Galan Lithium (ASX: GLN) - Lithium - Argentina

HIGH GRADE LITHIUM
Galan Lithium (“Galan” or “the Company”) is concentrating activities on its 100% owned
lithium tenements located over Salar de Hombre Muerto in Catamarca and Salta Provinces,
Northern Argentina. Salar de Hombre Muerto is a proven lithium producer, with Livent (NYSE.
LTHM, formerly FMC) having operated the Fenix lithium operation since 1992, and Galaxy
Resources (ASX.GXY, “Galaxy”) looking to develop the 100% owned Sal de Vida Project -
Galaxy has recently sold part of its large Sal de Vida Resource to POSCO for US$280 million,
with the funds to be put towards development of Sal de Vida.
Galan’s first drill hole on the Candelas property, adjacent to Sal de Vida on the eastern side of
the salar, has returned 165 m of high grade, low contaminant lithium brines, highlighting the
prospectivity of Candelas. This supports results of recent gravity and controlled source audio
frequency magneto-tellurics (“CSAMT”) surveys which defined a potential brine reservoir with
a length of 15 km, a width of 3 km to 5 km and thicknesses between 160 m and 400 m. Drilling
is ongoing, with a view to an initial Mineral Resource Estimate (“MRE”) in the short term.
Galan’s targeting has concentrated on areas that are partly covered by younger sediments or
volcanics, and have thus been ignored by previous operators - these include Candelas which
represents the main inflow channel to the salar (and for which results of work to date speak
for themselves), and the Western Projects, which are over areas peripheral to the main salar,
but for which the CSAMT surveying again has highlighted the brine potential, supported by the
results of surface brine sampling. One of these western projects, Santa Barbara, is adjacent to
Livent’s Fenix operation.
In short, work to date has highlighted the prospectivity of all areas at Hombre Muerto, and we
should expect positive results from ongoing activities.
KEY POINTS
�� Proven salar: Salar de Hombre Muerto is a proven high grade, low contaminant producer
of lithium, with plans for further development on the salar - it hosts the highest Li grade
and lowest contaminant grade brine resources in Argentina.
�� Transport infrastructure: Although remote, Salar de Hombre Muerto is 390 km by road
from the city of Salta; in addition there is a 3 km long airstrip at the Fenix operation.
�� Access to gas: Salar de Hombre Muerto is served by the 300,000 m3/day multi-user Fenix
Gas Pipeline, that was commissioned in 2015, and designed to supply industrial operations
in the region.
�� In the right commodity: Although there are differing demand forecasts for lithium, the
fundamentals look strong over the medium to long term with the expected +20% CAGR
growth largely in electric vehicle (“EV”) battery markets, with Galan ideally situated to take
advantage of this.
�� Strong management and committed personnel: Company personnel, including
consultants, have extensive industry experience in varied regions (including Argentina)
and commodities. In addition directors hold significant share holdings, and thus will be
motivated to producing strong returns for shareholders.
�� Relatively quick to prove up: Given the requirement for only relatively wide spaced
drilling, JORC 2012 compliant Resources for brine operations can be delivered relatively
rapidly and at reasonable costs - as an example the average well coverage/polygon size for
the Sal de Vida 2012 MRE of 7.23 Mt lithium carbonate equivalent (“LCE”) was ~8 km2,
with 56% of this being in the Measured and Indicated categories.
�� Strong cash position: With A$2.19 million as of December 31, 2018 and close to A$4
million due from the conversion of in-money options at the end of 2019, the Company
should be well funded for all activities through 2019. However should the Company decide
to fast track activities in 2019 some earlier funding may be required.
�� Steady news flow: Ongoing activities including drilling, well testing and the estimation of
an initial MRE will lead to steady news flow over coming months.