Galan Lithium (GLN) - $15M Focused on Delivering Feasibility Study

(FS)Galan Lithium is an ASX listed, Australian based, international mining company developing lithium brine projects within South America’s Lithium Triangle on the Hombre Muerto Salar in Argentina.  We wanted to catch up with the company to discuss the recent PEA at Hombre Muerto and to discuss the recent raise.

With close to AUD$15M in the bank, the company plans to initiate a Feasibility Study (FS) at Hombre Muerto, dependent on the results of the brine samples. This will cost AUD$8M and take around 12 months to complete. Once the FS has been delivered, they will look for funding to cover the project Capex and head into production. 

We caught up with Juan Pablo Vargas de la Vega, Managing Director of Galan Lithium who has been busy since we last spoke in September.

Company & Project Overview

Galan Lithium has 3 projects:

Hombre Muerto West, a 14km by 1.5km wide section of the west coast of the Hombre Muerto Salar. Hombre Muerto is proven to host the highest grade and lowest impurity levels within Argentina and is home to Livent Corporation’s El Fenix operation and Galaxy Resources and POSCO’s Sal de Vida projects. Geophysics and drilling at Hombre Muerto have demonstrated the significant potential of a deep basin. Galan Lithium has delivered the Scoping Study/PEA at Hombre Muerto West. 

Candelas, a 15km long by 3.5km wide valley filled channel which project geophysics and drilling have indicated the potential to host a substantial volume of brine and over which a maiden resource was estimated at 685kt LCE in Oct 2019. 

The Greenbushes South Lithium Project. Galan Lithium has an Exploration License application covering a total area of approximately 43km2 which is approximately 15kms to the south of the Greenbushes mine.  

Acquisition of Lithium Australia's Greenbushes South 

Galan Lithium bought the Greenbushes South project from Lithium Australia with 80% earning potential as the starting point. The deal was equity only, in the vicinity of AUD$350,000-$400,000 and there was no cash involved. Galan Lithium has raised some money recently, with AUD$15M in the bank and the plans for 2021 are to spend about 90% of total spend in Argentina and 10% in Australia. 

The main focus will be Argentina and they will need to approach the Australian project in a systematic way to really understand it properly. They have been given a lot of data on the Greenbushes South project which they need to digest and try to understand previous events. 

Candelas Project & Plans for 2021 

Galan Lithium has parked their Candelas project for the time being to focus their efforts on Hombre Muerto West. They have 700,000t of Lithium carbonate equivalent at Candelas which could be a satellite project to Hombre Muerto West in the future. 

Hombre Muerto West's PEA Results

Galan Lithium aims to focus on their Hombre Muerto project and they have completed a PEA. The project has a NPV of AUD$1Bn NPV and operating costs at around AUD$3,500/t, which is very similar to what Livent reports as actual cost of production on a yearly basis. The reason for the low cost is that Hombre is a high-grade asset with low impurities. Capex is rounded to AUD$340M with of that AUD$100M in contingency. 

The Livent project in Argentina has been operating for more than 25-years and the revolution for the Lithium-ion batteries started at Hombre Muerto. Livent sells most of their Lithium to Panasonic who sells batteries to Tesla. They produce around 20,000t of Lithium carbonate equivalent a year and want to expand production further which is good news for Galan Lithium as their Hombre Muerto West project is right next door.

Technical Aspects

Technically, Galan Lithium has found good grades with low impurity. They have a simple approach using solar evaporation ponds as the proven conventional method for Lithium extraction. Galan Lithium wants to ensure that their money is well spent, but don't want to risk it with new technology such as DLE. They are in discussion with several companies regarding a hybrid solution which could be used to increase recovery at the site. The current recovery is in the high 60s and the hybrid technology, using ponds, could potentially increase production rate with the same capital expenditure and the same footprint. This technology has low energy and low water consumption and in the middle of the Andes, access to water and power is not readily available.  

PEA at PFS Level: Next Deliverables, Timing & Costs

Galan Lithium has completed the PEA to PFS level in some components. They have sent another 17,000l more Brine to the labs in Chile and are doing several tests but lab testing has been delayed and is currently taking more time than usual. The results should be back within this quarter after which they can announce what they will be doing next with Feasibility Study (FS), whether they need to go for a PFS or a Feasibility Study. A PFS or a Feasibility Study will cost the company around AUD$8M and it will take another 12-months to complete.

Positioning Galan Lithium at Market 

Given the global excitement about Lithium, there are a lot of existing Lithium producers ramping up towards production and a lot of new entrants coming into the Lithium marketplace. We talk to a lot of Lithium companies at the moment with capex similar to that of Galan Lithium and strategic and financial partners are going to be quite selective. 

Galan Lithium is in a good location at their Hombre Muerto project with good infrastructure, on a salt flat, next to an existing producer. They need to get information out to the market about who they are and what they are doing to increase awareness of the company and their objectives. In another 12-months they will have results, and funding will be the next step. 

Galan Lithium will be producing high-purity Lithium carbonate which is the preferred material to go into the batteries and it's a lot cheaper to produce than Lithium hydroxide. Lithium carbonate is a flexible product that has many global markets where they will be able to place it. The chemistry is always the most difficult part, and they are also looking at a solution that is less complex than producing Lithium carbonate by producing Lithium Concentrate as is produced in Australia. This would enable them to get the product to the market in half the time with lower capex requirements and is currently being evaluated by Galan Lithium as a potential product for the company.

Galan Lithium is clear about where they sit and how they will approach their next steps. It was good to catch up with the company and we look forward to following the story going forward. 

To find out more, go to Galan Lithium's Website.