Investment Tips 01-12-2023 13:03 10 Views

Galan Lithium

Overview

Argentina is no stranger to lithium mining. The South American nation is one of three encompassed in the prolific Lithium Triangle, a region that holds more than half of the world’s lithium deposits. Argentina ranks third in the world in terms of lithium reserves at 2.2 million MT, concentrating lithium operations in the provinces of Jujuy, Salta and Catamarca.

Amidst electrification and decarbonization, analysts are forecasting a global supply deficit of 89,000 tonnes of lithium carbonate equivalent (LCE) in 2023 and the Argentinian government aims to double down on lithium to meet the increasing demand. Argentina has committed to $7 billion worth of investment for lithium production with strong growth projected for exports at $1.1 billion in 2023.

Galan Lithium (ASX:GLN, FSX:9CH) is an Australia-based international mining development company focused on its high-quality lithium brine projects in the world-class Hombre Muerto region in Argentina and its highly prospective lithium project in Australia – Greenbushes South.

The company’s flagship Hombre Muerto West (HMW) project hosts some of Argentina’s highest grade and lowest impurity levels with an inventory of 6.6 million tonnes (Mt) lithium carbonate equivalent (LCE). The 100-percent-owned property also leverages close proximity to Livent Corporation’s El Fenix operation and Allkem’s Sal de Vida projects.

Pilot Plant at HMW

The pilot plant has validated the production of lithium chlorine concentrate, adding reagents to eliminate impurities, and generating a concentrate at 6 percent lithium. The plant comprises pre-concentration ponds, a lime plant, a filter press and concentration ponds.

A definitive feasibility study (DFS) for phase 2 was released in October 2023 with a 20.85 ktpa LCE operation at HMW, targeting a high-quality, 6 percent concentrated lithium chloride product (equivalent to 12.9 percent lithium oxide or 31.9 percent LCE) in 2026. The DFS also indicated phase 2 will deliver a post-tax NPV (8 percent) of US$2 billion, IRR of 43 percent and free cash flow of US$236 million per year. Phase 2 provides an exceptional foundation for significant economic upside in phases 3 and 4, targeting 60 ktpa LCE production by 2030.

Construction for phase I has already commenced for 5.4 ktpa LCE production at HMW, and aims to deliver lithium chloride production in H1 2025. The fourth long-term pumping test (PBRS-03-23) results at HMW record an outstanding lithium mean grade of 981 mg/L – the highest reported grade from a production well in the Hombre Muerto Salar.

Galan’s secondary Candelas project comprises a sizable valley-filled channel with a potential indicated presence of substantially high-volume brine characteristics. The project’s maiden resource estimates stand upwards of 685 kilotons (kt) LCE, based on surveying from October 2019, and demonstrate exceptional discovery opportunities across this underexplored asset. Candelas has been rolled into Phase 4 of Galan’s targeted expansion plans, towards 60 ktpa LCE production by 2030

Galan’s 100-percent-owned Greenbushes South Project is located in Western Australia and boasts advantageous positioning 3 kilometers south of the prolific Greenbushes lithium mine owned by Talison, Tianqi, IGO and Albermarle. Drilling of the first target was completed in July 2023. Galan is currently developing land access agreements for future drilling campaign at Greenbushes South.

In 2023, Galan entered into an exclusive binding agreement with Redstone Resources to acquire 100 percent of the Camaro-Taiga-Hellcat property blocks from Infinity Stone Ventures (CSE:GEMS, GEMSF, FSE:B2I). The assets are located in the world-class James Bay Lithium Province in Quebec, collectively covering 5,187 hectares. The joint venture also includes an option to acquire 100 percent of the PAK East and PAK Southeast Lithium Project, spanning 1,415 hectares in Ontario’s Electric Avenue near Frontier Lithium’s PAK Lithium Project.

Galan has a highly experienced management team with over a century of professional expertise in the resource, finance and energy sectors. This results-oriented board and their vested interest in the company’s success prime Galan for exceptional discovery potential and advanced development of its high-quality projects.

Company Highlights

Galan Lithium is an ASX-listed company developing lithium brine projects within South America’s lithium triangle on the Hombre Muerto salar in Argentina.The company has three high-quality projects in the works: its flagship Hombre Muerto West (HMW) and the Candelas lithium project, both in Argentina, and the Greenbushes South lithium project in Australia.The Hombre Muerto West project leverages advantageous positioning near notable mining operations, including Livent Corporation’s El Felix project and hosts exceptional high-grade lithium and low impurity resources.HMW Phase 2 definitive feasibility study (DFS) delivers compelling economics with 21 kilo-tonnes per annum (ktpa) lithium carbonate equivalent (LCE) operation at HMW, targeting a high-quality, 6 percent concentrated lithium chloride product (equivalent to 12.9 percent lithium oxide or 31.9 percent LCE) in 2026. The HMW Phase 1 (5.4 ktpa LCE) execution plan is progressing well with the delivery of the first evaporation-ready pond expected by Q1 2024, production in H1 2025. Geophysics has indicated Candela’s potential to host a substantial brine volume and provide significant amounts of processing water through low-grade brine treatment without using surface water from the Los Patos River.Galan has 100 percent ownership of the Greenbushes South lithium project, located 3 kilometers from the Greenbushes lithium mine, the largest hard-rock lithium mine in the world.Galan aims to transition into a major lithium project developer and remains committed to conducting fast-tracked lithium development in its prolific projects with a target production of 60 ktpa LCE from HMW and Candelas by 2030.

Key Projects

Hombre Muerto West Project

The 100-percent-owned Hombre Muerto West project is a large land property that sits on the west coast of the Hombre Muerto salar in Argentina, the second-best salar in the world for the production of lithium from brines. The property also leverages strategic positioning adjacent to notable competitors like Livent Corp. to the east.

The project has an updated resource of 6.6 Mt LCE @ 880 mg/l lithium (72 percent in measured category.

Galan has completed a definitive feasibility study, which indicates a competitive capex of US$429 million and a low OPEX of US$3,510/t LCE, as well as a production rate of 21 ktpa targeting battery-grade lithium carbonate across the property.

Galan now has 100 percent full ownership of the Catalina tenement that borders the Catamarca and Salta Provinces in Argentina. The newly secured Catalina tenure has a strong potential to significantly add to the existing HMW resource. The Catalina tenure also covers the Catalina, Rana de Sal II, Rana de Sal III, Pucara del Salar, Deseo I and Deceo II tenements.

Greenbushes South Lithium Project

The 100-percent-owned Greenbushes South lithium project is located near Perth, Western Australia, and is three kilometers south of the world-class Greenbushes lithium mine, managed by Talison Lithium. The Greenbushes South tenements can be found along the Donnybrook-Bridgetown Shear Zone geologic structure, which hosts the lithium-bearing pegmatites at the Greenbushes Lithium Mine.

Greenbushes South covers nearly 315 square kilometers, and hosts elevated pathfinder elements with well-defined anomalies adjacent to the property.

Management Team

Richard Homsany – Non-executive Chairman

Richard Homsany is an experienced corporate lawyer and has extensive board and operational experience in the resources and energy sectors. He is executive chairman of ASX-listed uranium exploration and development company Toro Energy Limited, executive vice-president of Australia of TSX-listed uranium exploration company Mega Uranium and the principal of Cardinals Lawyers and Consultants, a boutique corporate and energy & resources law firm. He is also the chairman of the Health Insurance Fund of Australia (HIF) and listed Redstone Resources and Central Iron Ore and is a non-executive director of Brookside Energy Homsany’s past career includes time working at the Minera Alumbrera Copper and Gold mine located in the Catamarca Province, northwest Argentina.

Juan Pablo (‘JP’) Vargas de la Vega – Founder and Managing Director

Juan Pablo Vargas de la Vega is a Chilean/Australian mineral industry professional with 20 years of broad experience in ASX mining companies, stockbroking and private equity firms. JP founded Galan in late 2017. He has been a specialist lithium analyst in Australia, has also operated a private copper business in Chile and worked for BHP, Rio Tinto and Codelco.

Daniel Jimenez – Non-executive Director

Daniel Jimenez is a civil, industrial engineer and has worked for a world leader in the lithium industry, Sociedad Química y Minera de Chile, for over 28 years. He was the vice-president of sales of lithium, iodine and industrial chemicals where he formulated the commercial strategy and marketing of SQM’s industrial products and was responsible for over US$900 million worth of estimated sales in 2018.

Terry Gardiner – Non-executive Director

Terry Gardiner has 25 years’ experience in capital markets, stockbroking and derivatives trading. Prior to that, he had many years of trading in equities and derivatives for his family accounts. He is currently a director of boutique stockbroking firm Barclay Wells, a non-executive director of Cazaly Resources, and non-executive chairman of Charger Metals NL. He also holds non-executive positions with other ASX listed entities.

María Claudia Pohl Ibáñez – Non-executive Director

María Claudia Pohl Ibáñez is an industrial civil industrial engineer with extensive experience in the lithium production industry. Until recently, she worked for world leader in the lithium industry Sociedad Química y Minera de Chile (NYSE:SQM, Santiago Stock Exchange:SQM-A, SQM-B) for 23 years, based in Santiago, Chile. During her time at SQM, she held numerous senior leadership roles including overseeing lithium planning and studies. Ibáñez brings significant lithium project evaluation and operational experience whilst joining the board at a critical juncture in Galan’s journey to becoming a significant South American lithium producer. Since leaving SQM in late 2021, Ibáñez has been managing partner and general manager of Chile-based Ad-Infinitum, a process engineering consultancy, with a specific focus on lithium brine projects under study and development, and the associated project evaluations.

Graeme Fox – Chief Financial Officer

Graeme Fox is an Australian CPA-qualified accountant and experienced business analyst, with over 25 years of experience in the mining, contracting and transport industries, with a focus on strategic planning, financial modeling, investment evaluation, management accounting and compliance. During the last 20 years, Fox’s career has been focused on the resources sector, including diverse roles throughout the value chain, working with BHP, WMC and Macmahon.

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