The DFS has outlined a payback period of two years for Phase 1 of Hombre Muerto West. Pic via Getty Images.
Phase 1 DFS knocks it out of the park at Galan’s Hombre Muerto West lithium play
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Galan Lithium has outlined compelling economics for Phase 1 of its Hombre Muerto West (HMW) project, which will see initial production of 5,370tpa of LCE equivalent, up from the expected 4,000tpa.
At a capital cost of US$104m (minus contingency) and operational expenses of US$3,963/t of recoverable LCE, Phase 1 will deliver a post-tax NPV 8% of US$460m, IRR of 36% and free cash flow of US$54m per year – and with a payback period of about two years, it will facilitate funding for further expansions.
The Phase 1 DFS is part of Galan Lithium’s (ASX:GLN) four-phase approach to building out its HMW and Candelas projects to a final output of 60,000ktpa.
The two projects have a combined resource of 7.3Mt at 852mg/l Li – with HMW providing the bulk of this at 6.6Mt LCE at 880m/l Li – giving the company one of the highest grade, large scale resources in the brine-rich Catamarca region.
Focus on HMW
Accordingly, the first three phases of production will concentrate on HMW, while phase four will include LCE from Candelas.
The brine developer said initial Phase 1 development permits have been granted, and early works have commenced, including top-soil removal, camp expansion and other earthworks, allowing the project to maintain schedule for first production in H1 2025.
The HMW project has also developed a layout allowing the closer location of the project’s main facilities, helping bring down capex.
The brine wells field, evaporation ponds system, lithium carbonate plant, water wells and camp are all within ~6km radius and next door to the Hombre Muerto Salar.
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.
Galan MD Juan Pablo Vargas de la Vega said the team is delighted by the compelling economics produced from just the first phase of the HMW DFS.
“The re-evaluation of the DFS process and long-term production strategy will now deliver a high-quality lithium chloride product into the market which will provide Galan with strong early cash-flows,” Vargas de la Vega said.
“The numbers speak for themselves with an approximate two-year payback and a project NPV that represents more than twice our current market cap.”
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.
