Galan secures go-ahead to expand Argentina lithium production

Galan Lithium has secured vital phase two permitting for its Hombre Muerto West and Candelas lithium brine projects in Argentina’s world-class Lithium Triangle.

The permit allows for expanded production of up to 21,000 tonnes per annum (tpa) of lithium carbonate equivalent and sets the stage for Galan to scale its operations in line with a predicted lithium market bounce back.

The company says the long-anticipated permit authorises all necessary construction activities, including the development of further evaporation ponds, a processing plant, power infrastructure and onsite laboratory facilities.

Galan predicts its phase two production will be cash flow positive, even at current lithium carbonate prices, with the Hombre Muerto West project positioned in the all-important first quartile of the industry’s all-in sustaining cost curve.

The company says it is developing Hombre Muerto West in a series of production phases designed to balance funding and operational risks while aligning increased production with an expected bounce back in the global lithium market, which has been suffering recently.

Phase one of the project is already underway with a production target of 5400tpa lithium carbonate equivalent, expected to come online in late 2025. The newly approved phase two permitting, received from Argentina’s Mines Department minister, opens the way for its medium-term production targets of 21,000tpa. Further expansion is planned to then achieve 40,000tpa in phase three of the project and a final 60,000tpa in the following years.

The phased approach also leverages lithium resources at Candelas, which is Galan’s second project in Argentina. The company says the projects should simultaneously provide a sustainable growth pathway, positioning Galan among the leaders in the region for low-cost lithium production.

The company is already lining up potential suitors for its increased production capacity, recently signing a memorandum of understanding with China-based Chengdu Chemphys Chemical Industry Co for a US$40 million (A$64.2m) funding and offtake package at Hombre Muerto West.

The potential funding package was made in exchange for a five-year purchase agreement for Galan to deliver a total of 23,000t of lithium carbonate equivalent material to the Chinese firm.

Our plan for Hombre Muerto West is unchanged… Our immediate focus is finalising the financing and offtake arrangements for phase one. Once secured, our operations team will complete construction and commence first production of lithium chloride concentrate. While the operations team advances phase one construction, our corporate team, supported by advisors, will commence a project financing process for phase two.

Galan’s flagship Hombre Muerto West project features a recently updated resource estimate of 8.6 million tonnes, grading its lithium carbonate equivalent at some 859 milligrams per litre (mg/l).

The company is on track for nameplate capacity of its phase one production, its fourth and fifth evaporation ponds are complete and it expects to produce the forecast 5400tpa of lithium concentrate.

Management says the phase two permit will also bolster Galan’s application for Argentina’s Régimen de Incentivo para-Grandes Inversiones program. If the application is approved, Galan will benefit to the tune of a reduced corporate income tax rate of 25 per cent instead of 35 per cent, an accelerated depreciation rate and further import duty concessions. These production advantages would further enhance already financially robust projections for the Hombre Muerto West project.

The shift in battery technology toward lithium iron phosphate chemistry -favoured for its cost efficiency and reliability - has increased demand for lithium chloride feedstock, precisely the product Galan plans to supply.

With its strategic phase two mining permit in hand, Galan Lithium is well on its way to scaling up production and capturing its share of the lithium market. As construction of phase one concludes and financing arrangements for phase two advance, the company looks to be well on track to deliver a successful lithium operation despite the testing market conditions.

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