Galan Lithium (ASX.GLN) Presentation, FNN Online Investor Event, October 2021

Company Presentations

Galan Lithium Limited (ASX:GLN) Managing Director Juan Pablo Vargas de la Vega provides an update on the company's key high-grade lithium brine project Hombre Muerto West in the Lithium Triangle of Argentina.

I've got exciting things to tell you about Galan. Galan is part of the lithium revolution that is going to take over the battery industry. And that's why lithium, you hear on the news, is everywhere. Because we are seeing something unprecedented for the last, I'll say, 100 years. We're seeing batteries everywhere and we're seeing batteries in cars. And that's the main driver as to why lithium is important today. We'll see pretty much that the combustion engine is going to be out-faced or retired from the market. And the last time we saw something like that, that was almost 100 years ago, when horses got retired from the everyday life in the industry. And so it's something that none of us has ever lived. And this is big, and is a big transformation of what we've seen.

But more to the point, the market is interesting, yes. We've seen that the market is taking lithium as a newcomer. There is all this interest in lithium, but this is about Galan. Why Galan? I'm the Managing Director and founder of this company, started four years ago. Needless to say, I've got a fantastic team in Argentina, Chile, and also I've got a very supportive board here in Australia. And our main focus today is Argentina. Why Argentina? For the last four years, we've been working hard to take our projects to advance them as much as possible and the fundamental things about Galan, it's a product that's got high grade and low impurities. That setting is unique. You cannot find that easily as part of nature everywhere. So in other words, if you've been in mining for a while, grade is king. We have approximately 3 million tons of lithium carbonate, equivalent in ground, in between two projects, and our flagship project is called Hombre Muerto West.

We have taken these projects into a study phase that we now are moving into our DFS and promptly to start. But one of the things that I would like to highlight as well is that Argentina today, is been really busy and we've seen a lot of action happening everywhere. And one of those things is that we've seen the merger of Orocobre and Galaxy, and there's going to be a new company. And that is as big as Pilbara Minerals, by the way. So it's not a small joint venture. We've seen that Millennium's been taken over by Ganfeng and then outbidded by CATL. Then we have the transaction that is pending to be approved with Neo Lithium, for a significant amount of CDN$960 million to be exact. And all of this is just happening within this month.

I would like to highlight that Galan Lithium, it's from where I stand, the last lithium project in Argentina that has no JVs, no deals with anyone. And it's 100% owned by Galan. So if you want to look for lithium in Argentina, it's got a path to develop for lithium carbonate, then there's no one else. And this places us in a good position for the future deals that we may do in the future. And as we haven't done any JV agreements, or off-take agreements, as we develop the project, we can walk into a better commercial solution for what we want to do.

And what do we want to do? The study showed that we can produce from Hombre Muerto West, that's our flagship project, the study done with Worley it showed that we can do 20,000 tons of lithium carbonate for 40 years, with a low OPEX of $3,500 a ton, a CapEx of around $440 million, including a large contingency of a $100 million that should be released on the track.

But these numbers, these days are few and far between, because there's not much left in the market that I can independently say that production can be achieved. And for such, we are establishing a very simple method of evaporation. I understand that there's technology out there that's promising a lot of things, but today there's nothing replacing the evaporation process. It's a low risk, low CapEx. It has low OPEX, we don't need energy. Remember, all lithium triangle products are in the middle of nowhere. So access to water and access to power doesn't come easy, it's not actually there. New technologies are promising many solutions, but if you take it into account all the things that I mentioned before, then it raises a risky profile and on top of that, potentially reinjection of brine, it's something totally unknown.

So we take the known approach to produce lithium carbonate from a known solution, something that works for 40 years, and we're trying to improve it and make it better to increase recoveries and to reduce OPEX. Anyway, where we are today, we raised our funds a couple of months ago and finalised that last week and the money's going to be put together for all the studies that are required for Hombre Muerto West. In other words, we are drilling today for reserves. We are moving in to start a power plant to demonstrate the points that I mentioned before. And to do the engineering, there's going to be a ward that's imminently coming for showing that we have a robust case, a commercial case, to produce lithium carbonate at site. But interestingly enough, we may have another way of getting to market quicker and I'll go more into the rest of the presentation.

The money also will be deployed for doing the same thing at Candelas. And overall Candelas is stage II, if you want to call it. So Hombre Muerto West has a profile today of 20,000 tons, as per study. We believe we could get to 25,000 tons of lithium carbonate as the next study phase that we can get. And Candelas could have somewhere between 10,000 to 15,000 tons of lithium carbonate equivalent. So you can call it that at stage II, if you want. A combination of both projects could give us a long term profile in the future of around 40,000 tons of lithium carbonate equivalent and that is a similar profile that it's looking at Lithium Americas to produce today. So the value that we can add and show within two stages of Hombre Muerto West and Candelas, it shows that Galan could be a relatively large lithium company with a healthy EBITDA and with a long term investment for our shareholders.

And more to where we at, I just want to show you that we are the lithium triangle, and also say who our neighbours are. Our neighbors are POSCO, Galaxy, and Orocobre now, and Livent. Livent is a company that has proven that Hombre Muerto can produce lithium carbonate and lithium hydroxide, if you want to go that way. They've been in the market for 28 years. The lithium revolution for the Sony Handycam started at Hombre Muerto, where Livent is. So lithium is something that started a lithium revolution a while ago. But more to the point that I started, grade is king. In this chart, you can see that the grade is king in salt flats, in Argentina. Hombre Muerto West is a far right balloon that you can see there, followed by all the other projects out there, Hombre Muerto basin again. So you got POSCO, Galaxy, Livent and following Galan, but if you look at on the left axis, you also will see the lithium impurities to magnesium on the left axis.

The interesting thing here is that you want to be as low on the left side and as far right, as you can, and Galan is showing that you can do it. So in other words, it translates that we can have, down the track, an operation with low risk. Because grade can help you to manage operations better and there will be challenges. And we are preparing ourself for those.

And if you look at more impurities in the next slide that I'm showing, you have magnesium to lithium and then if you replace grade, you'll see sulfur to lithium. Now, where would you like to be? You would like to be as close as zero as you can be. And then you find a cluster and that cluster is Hombre Muerto and all the companies I previously mentioned that are our neighbours. In other words, it shows that the level of impurities at Galan are the same as POSCO, Galaxy, and Livent. The main difference, that we have a little higher grade than them. And this is the key thing as why POSCO, two years ago, bought the Northern part of Galaxy for $208 million. At the time, that looked like ridiculous money, too expensive. Today, everyone is looking at that transaction, how could it be so cheap? So I'll leave you with that to think about the impurities, and the setting is very important.

The next slide is about the ESG. Needless to say the operations today for the evaporation process, and this is courtesy of SQM, it shows that the greenhouse gas (GHG) emissions or the carbon footprint in case, coming from brines is lower than hard rock.

And this is going to be a more important thing as time passes by, because the main reason why you can do this is because you use the sun to your advantage. And the next slide shows the energy intensity, and that is reflects that the sun does not charge. The lithium comes in a solution. We don't have to crush screen, process concentrate, roast, do a lot of things to get to a lithium carbonate product. It's a low energy intensive process, and that's why the carbon footprint can be so low. So in other words, there is a way forward for lithium, that from brine it can show that is a better option for the future in terms of carbon footprint. And this something that we currently engage a company to do this study. We don't just want to work with numbers from third parties. We're doing this ourselves.

So a snapshot about the company, tightly held 289 million chairs from issue. We don't have billions of chairs an issue. The management's got 17% of the company top 2048, and top fifths around 60% of the company. The free float is very tight and we have $15.5 million as the last quarterly when reported, we should have a position of around $60 plus million now that we complete the last race.

In relation to our board, I would like to highlight that Daniel Jimenez, the third man from left to right, is the person that has most lithium experience in our board. He worked for 28 years for SQM, 10 years as a senior VP of commercial. So he is someone that knows brine back and forth, knows the market. And it's been instrumental in all the advances that we are making. People ask, what is he doing behind the scenes?

He's got a lot of context and help us to fast track the study, the hydrology, and even the context that we talking on these days, to get him in a very strong position. So Daniel, I keep insisting is a key man in our group. And I'm very pleased to see the results that you can bring to us.

Now, the satellite picture of Hombre Muerto, where we're at. And Hombre Muerto is a large space, as you can see. The map starts on the left with Hombre Muerto West. We move to the right, we got Livent in red, further north to the right, we see POSCO. Then to the south, we see Galaxy and Orocobre JV . Further south, we see Candelas. As you can see, we have two projects in the same basin that is high grade, low impurities, and you could call it on Hombre Muerto West stage I, and Candelas stage II for simplicity.

The combination of this can make Galan future operations and project as a large project of up to 40,000 tons of lithium carbon equivalent. That's a key message that I would like you to keep thinking.

And then this is the study that we done with Worley. We joined up 20,000 tons of lithium carbonate equivalent a year on pounds, can be all done in our ground. We don't have to ask permission for a third party. And on the picture on the left, it can show how competitive the study shows that Hombre Muerto West could be. If we were to produce today, we'll be one of the lowest operating costs on the lithium cost curve. A comparison now to Australian companies and Lithium Americas, so you can see, we have a very competitive OPEX and also our CapEx is working progress that we are going to improve even beyond to what we've seen.

So this information you can download and see at your own leisure and ask me questions any other time you would like. Are more accessible. My contact's are on our webpage.

But furthermore, Hombre Muerto West, what else can we do? We not stopping thinking of where can we improve? And pretty much we've seen that Hombre Muerto West, it has footprint for ponds of up to 25,000 tons. And that's what I mentioned earlier on. And you can see the different colours of stage I and II within Hombre Muerto West, as what we can do to develop up to 25,000 tons. We have more ground, by the way. That we can use on the other end of the reach to increase our production. If we, for whatever reason. We've seen that our conversion to reserve is fantastic. But for the time being, this is where we at. We acquire more ground.

We try to increment our resources statement and also come out with an amazing study for reserves. So one of the commercial things I would like to show that are done within the studies and all the work that we've done behind the scenes, and we announced to the market as well, is that our concentrate. The ponds that you see there is can concentrate up to 6% lithium chloride concentrate. In other words, we could use to advantage the Australian view of producing lithium concentrate, and then sell it either to our neighbours or export it. This is something that we're definitely exploring because we see that has a value to it. It means two things. We can come to market, instead of five years, we can reduce that to three. And now CapEx from $440 million, it could be released to around $200, $250 million. So all becomes more doable from Galan's point of view. And this is something that we are going to explore, to try to apply the Australian model, concentrate and sell it, get cashflow and reduce the risk and produce lithium carbonate down the track, if that's a requirement that we believe that is going to add more value.

Now, in terms of what we've done, we've done tests and we keep doing testing, testing, testing. So we are starting to evaporate in that site, it's something that we are very excited about. And lastly, I would like to say that we are doing geophysics and soil sampling at the Greenbushes South joint venture. We have a project down there that is very interesting in terms of its prospectivity.

So with that said, I will conclude my presentation, but one of the things that I would like to say about Galan, is we're very approachable. Going forward, there's a lot of things that I would like to say, but my contact details there, please reach out anytime. I'm happy to engage one-on-one, explain further details of things that you like to know from us. So with that, thanks very much, Clive. And I wish everyone a good day.


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