Galan Lithium (ASX:GLN) Presentation, FNN Online Investor Event, July 2020

Company Presentations

Galan Lithium Limited (ASX:GLN) Managing Director Juan Pablo Vargas de la Vega presents on developing high-grade lithium brine projects in the Hombre Muerto Salar in the Lithium Triangle in Argentina.

Good morning in Perth and good afternoon everyone over East and I hope you're having a good day. Thanks very much for attending today's presentation. My name is JP Vargas de la Vega. I'm the Managing Director of Galan Lithium. Galan Lithium is a very new lithium company that started as just an idea in September 2017. So the picture you see behind me actually is the first pictures ever taken when I was at site. So this is quite a personal story for myself and something that I have pushed the envelope in the terms of funding a significant asset in an area where no one thought that it will be anymore high quality lithium.

Well, if we go to the next page please, that will be good.

The usual disclaimer, so this is a public presentation that you can download from my own website. Now, the fundamentals about Galan Lithium. I will take a little bit of time here to explain why we are different to the rest of the companies out there, the junior companies. We are, as mentioned, a recent company but we are Hombre Muerto. Just to give you a context of Hombre Muerto, Hombre Muerto is the best high grade operating salt flat in Argentina. There's nothing better today operating.

The Livent Corporation is operating there for more than 20 years and the salt flat is known historically for producing high quality lithium carbonate and also lithium hydroxide. The lithium that comes from this salt flat, directly from Livent has gone into the Sony batteries that were in circulation in the '90s. More recently, that lithium has gone into the Panasonic batteries that we manufacture in Japan. Now, if Panasonic rings a name, it's because the Panasonic batteries have gone into the Tesla cars for a while now.

So whoever says that spodumene is the only candidate to go into lithium batteries, that's not right because historically, that's been done for a long time. So going back to Hombre Muerto and Galan, we have a quality project where we have proven that we have high grade and low impurities. And this is critical in any story about lithium brine because of you have the combination of both, you are at a head start to produce high grade lithium carbonate at a competitive cost.

We also have a low carbon footprint. So if you compare ourself to all the other industries in lithium, the sun is evaporating the brine for us and it's doing all the energy that you usually find in a mine. We don't have drilling blasts. We don't have trucker hauling. We don't have concentrations of this. The energy intensity of the process is very low, so hence the carbon footprint, again it correlates with the low energy intensity of the operation.

We have a fantastic team. I could not be happier with the people that we got on the ground in Argentina. We have very highly qualified people in Argentina operating. And today actually, we are taking brine. We are collecting to send that to the lab hopefully in the next few weeks. We are just nailing which lab we are going to go and send this because as part of the study that we want to do, we want to get physical result bank stopped studies for the lithium carbonate production and we're targeting battery grade lithium carbonate. So these are the things that we are trying to do.

Now, in Santiago, we also have Boris. This is our product manager that has been overseeing all the work that we're doing today. Then we've got Daniel Jimenez, which was the ex-FMC senior Vice President of Commercial. So we have the right people in South America and I could not be happier with the support I'm getting in Australia as well with my board.

Also, within all this finding, we have a low grade brine that is amicable for reverse osmosis, so we don't have to go and tap water from anyone. If we need fresh water, we just go into drill hole number two. For the ones who know a bit more about the company, we can take this reverse osmosis and get fresh water for our processing, which is not going to be that much but we have that if we need to.

So going back to what we deliver today. So we have the Hombre Muerto west project that has approximately 1.4 million tons sitting at the highest grade in Argentina with a total inventory of close to 2.1 million tons. Just for reference, the Poscotransaction was 280 million foot, 2.5 million tons at Hombre Muerto that they purchased from Galaxy. So is it worth that today? The answer's no. Will we be worth that in two, three years? I will say yes.

So with that, also I like to highlight that we have our last round cap rates, we have a first fund and a green fund from Europe called Thematica and they're very committed into investing in lithium and alternative technologies. So most importantly, last week we announced that Worley has joined us to do the PEA, pre economic assessment, and it's expected to be live in four months. So we have a lot of news to tell in the next four months. We have results that we're going to be updating the market because we've been starting this process of study since December last year.

So next page please.

So this is a bit of where we are in the lithium triangle. We are in Argentina. We are in the Province Catamarca and our neighbours, as mentioned, are the Livent Corporation. They've been operating for 20 plus years producing lithium carbonate and lithium hydroxide that goes sell directly to Japan. So the word quality well renowned and it will send back again. There is a solution for producing high quality brine as our lithium carbonate from our end? From our end, the answer's yes. It's been proven and we're not presenting anything new.

So we have a very de-risk project in terms of a lot of the certainties or uncertainties that people have been asking around. We do have something great. Galaxy is very fully in the push to become a producer, so you've seen the announcement. They are assuming to be producing by the end of next year, so that's a strong commitment from their side. And POSCO since the purchase of Galaxy of Sal de Vida, they've just been really, really busy. So overall, we have a very busy neighbourhood and we are playing catching up. The good thing is we are small. We are a small company. We can move in faster than them, so we are trying to get as fast as them if possible.

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So this is about chemistry but all what I want to say is the furthest to the right you are is the highest grade and the lower you are on that graph is the lowest level of impurities on the ratio Mg/Li. So see where Hombre Muerto West is for Galan. It escapes the pack of everyone else. Highlighted in black, we have all recovery in Hombre Muerto from Livent. So you can see where they're sitting in terms of the chemistry and the grade and the operating mines. So this is why we have a thesis that believe that we can become a producer in the future.

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Now, we have another level of impurities. This is a chemistry picture. The reason why Posco is there in bold, spend $280 million in this is because you cannot buy quality. And the quality from Muerto is reflected in this chart and it shows that the closer you are to zero, the cleaner your brines are. So the more room you have to have low operating costs because lower level of impurities, it reflects on a lower operating cost.

So Galan is sitting in the lowest quadrant in the industry. Same as Livent. Same as Galaxy. Same as Posco. And this is why it's so important to have this level of low impurities. I sound like an old record but low impurities are very important.

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Now, if you compare the level of the footprint of CO2, so this data has been published SQM. So if you see to the right, you will see that the lowest levels of production of CO2 comes from the lithium carbonate industry. They're lower than the lithium oxide coming from the industry here in Australia, so we can present something viable going forward.

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So the energy footprint, again, the energy footprint is a reflection of the same process that I was mentioning. We evaporate. We don't have an energy intensive process, hence low energy, low carbon footprint.

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So now about Galan, we're a tightly held company. We have 181 million shares on trade. We have around $1.6 million in the bank, so we are fully funded to do the PEA and the lab tests that we want to do. So we are in a good spot and directors of management has got 27% of the company and the top about 20 shareholders have got 54. If I go to the top 50, that number's even higher. So we're tightly held.

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So about the board, I'd like to highlight Daniel Jemenez. He's the third person from left to right. He was SQM ex VP of SQM. And actually, I could not talk highly more than him. He's been very good and critical in understanding where we're going, what we're doing, and the products that we can produce. This is someone that has sold lithium and know how to sell lithium. It's critical to us and one of the things that I like to say is while we want to produce lithium carbonate, we're also investigating other alternatives out there in the market. So this is very important because we want to see what else we can do with a little money that we have. And we understand we are energy company, so we want to be able to provide solutions to the market. This is a business and we want to be the most profitable way and in the shortest time possible.

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So about the Hombre Muerto and this is a picture of the map. So to your left, you have Hombre Muerto West in blue. To the right, at the bottom right, you have Candelas, which was our first project. And also about that, we have Galaxy. Above Galaxy, we've got Posco. And to the right, you got Livent. This salt flat is massive. Just to give a reference, going from Catalina to PataPila, it's around 15 kilometres. So it's like going to Perth to Fremantle. So it's quite a distance.

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So we just recently announced the 22nd of June 1.4 million tons at the highest grade possible that we have found in Argentina. So this is the key and this is the cornerstone as to how we're starting a project from scratch but to build something that is becoming more tangible.

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So we have an agreement with Portofino, which is a Canadian listed company. So once we finalise that transaction, we'll be able to have a continuous grant from Catalina to PataPila. So we're advancing on the legal side of things. They're being slower because the Catamarca has been having on and off cases of Covid-19. So as soon as we get that out of the way, we finalise the conception.

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So what we've found so far is the brine that we have for evaporation, it ranks among the best in Argentina. So high level recoveries. Low footprint in terms of size. And you can in your own time look at this table but I like to highlight next table.

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So next slide shows that if we are recovering, how much space do we need to produce our what our recovery is producing today. And what it shows the area at the bottom of the map on the right is showing the 540 hectors that they're using for their 17,500t combined footprint for the production. So we have spare capacity if we want to be recovery. So things in perspective, do we have enough size for producing? The answer's yes. Can we produce lithium carbonate from our inventory? The answer's yes. And that's just a flavour.

From 1.4 million tons, if you divide that by half to convert that from indicated to reserve, just making an estimation, I have 750,000 tons of lithium carbonate sitting in the ground. That's around 30 years at 25,000 tons of production. So that means that we can be beyond Livent for 30 years. So we have more than enough in our ground to become a serious candidate, so this is why we're investigating and we have Worley on our side. I couldn't not be happy to earning our stripes with a large company that is going to provide us with CapEx and OPEX and a way forward to become a producer.

So next slide please.

So this is a comparison with our other companies in Australia. But all what I want to say on this is grade is king and we have something that is better than what else is happening on the ASX space.

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So this is our timeline on where we are, where we're going next, and all the things that we achieve in a very short time is less than 18 months since our first drill hole and we're already doing our studies. Our PA is going to be completed within the next four months, so we are very, very excited about where we are then where we're going next.

Next please.

So about Catamarca, all what I want to say the governor of Catamarca's been very proactive and a very supportive into all the exploration that we've done. So we're more than happy where we have been, where we are, and the support that we're getting forward. And to clarify things, Livent has been producing, our neighbours have been producing more than 20 years. We've got Galaxy on the other end and all of these companies are moving forward, despite whatever is happening in Argentina, local government of Catamarca is being fantastic.

So next slide.

So why Galan? We have the fundamentals layout there. In a very short time, we've moved fast despite constrain, despite Covid-19. We're moving forward. We see that there's a great upside in lithium and we just want to make it happen. So all my effort is to make this a producer as soon as we can. So thank you very much for your attention and thanks Clive.


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