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- Galan Lithium (GLN) has received compelling results from a preliminary economic assessment for its Hombre Muerto West Project in Argentina
- The PEA estimated an annual production rate of 20,000 tonnes of battery-grade lithium carbonate product over a 40 years
- However, this has the potential to increase as the study only utilised about 60 per cent of the lithium project recently upgraded mineral resource
- The PEA also outlined a pre-tax net present value of US$1.011 billion (roughly A$1.33 billion) and an internal rate of return of 22.8 per cent with a 4.3 year payback period
- Galan will need to allocate US$338 million (roughly A$445 million) in capital costs, excluding contingency
- And, importantly, the average annual cost for production is US$3518 per tonne – positioning the lithium player as one of the lowest in the industry
- Over the next 18 months, Galan may undertake pre-feasibility and feasibility studies ahead of financing discussions and the beginning of construction at the end of 2022
- Galan’s shares have dropped 3.03 per cent to trade at 32 cents
Galan Lithium (GLN) has received compelling results from a preliminary economic assessment (PEA) for its Hombre Muerto West Project in Argentina.
The Hombre Muerto West Project strategically lies within South America’s Lithium Triangle on the Hombre Muerto basin — one of the most globally prolific salt flats. The Hombre Muerto Salar also hosts the highest-grade and lowest impurity levels within Argentina.
The PEA estimated an annual production rate of 20,000 tonnes of battery-grade lithium carbonate product over a 40-year period. This equates to the project potentially producing around 800,000 tonnes of lithium carbonate equivalent over its total life span.
What’s even more pleasing, is that the estimate production rate has considerable potential to increase due to the PEA only utilising around 60 per cent of Hombre Muerto West’s existing mineral resource.
The mineral resource was upgraded last month and now sits at 2.3 million tonnes lithium carbonate equivalent (LCE) at 946 milligrams per litre lithium. This marked a 65 per cent increase from the maiden resource announced in March this year.
The study also outlined some robust economic results, including a pre-tax net present value of US$1.011 billion (roughly A$1.33 billion) and an internal rate of return (IRR) of 22.8 per cent with a 4.3 year payback period.
To get the project up and running, Galan will need to allocate US$338 million (roughly A$445 million) in capital costs, excluding contingency.
Further, the lithium project has an average life-of-mine annual pre-tax earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$174 million (roughly A$229 million).
Importantly, the average annual cost for production is US$3518 per tonne (approximately A$4636)— positioning the lithium player as one of the lowest-cost in the industry.
“We are delighted by the compelling and more than competitive results of the HMW Project PEA. We have proven high grade, low impurities, a considerable resource size and now being potentially among the lowest cost of future producers in the lithium industry, especially with a low carbon footprint,” Managing Director Juan Pablo Vargas de la Vega said.
“We remain with the conviction to bring the HMW Project to market in the shortest possible time to hopefully be supplying lithium for the future lithium requirements needed for batteries in electric vehicles,” he concluded.
Over the next 18 months, Galan plans to conduct more project studies such as pre-feasibility and feasibility studies.
Galan plans to begin construction in the final quarter of 2022 — as long as an exploitation permit is approved and financing activities have been completed. It’s expected the construction and commissioning phase will take two years and production is aimed for early 2025.
Galan’s shares have dropped 3.03 per cent to trade at 32 cents at 10:23 am AEDT.
