An updated economic study for Galan Lithium’s (ASX: GLN) flagship Hombre Muerto West (HMW) lithium brine project in Argentina has lifted the project’s pre-tax net present value (NPV) to almost US$2.2 billion (A$3.06 billion).
The updated NPV is based on a revised long-term lithium price assumption of US$18,594 per tonne between 2025 and 2040.
This was up from the previous assumption of US$11,687/t of lithium, and has driven up the NPV by 120% from the previous US$1 billion.
The updated price was also used in the study for Galan’s second lithium brine project, Candelas.
Combined, HMW and Candelas have a pre-tax NPV of US$3.4 billion (A$4.74 billion).
‘Phenomenal’ NPV adds value for shareholders
Galan managing director Juan Pablo Vargas de la Vega said that, in spite of its conservative price assumption, HMW has delivered a “phenomenal” pre-tax NPV.
“These updated project economics for Hombre Muerto West just show how very strong and healthy our flagship project is.”
“The company is in an enviable space whereby it has two study level projects that can potentially deliver combined long-term production levels of 34,000 tonnes per annum along with combined NPVs that are above US$3.4 billion,” Mr Vargas de la Vega added.
“Galan remains excited about the potential value-add for our shareholders once we enter the lithium market.”
With a higher lithium price assumption, the updated study for HMW also increases anticipated annual earnings before interest tax depreciation and amortisation (EBITDA) from US$174 million to US$287 million.
Estimated capital expenditure for HMW remains the same at US$439 million, but payback has been shortened from 4.3-years to 2.75-years.
Projects to be among lowest cost in world
He said that Galan’s projects would now be among the lowest cost of any future producers in the lithium industry, due to their high grade and low impurities.
The projects also benefitted from green credentials and a low carbon footprint.
“Galan is excited to be part of a solution to the global decarbonisation story.”
The updated economic study also reflects recent changes to tax legislation in Argentina.
Meanwhile, work is advancing on a new drilling campaign at HMW, along with pilot plant and engineering works, in preparation for a start on the definitive feasibility study.
Galan mid-year completed a new review of Hombre Muerto West, located in Argentina’s “lithium triangle” which confirmed it will produce 20,000t per annum of lithium carbonate equivalent.
The project is within Argentina’s Catamarca province.