Galan has started Phase 1 construction works for its HMW lithium brine project in Argentina. Pic: via Getty Images
Galan’s journey to Phase 1 lithium production at HMW is building up a head of steam
Mining
share
- Construction starts on evaporation ponds at Galan’s HMW project
- Filling of first pond with lithium brines expected in 1Q 2024
- Lithium chloride concentrate production expected in 1H 2025
Galan has well and truly embarked on its journey towards becoming a lithium producer in the first half of 2025 with the commencement of full Phase 1 construction at its Hombre Muerto West project in Argentina.
The construction work, which follows closely on the heels of the company receiving construction approvals for Phase 1 earlier this month, has kicked off with the construction of the evaporation ponds with further equipment scheduled to arrive in the next week to scale up material movement capacity.
Other construction activities are also underway for upgrading essential services such as camp, diesel storage and water supply.
Phase 1 of Galan Lithium’s (ASX:GLN) HMW development – the highest grade, lowest impurity lithium brine project in Argentina, South America – is aimed at producing a premium 6% lithium chloride concentrate at a rate of about 5,400tpa of lithium carbonate equivalent from the first half of 2025.
This is the first of four phases aimed at building out its HMW and Candelas projects to a final output of 60,000tpa.
It comes as Argentina’s star in the lithium sector rises — French miner Eramet has signed a US$400m deal with commodities giant Glencore to market lithium produced from its Eramine DLE project, while Allkem (ASX:AKE) continues to ramp-up production at its Olaroz Stage 2 lithium facility.
Galan’s first milestone is constructing, lining and filling the first pond in the system with brine by the first quarter of 2024. This pond has an evaporation area of 205,000m2, and its completion is a major step towards triggering the evaporation path to production at a particularly favourable time.
“This is the beginning of our construction journey to production. I would like to congratulate the global Galan team for their continued support to make this happen,” managing director Juan Pablo Vargas de la Vega said.
“We have come a long way since our early days, considering Galan only obtained the original Hombre Muerto assets just over 5 years ago, and with all the delays experienced during Covid-19.
“This feels more real than ever for everyone at Galan. We will continue to give our best focused efforts to become a new lithium producer by H1 2025.”
High grade for high returns
Galan’s Hombre Muerto West project is the highest grade lithium brine project in Argentina. It boasts a current JORC resource of 6.6Mt of lithium carbonate equivalent, grading 880mg/l lithium and is close to tenure held by Livent, Allkem and POSCO.
This grade and the low impurity levels translate to very attractive economics, with a Definitive Feasibility Study outlining that Phase 1 could deliver a post-tax net present value 8% and internal rate of return – both measures of a project’s profitability – of US$460m and 36%, respectively, as well as free cash flow of US$54m per year.
Capital costs are estimated at a palatable US$104m with payback of about two years and operational expenses of US$3,963/t of recoverable LCE.
Optimisation work is ongoing and will culminate in the release of the Phase 2 DFS in September this year to address a 20,000ktpa production rate.
Taking advantage of forecast lithium bounce
While there are short-term concerns about lithium demand due to a slowdown in electric vehicle adoption in China, Australia’s Department of Industry, Science and Resources has flagged that China’s intensifying environmental scrutiny of its lepidolite producers could impact production.
Concerns have also been raised by Chile’s decision to nationalise the lithium industry, though this is not expected to have an immediate impact due to its commitment to honour current lease arrangements.
Meanwhile, Albemarle has forecast that its net sales for the full-year 2023 will improve by 40% to 55% due to growing interest in electric vehicles.
Progress ahead
Galan is currently progressing the Phase 2 DFS, which is due for release in September, as well as the Phase 1 construction works.
The company also continues to carry out third-part offtake and other strategic discussions.
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.
