Galan Lithium (ASX: GLN) has debuted “compelling” economics for its flagship Hombre Muerto West lithium brine project in Argentina’s Lithium Triangle.
Equivalent to a JORC scoping study, the preliminary economic assessment also confirms Hombre Muerto West as a tier one lithium brine asset and positioned it in the first quartile of the global lithium cost production.
Hombre Muerto West was given a pre-tax net present value of US$1.01 billion and an internal rate of return of 22.8%.
The study estimates production of 20,000 tonnes per annum of battery grade lithium carbonate over more than 40 years.
Initial capital expenditure of US$439 million is predicted to get the project up and running. This cost includes a 30% contingency.
The study anticipates payback within 4.3-years and that the operation would generate earnings before interest tax depreciation and amortisation of US$174 million annually.
Underpinning this is an assumed average price of US$11,687 per tonne of lithium carbonate equivalent between 2020 and 2040, which is a Roskill prediction.
Commenting on the study, Galan managing director Juan Pablo Vargas de la Vega said he was “delighted” the results were “compelling” and “more than competitive”.
“We have proven high-grade, low impurities, a considerable resource size and now potentially among the lowest cost of future producers in the lithium industry – especially with a low carbon footprint.”
“Galan now has a solid commercial base to move forward with a clean, proven, low tech and low energy solution with no joint venture or non-statutory royalties involved.”
Plenty of potential upside
Of note, the economic assessment is based on only 60% of the current mineral resource for Hombre Muerto West.
As a result, Galan anticipates there is “significant flexibility” to increase the proposed lithium carbonate production rates.
Additionally, Galan’s recent Del Condor acquisition is believed to provide financial upside to optimise the project layout in the next study and further curb operating and capital expenditure estimates.
Mr Vargas de la Vega pointed out the company had learned “enormously” throughout the journey and would continue to apply its new-found knowledge to optimise its next feasibility studies.
“We remain with the conviction to bring the Hombre Muerto West project to market in the shortest possible time to hopefully be supplying lithium for the future lithium requirements needed for batteries in electric vehicles.”