Galan Lithium (ASX: GLN) continues to hit construction milestones at its 100%-owned Hombre Muerto West (HMW) phase 1 lithium brine project in Argentina.
The company remains on target for first lithium chloride production expected in H1 2025 with a number of key activities either completed or underway.
The recent commencement of brine evaporation following the successful completion of pond 1 earthworks and subsequent installation of the pond liner measuring 2.4km in length is considered the first major step of Galan’s long-term production schedule.
Galan is now filling the remainder of pond 1, allowing for the commencement of the evaporation process.
Construction of the pond 2 earthworks is 65% complete, with liner installation to commence next week and the company has also successfully constructed nine production wells to date.
While phase 1 production only requires six wells, the additional three will offer operational flexibility.
In total, there are 23 production wells required for phases 1 and 2.
Hombre Muerto West progress
The HMW project is being progressed in four production phases.
An initial phase 1 definitive feasibility study (DFS) focused on the production of 5.4 thousand metric tonnes per annum (ktpa) lithium carbonate equivalent (LCE) of lithium chloride concentrate by H1 2025.
The phase 2 DFS identified a target of 21 ktpa LCE of lithium chloride concentrate in 2026, followed by phase 3 production of 40ktpa LCE by 2028 and finally a phase 4 production target of 60ktpa LCE by 2030.
Phase 4 will include lithium brine sourced from both HMW and Candelas, Galan’s other 100%-owned project in Argentina.
Robust project
Managing director Juan Pablo Vargas de la Vega said the DFS identified a robust project with strong returns and that it is pleasing to see the strong progress made to date.
“The completion of earthworks and the installation of liners for pond 1 represents a significant milestone for the HMW phase 1 construction team.”
“Evaporation has now commenced, which is the first step of the company’s long-term production schedule for its low-cost, low-risk lithium chloride development strategy as Galan looks to become the next lithium producer in Argentina in H1 2025.”
HMW is a tier-one project that will produce a premium high-grade lithium chloride concentrate of 6% lithium – comparable to 13% lithium oxide or 32% LCE – in H1 2025.
Studies have confirmed the project’s low all-in sustaining costs place HMW in the first quartile of lithium industry’s cost-curve with an initial reserve estimate of 40 years.
Glencore due diligence
Galan also reported that mining giant Glencore is continuing its due diligence of the project in the lead-up to finalising a potential major offtake and funding agreement.
In late November 2023, Galan signed a phase 1 offtake and financing agreement with Glencore, which is looking to purchase technical-grade lithium chloride product from the high-grade, low-impurity HMW project.
Upon the satisfactory completion of its due diligence, Glencore has the option to either purchase the lithium chloride product or toll-treat lithium carbonate in Argentina.
The binding agreement is for an initial 5-year period for 100% of Galan’s phase 1 production.
Glencore has also offered to provide or facilitate a financing prepayment facility for $107 million to $153 million.
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