Galan Lithium signs offtake agreement with Glencore for its lithium project in Argentina
Australia-based mineral exploration company, Galan Lithium Ltd (Galan) has signed an offtake agreement with global mining major, Glencore Plc (Glencore) for its lithium chloride concentrate from Homre Muerto West (HMW) lithium project in Argentina.
The binding agreement secured from Glencore entails an offtake of up to 100% of Galan's lithium chloride concentrate from Phase 1 production at the HMW lithium project and a Financing Prepayment Facility (FPF) for $70 to $100 million (subject to conditions being met).
"Our agreement with Glencore significantly de-risks our project and we are very well poised to secure finance for Phase 1 of the HMW Project. Importantly, Glencore's funding assistance via the prepayment facility endorses our lithium chloride concentration strategy to deliver the HMW project, and provide returns to shareholders, in a shorter time frame," said Juan Pablo Vargas de la Vega, MD at Galan.
"We are today closer to becoming a significant and reliable producer of lithium, and thereafter growing our production in line with the expected rise in demand."
The commercial production at HMW will begin in H1 2025. As per the terms of the deal, the agreement will lasts for a period of five years from the commencement of commercial production for 100% of Galan's Phase 1 production which is estimated to be 5.4 kt lithium carbonate equivalent (LCE) in lithium chloride concentrate per annum.
The offtake agreement does not require Galan to secure an export licence for its lithium chloride. Glencore will accept offtake for Galan's lithium chloride to be toll-treated into lithium carbonate for sale and export from Argentina, Galan clarified. The FPF secured from Glencore will support the funding of Phase 1 of the project.
As Galan develops Phase 1 for maiden production, the company has agreed that Glencore will have the first right to negotiate with respect to marketing and financing of the future expansion of Phase 2 at HMW lithium project.