RIU Explorers: Lithium players hold out for the market to turn around

Every now and then investors get a little nervous that the best of the years have gone by, but Galan’s (ASX:GLN) Juan Pablo Vargas de la Vega, commonly referred to as ‘JP’, reassured conference goers at this year’s RIU event in Fremantle that the lithium market will turn around.

Despite many unknowns from elections to cost increases, global conflicts, rates and inflation, JP was confident Galan would come out on top once the market recovers, in growth mode, ready to ramp up exploration and production plans across its flagship Hombre Muerto West (HMW) project in Argentina.

“Everyone is worried asking me about when markets will change… but Galan has existed for the last six years and this is the third time we’ve been faced with difficult market conditions in our history,” he said.

“It is not new, and I can guarantee we will see it happen again, it will repeat itself.”

But unlike many other ASX junior explorers, the Glencore-backed company is gearing up for production in the first half of 2025, with a “strong weapon”, a world-class 7.3Mt LCE resource @ 852 mg/l Li, making it one of the highest-grade, large-scale resources in Argentina and its vaunted Lithium Triangle.

With an attractive post-tax net present value (NPV) of US$460m and internal rate of return (IRR) of 36% highlighted in the latest Phase 2 DFS released in October 2023, Galan has identified a production target of 21,000tpa LCE from a lithium chloride concentrate in 2026.

Phase 2 will also reduce OPEX intensity by 11% to US$3,510/t LCE, leaving HMW in the first quartile of the industry’s cost curve.

“The more we drill the more we find, it is a resource that keeps on giving,” JP said.

“Don’t be surprised when we come out with a resource update and a new target, but as it is Hombre Muerto is large enough to produce 60,000tpa of lithium carbonate in four phases.”

The best in brines

Another ace in Galan’s deck of cards is its strong, highly experienced team, complete with several ex-SQM executives including the former senior VP of commercial and senior VP of operations.

“SQM is the world’s biggest brine producer, and they are bringing their own people to us including many middle-ranked management,” he told Stockhead on the sidelines of the conference.

“If you take an XRAY of Galan, we’ve got SQM in our bones, so we’ve got the right team to execute on our goal of becoming a producer and generating the highest revenue possible.”

It’s been a monumental transformation for Galan from what started out as a single drill hole in 2019 at Pata Pila, part of Galan’s lithium brine tenements on the Hombre Muerto Salar, within a 20km radius of Arcadium (formerly Livent and Allkem).

“I took this photo with a drone, it is the first drill hole at Pata Pila,” JP told the crowd during his presentation.

First drill hole at Pata Pila in 2019. Pic: Supplied (GAL)

“Fast forward to February 2024 and we now have a camp, a pilot plant that is delivering concentrate, and we have commenced construction on Pond 1, with another nine in the pipeline.

HMW is now in Phase 1 construction. Pic: Supplied (GAL)

Others on the road to near-term lithium brine production

Other lithium companies working the floor at RIU this week included Lithium Energy (ASX:LEL), the owners and operators of the Solaroz lithium project in Argentina’s northwest.

The 3.3Mt project is in an agreement with extraction specialist Lanshen over the build of a demonstration direct lithium extraction (DLE) plant capable of producing up to 3,000tpa of battery-grade lithium carbonate.

The demonstration plant is to prove future development of either a base 20,000tpa option or an upsized 40,000tpa LCE production facility.

LEL garnered attention from several parties in the EV battery space in September last year, with growing interest in strategic partnership or investment opportunities that will propel Solaroz’s development.

Speaking to Stockhead, LEL executive chairman William Johnson said a formal process has kicked off internally whittling down the interested parties to a short list of about four or five.

“We’re continuing to advance those discussions, but we’ve also received a number of non-binding indicative offers and we’ve also received offers from parties who want to buy the project,” he said.

“So, we’re evaluating those options, and we expect to be in a position fairly shortly to make a decision on that.”

Why WA’s home grown lithium is hot property

Western Australian lithium was well represented by Dynamic Metals (ASX:DYM) and Torque Metals (ASX:TOR), neighbours in the lithium ‘Goldilocks Zone’ one of WA’s emerging critical mineral regions near Kambalda.

TOR’s Penzance exploration camp is right next door and 600m along strike of Mineral Resources’ (ASX:MIN) Bald Hill operation with other heavy hitters in the area including Arcadium Lithium (ASX:LTM) and its recently acquired ‘Madoonia’ tenements.

TOR’s other lithium asset in the area, New Dawn, also abuts the Bald Hill mine and comprises an exploration target of 8-14Mt @ 1-1.2% Li2O.

A recent RC drilling program intersected vertically stacked pegmatites in all 17 holes with diamond drilling planned to take place shortly.

Meanwhile, DYM has been systematically working through its lithium potential with the collection of around 880 samples at the Spargos East and Franks Far Southeast (FFSE) prospects.

Results from the first 300 assays defined a robust and consistent lithium anomaly in soils over 100ppm Li with a peak returned assay of 190ppm.

The company is currently in the process of completing requirements for permitting in preparation for drilling.