Galan Lithium nears completion of key construction milestones at Hombre Muerto West project

Galan Lithium (ASX: GLN) continues to make rapid progress with construction activities at its 100%-owned Hombre Muerto West (HMW) phase 1 lithium brine project in Argentina.

The company enters 2024 with a number of significant activities underway at the HMW phase 1 development, with the project scheduled to commence lithium chloride production in H1 2025.

Galan managing director Juan Pablo (JP) Vargas de la Vega said current construction highlights include work on pond 1 where earthworks are almost complete and liner installation now underway.

The company plans to commence filling pond 1 in the current quarter, allowing the brine evaporation process to commence this summer.

Mr Vargas de la Vega said this will be the first major step of the long-term production schedule for HMW phase 1.

Galan has already commenced earthworks construction at pond 2 and work there is now 10% complete.

Elsewhere, the company is making strong progress on the project’s production wells, with nine now constructed or underway. Phase 1 production only requires six wells.

In total, there are 23 production wells required for phases 1 and 2.

Another box ticked

“The commencement of the installation of liners for Pond 1 is another tick in the box for the HMW phase 1 construction team,” Mr Vargas de la Vega said.

“The team continues to push forward on all fronts as it aims to validate Galan’s low-cost, low-risk lithium chloride development strategy to become the next lithium producer in Argentina in H1 2025.”

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.

Glencore site visit

Galan has also confirmed that mining giant Glencore is set to visit the site in the near future as part of the due diligence related to a proposed offtake agreement.

In late November, Galan signed a phase 1 offtake and financing agreement with 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 a lithium chloride product or toll treat lithium carbonate in Argentina.

The binding agreement is for 100% of Galan’s phase 1 production over an initial 5-year period.

Glencore has also offered to provide or facilitate a financing prepayment arrangement for anywhere between $107 million and $153m.

Positive phase 2 results

That deal followed close on the heels of the receipt of positive phase 2 HMW definitive feasibility study (DFS) results identifying a number of ways to add value to the project.

The phase 2 DFS results highlighted 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.

It 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.