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Galan Lithium signs crucial deal to sell Argentine lithium chloride

Galan Lithium managing director Juan Pablo Vargas de la Vega, second from left, and Catamarca Governor Raúl Jalil. Credit: File

Galan Lithium (ASX: GLN) has taken a major step towards selling product from its Hombre Muerto West lithium brine project in Argentina both locally and internationally after signing a crucial new deal with the Catamarca Government.

Managing director Juan Pablo Vargas de la Vega and Catamarca Governor Raúl Jalil signed a commercial agreement that supports the grant of permits for the commercialisation of Galan’s lithium chloride concentrate. The permits will allow for the domestic sale or export of lithium chloride concentrate and the company says it will continue work to place lithium chloride concentrate locally.

While the agreement includes an increase in the proposed royalty rate for the government to 7 per cent and potential advance payments, management says the lift is similar to royalties applied to the export of spodumene concentrate in Australia.

As part of the deal, Galan will also commit to pursuing further downstream processing routes after four years in a location outside the Hombre Muerto salar. The agreement locks in an important prerequisite that is required for the grant of phase two permits, which are currently under application.

The company says the next step in the process is the formalisation of the agreement and its passing into legislation.

This commercial agreement is an important milestone in implementing Galan’s strategy, providing access to a larger international customer base at potentially improved sales and funding/prepayment terms. The agreement is expected to provide tangible progress towards the granting of Phase 2 permits on our journey to becoming the next lithium producer in Argentina.
Galan Lithium managing director Juan Pablo Vargas de la Vega

Proposed production at the project has been separated into four specific phases, starting with 5400 tonnes per annum of lithium carbonate equivalent (LCE) next year. Phase two production is targeting 21,000 tonnes a year in 2026, before a significant increase during the third phase to 40,000 tonnes per year by 2028.

The final stage is predicted to produce 60,000 tonnes per annum using lithium brine sourced from both Hombre Muerto West and Galan’s other Argentinian brine project in Candelas.

Last year, Galan signed a binding offtake agreement with mining giant Glencore, which outlined the supply of up to 100 per cent of lithium products from phase-one production at Hombre Muerto West. To sweeten the deal, Glencore offered to provide a secured financing prepayment facility for US$70 million (AU$109 million) and up to US$100 million (AU$155 million), subject to conditions.

Hombre Muerto West and Candelas are both on the Hombre Muerto salar, which already hosts established lithium brine operations owned by the likes of Livent Corp, Allkem and POSCO.

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