Galan Lithium (ASX:GLN) making a rapid transition from explorer to developer


by Melissa Darmawan

Galan Lithium (ASX:GLN) Managing Director Juan Pablo Vargas de la Vega provides an update on they company's key Hombre Muerto lithium brine project in the Catamarca province of Argentina.

Melissa Darmawan: Hello. Melissa Darmawan for the Finance News Network. Joining me from Galan Lithium (ASX:GLN) is Managing Director Juan Pablo Vargas de la Vega. JP, nice to meet you, and welcome back to the network.

Juan Pablo Vargas de la Vega: Well, thanks very much, Mel, and it's good to be in Sydney.

Melissa Darmawan: It's good to have you. Galan Lithium's key project is the Hombre Muerto West lithium brine project in Argentina. How's that going?

Juan Pablo Vargas de la Vega: Everything's going very well. Last year in December, we released our scoping study PEA (preliminary economic assessment). The study was performed by Worley (ASX:WOR), and we used the office in Chile. The conclusions of the study are that we have a tier one long-life project that can operate potentially for 40 years, producing 20,000 tons of lithium carbonate a year. We also have a low operating costs in terms of comparing ourselves to the rest of the industry. We fit in the first quartile of the industry, and our capital expenditure is estimated to be around $340 million roughly plus contingency. The NPV (net present value) study of our project has indicated that we could have up to a billion dollars of value with our four years payback. I'd like to remind people that this was done with very conservative numbers, done by Roskill, and so we have a strong project that we're going to be optimising. It's looking fantastic as a first pass.

Melissa Darmawan: So, what's next in regards to the project?

Juan Pablo Vargas de la Vega: We have done a capital raise early this year, and we have done significant work in the lab, looking at lithium chloride solutions. We continue to test alternatives internally that we're going to be implementing into the next stage of studies. The next 12, 15 months are critical to get the right answer commercially for what we're doing. So, this is an exciting place to be because, as we mentioned, our results are very compelling, very strong, but we believe that there are significant areas that we can improve and add more value to where we want to go. So, in a nutshell, just watch this space. We have something really good coming up for us.

Melissa Darmawan: And, JP, what are the green credentials for the project?

Juan Pablo Vargas de la Vega: The evaporation process has got the lowest emission of CO2 of the industry. And why is that? We use evaporation and solar radiation to our advantage. So, we're not burning anything. The sun is doing the work for us.

Melissa Darmawan: Now to finances and your share register. You completed a capital raising late January at 50 cents per share, raising $10 million. How far will that take you, given the busy progress ahead?

Juan Pablo Vargas de la Vega: We have a total cash position today, after the raise, of close to $15 million. We also have approximately $5 million worth of options, and all of those options are in the money, meaning they can be converted. Our estimate for all the study, all the way to feasibility, is approximately… Today, our best guess is around $9 million. So, it will take us way beyond the next 12 months or 15 months that we expect to take in terms of our studies and activities, and it still will leave us in a strong position going forward after this study.

Melissa Darmawan: And can you provide a comment on share register?

Juan Pablo Vargas de la Vega: Our share register is comprised today by the largest shareholder, which is Gangfeng. The second, and the largest fund that we have, is Thematica. Thematica is a fund from Luxembourg, and they own around 5.4 per cent of the company, and they've been really aggressive at coming into Galan in the last six months. So, it's good to have a green energy fund behind us. Also, we have family offices and superannuation from people. It has a very strong Australian flavor, but, as time is passing, we've seen that we're getting more interest from Europe especially, and a bit from the US. The register is evolving, and it's getting stronger.

Melissa Darmawan: And how about yourself? Do you have skin in the game?

Juan Pablo Vargas de la Vega: Absolutely, yeah. I'm the second largest shareholder of Galan. So I'm fully motivated to get this to production. That's my motto.

Melissa Darmawan: Last question. Is there anything else you'd like to add?

Juan Pablo Vargas de la Vega: Absolutely. We have recently acquired, in Western Australia, the Greenbushes south project, which is three hours south of Perth. The Greenbushes mine is the largest and highest-grade lithium spodumene mine in the world. And our project is only three kilometers south from the pit. So, what keeps me awake at night is thinking, "How am I going to explore this in order to have a discovery?" While it's still early days. I think there's still a valid concept of prospectivity, and next week we're going to start doing some early works, and this is going to progress step by step, and we're going to be updating the market in all our developments on both fronts, in Argentina as well as in Australia.

Melissa Darmawan: JP, thanks for your time. We look forward to hearing from you on your next update.

Juan Pablo Vargas de la Vega: Thank you, Mel, and I look forward to being back in Sydney.


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