Galan Lithium reveals robust phase 1 HMW feasibility study
Galan Lithium (ASX: GLN) has highlighted the significant potential of its 100% owned Hombre Muerto West (HMW) Project in Argentina with the revealing of robust results of a phase 1 definitive feasibility study (DFS).
Managing director Juan Pablo (JP) Vargas de la Vega said the HMW phase 1 feasibility study provides a long-life and high value lithium project in the world class “Lithium Triangle” of South America.
“We are delighted by the compelling economics produced from just the first phase of the HMW DFS. The re-evaluation of the DFS process and long-term production strategy will now deliver a high-quality lithium chloride product into the market which will provide Galan with strong early cash-flows,” he said.
“The numbers speak for themselves with an approximate 2-year payback and a project NPV that represents more than twice our current market cap.”
The DFS has forecast an annual production rate of 5,367 recoverable tonnes of lithium carbonate equivalent (LCE) which will be contained in a concentrated lithium chloride product for a period of 40 years.
The DFS has also demonstrated the HMW Project has a very competitive and highly compelling project numbers with significant upside.
The phase 1 DFS has identified an initial 5.37 thousand tonnes per annum (ktpa) LCE operation, producing a high quality, 6% concentrated lithium chloride product.
Financial estimates for phase 1 are robust, delivering a post-tax NPV8% of $692 million, an IRR of 36% and free cash flow of $81.2 million per year.
The free cash flow is targeted at facilitating Galan’s funding for further expansions.
The project can be developed at a capex before contingency of $156 million and opex of $5,964 per tonne of recoverable LCE contained in concentrated lithium chloride product.
This places HMW phase 1 in the first half of the world lithium cost curve.
Galan is confident that phase 1, which is on schedule for first production in H1 2025, will create an exceptional foundation for significant economic upside in the phase 2 DFS (20cktpa LCE), due in September 2023.
Phase 1 DFS preparation
The preparation of the phase 1 mineral resource and ore reserve estimates were prepared by SRK Consulting (SRK), the lithium recovery method was designed by Ad-Infinitum and the pond designs and water contour channels were developed by AIA Engineering and Consulting Services International (AIA) and EIC Engineering (EIC) respectively
During 2022, Galan conducted successful test work activities at the HMW Project site for obtaining lithium chloride with a content of 6% lithium.
Galan has also conducted lab scale test work activities using the lithium chloride product obtained in the test work, for successfully achieving the obtention of lithium carbonate within the battery grade specifications.
Prime lithium location
The Hombre Muerto West Project is part of the Hombre Muerto basin, one of the most globally prolific salt flats, located in the Argentinean Puna plateau of the high Andes mountains at an elevation of approximately 4,000m above sea level.
The HMW Project is located to the West and South of the Salar del Hombre Muerto.
According to McKinsey, current annual global lithium demand is 0.72 million metric tons of LCE and is forecast to rise by 20% annually (31% for lithium hydroxide; 13% for lithium carbonate) to reach 3.06 million metric tons of LCE by 2030.