Galan Lithium advances HMW project with $40m offtake prepayment and $25m capital raise

Galan Lithium (ASX: GLN) has advanced its wholly-owned Hombre Muerto West (HMW) lithium brine project in Argentina, securing a deal for an offtake prepayment and completing a capital raise to fully fund Phase 1 initial production.

During the September quarter, the company entered into a memorandum of understanding with Chengdu Chemphys Chemical Industry for the supply of a minimum of 23,000 tonnes of lithium carbonate equivalent (LCE) as a lithium chloride offtake product over the first five years of production.

Chemphys — a leader in lithium product processing in China and a trusted partner to some of the world’s largest battery manufacturers — will provide Galan with a US$40 million prepayment facility to support the ongoing development of Phase 1.

Capital raising

Galan launched a $25 million placement and share purchase plan in September to fund production through to mid-2025.

“We are grateful for the strong support received for this capital raising in a challenging market environment,” managing director Juan Pablo Vargas de la Vega said.

“It is a clear validation of our strategy and the high-grade, low-impurity lithium brine resources at HMW.”

“As the industry shifts towards low-cost lithium resources, we believe we are well positioned to unlock the full potential of this project and deliver value to our shareholders.”

Inventories building

The operational de-risking of HMW Phase 1 advanced during the quarter, with lithium chloride inventories building to approximately 6,000t LCE and grades, flow rates and evaporation rates remaining consistent with feasibility study expectations.

Galan has built approximately 730,000 square metres of evaporation area at the project, allowing for an inventory of up to 10,000t LCE before processing the lithium chloride through a liming plant.

Overall completion of Phase 1 is approximately 45%, with 76% of the ponds constructed and 55% lined

First production is expected by mid-2025 at an initial production rate of 4,000tpa LCE, expanding to 5,400tpa when market conditions allow.

Community consultation

Galan concluded a public consultation program during the period with the communities of Antofagasta de la Sierra, Los Nacimiento and the Catamarca government regarding Phase 2 construction permits.

“The support of local communities and government is critical for the enduring success of our operations in Argentina,” Mr Vargas de la Vega said.

“It is a spirit of partnership that we foster at Galan with our local stakeholders, which has distinguished our company locally and enabled us to achieve so much in a short space of time.”

Candelas visit

Geologists from Australia and the US conducted a 10-day site visit in October to Galan’s Candelas tenements located on the Hombre Muerto salar, to evaluate structural controls on the lithium-bearing brine.

The team visited 83 stations and recorded 650 bedrock measurements across an area of approximately 285 sq km, using standard field mapping techniques, compasses and clinometers alongside high-resolution aerial mosaic maps generated by drones.

The geologists identified four major structural controls contributing to the region’s fracture and potential bedrock permeability.

Mr Vargas de la Vega said integrating the data with previous drill results and geophysical surveys would enhance the region’s geological model and guide Galan’s future exploration efforts.