Galan Lithium’s Hombre Muerto West Project Phase 2 DFS Uncovers Strong Financial Results

Galan Lithium’s Hombre Muerto West (HMW) project in Catamarca Province, Argentina, has reported promising financial results in its recently published Phase 2 Definitive Feasibility Study (DFS). The report indicates an increase in the annual production capacity compared to the initial Phase 1 DFS, which set a production level of 5.37 kilotonnes per annum (ktpa) lithium carbonate equivalent (LCE).

The Phase 1 DFS, released earlier this year, estimated the capital cost at $104 million and projected an operating cost of $3,963 per tonne for the HMW project. Following the completion of the Phase 2 DFS, the recoverable annual production rate has been raised to 20,851 tonnes LCE, with operations expected to continue for 40 years.

The Phase 2 study estimated an additional capital expenditure of $278 million in comparison to the $104 million outlined in the Phase 1 study, resulting in a total capital cost of $382 million for both phases. The analysis also forecasts a post-tax net present value of $2 billion, with an internal rate of return of 43% and a yearly free cash flow of $236 million, suggesting a payback period of just under three years.

Recent data indicates that Galan Lithium generated $1,480.9 million in revenue over the past year, marking an 8.91% growth. However, the company has experienced a declining trend in earnings per share. Currently, Galan’s price-to-earnings ratio stands at -1.24, reflecting its lack of profitability in the last twelve months.

Juan Pablo Vargas de la Vega, Galan’s managing director, expressed strong confidence in the HMW project, describing the production volumes and low production costs as indicative of its tier one status in lithium brine projects. He emphasized that these findings bolster Galan’s strategic re-evaluation and long-term production plans, promising a high-quality lithium chloride product and robust early cash flows.

Additionally, financial insights reveal that Galan maintains a stronger cash position than debt, a favorable sign for investors. Nevertheless, the company’s stock has experienced volatility, with significant fluctuations over the past week and a downturn in the last three months.

Construction of Phase 1 is progressing, with the first evaporation pond already 15% complete. Galan is also negotiating with potential off-take and funding partners for Phase 1. Phase 2 construction is anticipated to start in the latter half of 2024 and continue until mid-2026, with the first production from this phase targeted for late 2026.

The results of the Phase 2 DFS affirm the project’s ability to produce a premium lithium chloride concentrate with 6% lithium, equivalent to 13% lithium oxide or 32% LCE by late 2026. This reinforces Galan’s confidence in positioning the HMW project among the elite in the lithium brine sector.

This article was generated with AI assistance and reviewed by an editor.