiked to 61c (and received a speeding ticket from the ASX in the process) before plummeting below 30c.
A March 11 release can be blamed for the precipitous fall.
Drill hole number two at the Candelas lithium brine project in Argentina wasn’t replicating the success of the first just yet, Galan told investors.
The maiden drill hole had brine starting at about 200m and extending to the bottom of the hole at 401 metres, and included an “exceptional intercept” of 192 metres at 802 mg/l Li.
Hole 2, about 9.5km south of hole 1, had been drilled to about 465m and hit nothing so far.
The basin in this area comprises a “downthrown block”, the company said; the brine target horizon was expected at depth and was yet to be reached.
Galan managing director Juan Pablo Vargas de la Vega says the market is overreacting.
“The bottom line is that we are still drilling hole 2 — and we are still drilling because we believe the brines could be down there,” he told Stockhead.
“In hole 1 the brines sit in the basement.
“While we haven’t found [brines in hole 2] where we thought they would be, we are still chasing the basement.
“Is hole 2 a dud? Until we get there we aren’t going to know.”
Either way, Candelas is large project, and Galan took a bit of a gamble drilling so far away from the successful first hole.
“Yeah, it was a bit ballsy — I’ll take that,” Mr Vargas de la Vega says.
“But that’s what exploration is about.”
This is exploration 101, he says; you sink a hole, have success, then try and build on that.
The brines aren’t where Galan thought they would be, but it’s not over.
“The potential is there for hole 2 to be a success, but if that doesn’t work out then it just means we drill elsewhere,” Mr Vargas de la Vega says.
“We have plenty of ground to drill.
The potential for a large resource [at Candela] still stands.”
And how will hitting brines at depth affect project economics? Mr Vargas de la Vega says it will cost more to pump from depth – but it is relatively marginal portion of total costs.
In other words, it isn’t a deal-breaker.
“Bear in mind that petroleum is pumped from kilometres underground, and petroleum is a lot heavier than brines,” Mr Vargas de la Vega says.
“Does it cost to more to pump it? Yes, but it isn’t a cost that will kill you.
“It’s not technically unfeasible to pump brines from [depths of] 500m to 1km.
“We don’t see it as a show stopper, put it that way.”