Galan Lithium on track for initial production at Hombre Muerto West in 2025

Galan Lithium (ASX: GLN) has reached the 65% mark in its construction activities at the fully-owned Hombre Muerto West (HMW) Phase 1 lithium brine project in Argentina – with the project right on target to commence lithium chloride production in the first half of 2025.

The initial phase of the four-stage HMW development is focused on the production of 5.4 thousand metric tonnes of lithium carbonate equivalent (LCE) from a lithium chloride concentrate.

A recent Phase 2 pre-feasibility study (PFS) has identified a production target of 21ktpa LCE from a lithium chloride concentrate in 2026, followed by Phase 3 production of 40ktpa LCE by 2028 and finally a Phase 4 production target of 60ktpa LCE by 2030.

Phase 4 will include lithium brine being sourced from HMW and Galan’s other 100%-owned project in Argentina.

First-hand look at project progress

Galan’s managing director Juan Pablo (JP) Vargas de la Vega is feeling very positive after visiting the site this week.

“I am very pleased with the significant progress being made on site and most impressed with the dedicated personnel we have in place. Galan has assembled a cohesive team of highly competent people, with the necessary specialist experience and knowledge to build the ponds and infrastructure required to successfully deliver the first production phase of the HMW project.”

“Pond 1 construction works have been progressing well and in accordance with expectations. We are sharply focused on our objective to commence brine evaporation this summer.”

“We also remain enthusiastic and confident about development of Phase 1 HMW and achieving first production in H1, 2025,” he added.

Major offtake agreement

The project update is a further positive for Galan and HMW after the company announced a Phase 1 offtake and financing agreement with Glencore in mid-November and the results of the positive Phase 2 definitive feasibility study (DFS) a month earlier.

Glencore, one of the world’s largest globally-diversified natural resource companies, 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 the lithium chloride product or to toll treat lithium carbonate in Argentina.

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

Glencore has also offered to provide or facilitate a $107 million to $153 million financing prepayment facility.

Encouraging results from Phase 2

In early October, Galan released the results of a positive Phase 2 DFS at HMW, which have subsequently led to an increase in the overall annual production rate to 20,851 recoverable tonnes LCE contained in a concentrated lithium chloride product for a period of 40 years.

The DFS also identified an approximate 2.9-year payback.

The latest HMW mineral resource estimate announced in early May 2023 reported an increase to 6.6Mt LCE at 880 milligrams per litre of lithium.