Galan Lithium secures major offtake and financing deal with Glencore for Hombre Muerto West
Galan Lithium (ASX: GLN) has signed an agreement with a subsidiary of global mining and trading company Glencore for the offtake of up to 100% of lithium chloride concentrate from Phase 1 production at the Hombre Muerto West project in Argentina.
Glencore has also offered to provide a secured financing pre-payment facility for up to $153 million to support funding of Phase 1.
Under the terms of the five-year deal, Glencore will purchase technical-grade lithium chloride product from the start of commercial production at Hombre Muerto West in the first half of 2025.
Annual production is expected to be around 540,000 tonnes of lithium carbonate equivalent (LCE) in lithium chloride concentrate.
The price payable by Glencore will be referenced to a mutually-agreed lithium carbonate price index over a quotational period, less a marketing fee, discount and any penalties.
Glencore will not need an export licence to purchase the high-grade, low-impurity product.
The offtake will be toll treated into lithium carbonate for sale and export from Argentina.
Phase 1 of Hombre Muerto West remains remains on track for first pond fill early in the new year.
First right
The offtake agreement will see Glencore retain first right to negotiate marketing or financing for Phase 2 expansion of the Hombre Muerto West project.
Results from a recent Phase 2 definitive feasibility study and analysis provided “outstanding outcomes” and confirmed the project’s status as a Tier 1 development.
Phase 2 will commence construction in the second half of 2024, with first lithium chloride production targeted for 2026.
Exceptional quality
Galan managing director Juan Pablo (JP) Vargas de la Vega said the offtake agreement and financing is a validation of the lithium brine project’s “exceptional quality”.
“This is a significant milestone on the path towards commercial production at Hombre Muerto West… it validates the quality of our world-class project and endorses the calibre and experience of our team,” he said.
“Our agreement with Glencore de-risks this project and the funding assistance endorses our lithium chloride concentration strategy to deliver the project and provide returns to shareholders in a shorter time frame.”
Mr Vargas de la Vega said the agreement endorses Galan’s low-cost, low-risk development strategy to become the next lithium producer in Argentina.