Shares in Galan Lithium surged 30 per cent higher during intraday trading following a game-changing increase of more than 150 per cent to the mineral resource of its flagship Hombre Muerto West project in Argentina.
The revised estimate now tips the scales at 5.8 million tonnes of contained lithium carbonate equivalent, or “LCE” grading 866 milligrams per litre - a staggering 2.5 times increase from the previous figure.
Notably, over 4.4 million tonnes of the LCE material sits in the higher confidence “measured” category and runs a solid grade of 883 mg/L.
Galan's stock is currently trading at about $1.48.
The head turning revision was helmed by SRK Consulting and follows a flurry of development over the past year that has seen the company bolster its South American tenure, launch a raft of new drilling programs and boost the scale of the operation’s lithium-bearing aquifer.
The company says the updated estimate takes in geological and geochemical data from 15 drill holes totalling over 4300m at its Pata Pila, Rana de Sal, Casa del Inca and Del Condor tenements that form part of its larger Hombre Muerto West, or “HMW” project in Argentina.
The developer says it has achieved its new estimate whilst maintaining HMW’s high-grade, low impurity concentration – a massive win considering the size of the resource has over doubled.
Data from the revision will be integrated into a larger definitive feasibility study, or “DFS” at the project which is on course for an early 2023 release.
Galan Managing Director, Juan Pablo Vargas de la Vega, said:“The outcome is game changing in terms of the step-up in the overall technical and economic potential of this world-class lithium brine asset. This is a function not only of the size of the increase in resource, but also the big step-up in confidence classification that has been achieved.”
Galan set the market alight in 2021 with its share price surging from about $0.40 at the start of the year to before celebrating new year’s eve at $1.78.
The economics around the project are headlined by a cracking set of numbers outlined through a 2021 preliminary economic assessment, or “PEA” where production of 20,000 tonnes per annum of battery grade LCE was projected for 40 years.
The study projected a remarkable EBITDA of US$287 million per annum using a long-term average price of US$18,594 per tonne of LCE and also indicated the US$439m capital expenditure required to bring the project to life could be paid back in just 2.75 years.
Interestingly, only about 60 per cent of the existing resources at HMW were integrated into the PEA.
A recent study recent by the Minerals Council of Australia, indicated global demand for lithium could soar by over 360 per cent from 313,000 tonnes of LCE in 2019 to more than 1.45 million by 2030.
Notably, market prices for lithium have never been higher. Today on Pilbara Minerals’ Battery Metal Exchange auction platform the company inked a sales contract for 5,000 tonnes of its inferior lithium product at a price that equates to about US$8000 per tonne for its premium six per cent spodumene concentrate product. In comparison, the Exchange’s second auction back in July last year only netted bids equivalent to a price of just US$2500 per tonne.
It’s hard to think of a better time to more than double a high-grade resource, a feat Galan has just achieved.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
