Galan Signs Pivotal Commercial Agreement with Catamarca Government to Commercialise Lithium Chloride Concentrate

Galan Lithium Limited (ASX:GLN) (Galan or the Company) is very pleased to announce that on Friday 19 April 2024 (Argentina time), the Catamarca Governor signed a commercial agreement in support of the grant of permits for the commercialisation of lithium chloride concentrate from the Hombre Muerto West lithium brine project (HMW). The permits will allow for the domestic sale or export of lithium chloride concentrate, Galan will however continue to endeavour to place lithium chloride concentrate locally. Galan commits to pursuing further downstream processing routes (e.g. lithium carbonate, hydroxide or other alternatives) after 4 years, in a location outside the Hombre Muerto salar. The next step in the process is the formalisation and the passing into legislation.

Highlights:

• Galan has signed a commercial agreement with the Catamarca Government in support of the grant of permits to enable the commercialisation of lithium chloride concentrate to be sold locally or exported internationally
• Galan’s ability to export lithium chloride concentrate is expected to facilitate access to a larger customer base domestically and internationally, potentially offering enhanced offtake terms and funding/prepayment opportunities
• The agreement includes an increase in the proposed royalty rate to 7% and potential advance payments. This is similar to the successful regime operating in Australia (applied to the export of spodumene concentrate, which contributed to Australia becoming the largest Lithium exporter in the world, in recent years), thereby supporting the rapid development of the HMW project
• The agreement includes a commitment by Galan, after 4 years, to pursue further downstream processing routes (e.g. lithium carbonate, lithium hydroxide or other alternatives), outside the Hombre Muerto salar, with the intent to offer priority to a collaboration with the Catamarca government agency
• The HMW Project is a Tier One project that will produce a low cost premium high grade lithium chloride (LiCl) concentrate of 6% Li, comparable to 13% Li2O or 32% Lithium Carbonate Equivalent (LCE) and remains on track for first production in H1 2025.
• The agreement also cements an important prerequisite required for the grant of Phase 2 permits (currently under application), potentially enabling the continuity of development for Phase 2 construction at the completion of Phase 1.
• Galan continues to work closely with the local Catamarca government in relation to our long term value add lithium production strategy, this agreement further significantly de-risks the strategy and provides evidence of our very strong, positive and collaborative relationship with local authorities and our community

Catamarca Governor Raúl Jalil and Galan Lithium Ltd Managing Director Juan Pablo Vargas de la Vega in Catamarca on Friday 19 April 2024

As previously announced, the HMW project is separated into four production phases. The initial Phase 1 Definitive Feasibility Study (DFS) focused on the production of 5.4ktpa LCE of a lithium chloride concentrate (currently under construction) by H1 2025, as governed by the approved production permits. The Phase 2 DFS targets 21ktpa LCE of a lithium chloride concentrate in 2026, followed by Phase 3 production of 40ktpa LCE by 2028 and finally a Phase 4 production target of 60ktpa LCE by 2030. Phase 4 will include lithium brine sourced from both HMW and Galan’s other 100% owned project in Argentina, Candelas. The very positive Phase 2 DFS results were announced on 3 October 2023 (https://wcsecure.weblink.com.au/pdf/GLN/02720109.pdf).

Galan’s Managing Director, Juan Pablo (JP) Vargas de la Vega, commented: “Galan would firstly like to acknowledge and sincerely thank the Government of the Catamarca Province in Argentina for their continued support. We look forward to continuing to work side by side with our local communities and authorities, towards achieving mutually beneficial and sustainable outcomes for both the people of Argentina and Galan’s shareholders, through the further downstream development of lithium processing routes such as lithium carbonate, hydroxide or other alternatives, in Catamarca.

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.

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