A preliminary economic assessment (PEA) has generated “robust” results for Galan Lithium’s (ASX: GLN) Candelas lithium brine project in Argentina.
The PEA, which is equivalent to a JORC scoping study, gives Candelas an unleveraged pre-tax net present value of US$1.225 billion (A$1.72 billion) and a 27.9% internal rate of return.
It estimates an initial capital expenditure of US$408 million (A$574 million) will be required to develop the project, which would then generate 14,000 tonnes per annum of lithium carbonate for an initial 25 years.
Based on an assumed average lithium price of US$18,594 per tonne (A$26,144/t) and cash production costs of US$4,277/t (A$6,014/t) of lithium carbonate, the PEA estimates annual pre-tax earnings before interest tax depreciation and amortisation (EBITDA) of US$180 million (A$253 million).
The payback period for the capital outlay is anticipated to be 4.75 years.
Commenting on the study, Galan managing director Juan Pablo Vargas de la Vega said the company is “delighted” with the “strong and competitive results”.
“Our projects continue to show healthy economics and upside despite using a conservative long term price assumption at a time when new lithium projects are scarce,” he said.
With lithium prices anticipated to exceed US$25,000/t (A$35,151/t) of lithium carbonate equivalent, Mr Vargas de la Vega said the company was “excited” about the potential additional value this will bring to the project as well as its nearby flagship Hombre Muerto West (HMW) asset.
Advancing towards two producing projects
Including HMW, Galan now has two potential operations that could produce a combined 34,000tpa of lithium carbonate equivalent.
Mr Vargas de la Vega added this production rate could be even higher once drilling has been finished at HMW.
“We will also continue to review the possibility to produce lithium chloride concentrate to reduce time to market and capital expenditure at both of our projects.”
“As a result, we remain determined to bring our projects to market in the shortest possible time so that we can supply lithium for future lithium battery requirements needed for electric vehicles,” Mr Vargas de la Vega said.