Quarterly Activities Report September 2023

The Board of Galan Lithium Limited (Galan or the Company) is pleased to provide this Quarterly Activities Report for the quarter ended 30 September 2023 and to the date of this report. The focus for the quarter was the completion of the Phase 2 Definitive Feasibility Study (DFS) and construction works/activities at the Company’s 100% owned, high-grade/low-impurity Hombre Muerto West (HMW) Project in the Catamarca Province, Argentina.

Hombre Muerto West (HMW)(100% Galan):

• Phase 1 construction progressing well; first pond 35% complete
• Pilot plant achieves steady state Li concentrate production at 50l/day; confirms concentration model predictions
• Advanced negotiations for offtake/funding options for Phase 1 and 2 underway; Li samples delivered to potential offtake partners and potential Li2CO3 tollers
• Tier one Phase 2 DFS results; HMW Project produces a premium high grade lithium chloride (LiCl) concentrate of 6% Li, comparable to 13% Li2O or 32% Lithium Carbonate Equivalent (LCE) in H2 2026, and delivers the following strong financial outcomes:
  • Post-tax NPV8% US$2 billion, IRR 43% free cash flow US$236m pa (pre-tax NPV8% US$3.1 billion)
  • Short Payback Phase 1 & 2 of 2.9 years
  • Increased Production to 21Ktpa LCE up from 5.4Ktpa LCE in Phase 1
  • Moderate Incremental CAPEX of US$278m (additional to Phase 1 Capex US$104m). Total Phase 1 & 2 Capex US$382m (ex-contingency)
  • Low Operating Cost of US$3,510/t LCE (excludes conversion cost from LiCl to lithium carbonate). HMW is in the 1st quartile of industry’s cost curve
  • Phase 1 construction has commenced with first production H1 2025
• Capex & Opex intensity reduced by 7% & 11% respectively (from Phase 1 DFS); future potential reduction for key cost drivers
• High Li recovery (68.5%) with further process optimisation underway
• Strong 40 year Ore Reserve 806kt LCE @ 864 mg/Li; resource upside remains
• Long term average payable price assumed for LiCl 6% Li US$22,841/t LCE, long term average lithium carbonate price US$29,000/t LCE
• Galan’s robust 4 phase production strategy (up to 60ktpa LCE) provides an exceptional foundation for significant future economic upside

Greenbushes South (100% Galan):

• Extended maiden drilling campaign completed; pegmatite exploration model validated
• Further drill planning underway

Canadian acquisitions (50/50 JV – Redstone Resources Ltd as Manager):

• 100% purchase of the Taiga, Camaro and Hellcat projects in James Bay province, Quebec
• Option to purchase 100% of PAK East and PAK southeast projects in Ontario

Corporate:

• Cash and investments at the end of quarter ≈A$33 million

As announced on 3 October 2023, the Phase 2 DFS increased the overall annual production rate to 20,851 recoverable tonnes LCE, contained in a concentrated lithium chloride product for a period of 40 years. The Phase 2 DFS results and analysis provided outstanding outcomes confirming Galan’s belief that the HMW Project is a tier one project in the lithium brine industry.

Galan’s Managing Director, Juan Pablo (JP) Vargas de la Vega, commented on the Phase 2 DFS Results:

“The release of the Phase 2 DFS for Hombre Muerto West clearly demonstrates the world-class nature of Galan’s 100% owned Project. The production volumes and low cost of production from HMW means 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. 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 USD 2 billion Project NPV. 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 35% complete. Galan looks forward to updating shareholders and investors as development continues into future phases to accelerate and ramp up production.”

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