Galan Lithium (ASX: GLN) has reached further milestones along the path to commercialising its large, 100% owned Hombre Muerto West (HMW) phase 1 lithium brine project in Argentina.
The company says it continues to make strong progress in various areas of the HMW phase 1 construction and the project is on target to produce lithium chloride in H1 2025.
“HMW Phase 1 construction progress is tracking along as planned. Galan’s experienced and competent construction team are entirely focused on delivering the first HMW production phase in H1 2025 and remain enthusiastic and confident in doing so,” Galan managing director Juan Pablo (JP) Vargas de la Vega said.
“The pond 1 liner team is ready to mobilise with an expected commencement installation date in late December 2023, plus our onsite laboratory has just been commissioned for continual on-site lithium assaying as we move forward.”
Latest construction developments
In its latest HMW update, Galan reported that pond 1 construction had reached 85% and continues to progress on schedule, with installation of the pond liner to commence before year-end.
This will enable the initial fill of pond 1 in Q1 2024, enabling the important evaporation process to commence this summer.
Galan expects pond 2 construction to begin before year end.
Key milestones being ticked off
Earlier this month Galan reported construction activities at the HMW phase 1 project had hit the 65% mark.
The initial phase 1 of the four-stage HMW development is focused on the production of 5.4 thousand metric tonnes per annum lithium carbonate equivalent (LCE) of a lithium chloride concentrate.
A recent Phase 2 pre-feasibility study has identified a production target of 21ktpa 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 being sourced from HMW and Galan’s other 100%-owned project in Argentina.
Major offtake agreement in place
Galan also recently announced it had signed a phase 1 offtake and financing agreement with mining giant 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 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 between $107 million and $153m.
Positive Phase 2 news
In early October, Galan received positive definitive feasibility study (DFS) results from HMW phase 2 identifying a number of ways to add value to the project.
The phase 2 DFS results identified the potential to increase the overall annual production rate to 20,851 recoverable tonnes LCE, contained in a concentrated lithium chloride product for a period of 40 years.
The phase 2 DFS study also identified an approximate 2.9-year payback.
The latest HMW mineral resource estimate announced in early May 2023 highlighted an increase to 6.6 million tonnes LCE at 880 milligrams per litre of lithium.
