Offtake Prepayment MOU

Galan Lithium Limited (ASX:GLN) (Galan or the Company) is very pleased to announce that it has entered into an offtake prepayment memorandum of understanding with Chengdu Chemphys Chemical Industry Co., Ltd (Chemphys) in relation to the Company’s Hombre Muerto West (HMW) project in Argentina (Agreement).

Upon execution of definitive agreements, Galan will supply and Chemphys will purchase a total of 23,000 tonnes LCE, as a lithium chloride product, over the first five years of Phase 1 production from the HMW project. Chemphys will also provide Galan with a US$40 million offtake prepayment facility to facilitate the continued development of Phase 1 of the HMW project. Key terms of the Agreement are featured in Table 1.

Managing Director, JP Vargas de la Vega, commented:

“I am delighted with this outcome. The high grade, low impurity lithium chloride samples Galan has been producing from the HMW pilot plant have been very well received by lithium converters leading to this agreement with Chemphys. Chemphys is a leader in processing lithium products in China and is a trusted partner to some of the world's largest battery manufacturers.

The offtake partnership and the financing prepayment will be foundational agreements for the HMW project and Galan. We look forward to the execution of the definitive agreements and further advancing the development of HMW in anticipation of first lithium chloride production in the second half of 2025.”

Chemphys Director, Alison Dai, commented:

“Chemphys is pleased to achieve this first milestone with Galan. Chemphys places great importance on the quality of the lithium supply and visibility of the supply chain. Galan is a great partner for Chemphys on these measures and we look forward to a strong relationship.”

About Chemphys

Chemphys has been a high purity lithium chemicals and technology company since 1998. The company’s founder was pivotal in introducing spodumene into China in the 1990s and has been at the forefront of producing battery grade and high purity lithium products qualified by leading global battery materials customers. Chemphys’ proprietary lithium processing technologies include direct lithium extraction, direct precipitation and electrochemical processes. Chemphys has interests in lithium companies with projects in Argentina including in the Salta and Catamarca provinces.

Table 1. Key terms of the Agreement

In relation to the offtake and financing prepayment facility announced 16 November 2023, the Company notes that it has not received both an offtake and financing proposal from the counterparty and accordingly the Company could no longer proceed with that option.

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