Galan Lithium Limited (ASX: GLN) ("Galan" or the "Company"), an emerging lithium producer, is thrilled to announce a significant milestone in its journey towards becoming a key player in the lithium market. The Company has entered into a binding agreement with Glencore plc ("Glencore"), one of the world's leading diversified natural resource companies, for the offtake and financing of its Hombre Muerto West (HMW) Lithium Project in Argentina.
Key Highlights of the Agreement:
Binding Offtake Agreement: Galan has secured a binding offtake agreement with Glencore for the purchase of up to 100% of its premium lithium chloride concentrate from the HMW project. This agreement, covering Phase 1 production, spans five years from the commencement of commercial production, with an estimated annual output of 5.4kt lithium carbonate equivalent (LCE) in lithium chloride concentrate.
Flexible Financing Prepayment Facility: Glencore has proposed to provide or facilitate a Financing Prepayment Facility ranging from US$70 to US$100 million, subject to meeting certain conditions precedent. This facility is a significant step in supporting the funding of Phase 1 of the HMW project.
Export License Exemption: The offtake commitment with Glencore uniquely positions Galan, as it does not require the Company to secure an export license for its lithium chloride.
Renewable Agreement: The offtake agreement is renewable, subject to mutual agreement, reinforcing the long-term partnership potential between Galan and Glencore.
Endorsement of Galan’s Strategy: This agreement is a testament to Galan's low-cost, low-risk lithium chloride development strategy and its ambition to become a leading lithium producer in Argentina.
Future Expansion Opportunities: Galan and Glencore have agreed that Glencore will have the first right to negotiate in respect of marketing and/or financing concerning the future expansion of the HMW Project for Phase 2.
Progress and Outlook:
Galan has already commenced construction of Phase 1 of the HMW project in September 2023 and is on track for the first pond fill in Q1-2024. The commencement of production is forecasted for the first half of 2025. Concurrently, Galan is advancing discussions for the development of Phase 2 at HMW, demonstrating its commitment to growth and long-term value creation.
A Strong Endorsement:
The execution of the binding term sheet for the Marketing Offtake Agreement (MOA) and Financing Prepayment Facility is a validation of the exceptional quality of the HMW Project. It underscores the confidence in Galan's experienced team and their capability to successfully construct and deliver a lithium brine project in Argentina.
Galan’s Managing Director, Juan Pablo (JP) Vargas de la Vega, said:
“We are very delighted to announce Galan’s achievement of this very significant milestone on the path towards commencing commercial production at HMW in H1 2025. The agreement with Glencore is a validation of the quality our world class project and endorses the calibre and experience of Galan’s team. Our agreement with Glencore significantly de-risks our project and we are very well poised to secure finance for Phase 1 of the HMW Project. Importantly, Glencore’s funding assistance via the prepayment facility endorses our lithium chloride concentration strategy to deliver the HMW project, and provide returns to shareholders, in a shorter time frame.
We are today closer to becoming a significant and reliable producer of lithium, and thereafter growing our production in line with the expected rise in demand. Our momentum towards maiden commercial production continually strengthens and we look forward to updating investors on our progress.
We thank and acknowledge the work of our dedicated Board and personnel to reach this critical milestone. As always, we are grateful to our community and government in Argentina for their invaluable support of our development at HMW.”
Galan Lithium Limited (ASX:GLN) is an ASX-listed lithium exploration and development business. Galan’s flagship assets comprise two world-class lithium brine projects, HMW and Candelas, located on the Hombre Muerto Salar in Argentina, within South America’s ‘lithium triangle’. Hombre Muerto is proven to host lithium brine deposition of the highest grade and lowest impurity levels within Argentina. It is home to the established El Fenix lithium operation (Livent Corporation) and the Sal de Vida (Allkem) and Sal de Oro (POSCO) lithium projects. Galan is also exploring at Greenbushes South in Western Australia, approximately 3 km south of the Tier 1 Greenbushes Lithium Mine.