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PERTH (miningweekly.com) – The Phase 2 definitive feasibility study (DFS) into the Hombre Muerto West (HMW) lithium project, in Argentina, has delivered robust financial outcomes for ASX-listed Galan Lithium.
Galan earlier this year released a Phase 1 DFS which was based on the production rate of 5 367 t/y of lithium carbonate equivalent (LCE) contained in a concentrated lithium chloride production, over 40 years.
The Phase 1 DFS estimated a capital cost of $104-million and an operating cost of $3 963/t for HMW.
The Phase 2 DFS has increased the overall yearly production rate to 20 851 t/y LCE, contained in a concentrated lithium chloride product for a period of 40 years. The Phase 2 DFS results and analysis have provided outstanding outcomes that confirm Galan’s belief that the HMW project is a tier-one project in the lithium brine industry.
The Phase 2 project estimated a capital cost of $278-million additional to the $104-million contemplated in the Phase 1 study, with the total Phase 1 and Phase 2 capital cost estimated at $382-million.
The Phase 2 study also estimated a post-tax net present value of $2-billion and an internal rate of return of 43%, with a free cash flow of $236-million a year and a pay-back period for both Phase 1 and Phase 2 of just under three years.
“The release of the Phase 2 DFS for HMW clearly demonstrates the world-class nature of Galan’s 100%-owned project. The production volumes and low cost of production from HMW mean it is truly worthy of being considered a tier-one lithium brine project. These results fully support our DFS re-evaluation process and long-term production strategy, delivering a high-quality lithium chloride product into the market and providing Galan with strong early cash flows,” said Galan MD Juan Pablo Vargas de la Vega.
“The board is delighted to report these outstanding financial outcomes for the project Phase 2 DFS which are robust and include an approximate 2.9-year payback and a $2-billion project net present value. Thanks to our loyal project and corporate teams that have worked cohesively and tirelessly to deliver these outstanding results. We are also very grateful for the supportive government policies in place, and our local community support, which have enabled us to demonstrate the enhanced feasibility of the project.
“We are extremely confident about the future of HMW, both in the short and long term. Construction of Phase 1 is already well underway with the first evaporation pond already 15% complete. Galan looks forward to updating shareholders and investors as development continues into future phases to accelerate and ramp up production.”
Galan is in advanced negotiations with offtake and funding partners for the Phase 1 project.
Phase 2 construction is expected to start in the second half of 2024 and will run until the first half of 2026, with first production from Phase 2 targeted for the second half of 2026.