With potential world-class projects in one of the hottest lithium jurisdictions globally, cash in the bank and a handful of exceptional exploration results under its belt, things are certainly looking promising for Galan Lithium Limited (ASX: GLN).
The Argentina, lithium-focused minnow wholly-owns six projects covering around 25,000 hectares, with potential lithium brine coverage conservatively comprising around 7,800 hectares, in South America’s Lithium Triangle on the Hombre Muerto salar in Argentina.
Straddling the northwest corner of Argentina, northern Chile and southwest corner of Bolivia, the Lithium Triangle hosts the world’s largest reserves of lithium and around 60 per cent of world’s annual production of lithium, the bulk of which lies in the Atacama salar in Chile and Hombre Muerto salar in Argentina.
Hombre Muerto – which lies in the northwest corner of Argentina – hosts the highest grade and lowest impurity levels of lithium in the country and is the second best salar in the world globally for lithium brine production after Atacama.
Galan believes its landholding in the Hombre Muerto has the potential to host a substantial lithium deposit.
Its six projects – Rana de Sal, Deceo, Catalina, Peta Pila, Santa Barbara and Candelas – are all strategically located in the salar, boarding some of the biggest names in the lithium brine space globally.
The Sal de Vida project – owned by ASX-listed Galaxy Resources with a market cap of $750 million – is regarded as one of the world’s largest and highest quality undeveloped lithium brine deposits.
Galaxy recently sold off the northern portion of the project to POSCO – market cap $30 billion – for a cool US$280 million.
To the west of Sal de Vida lies recent New York-listed Livent Corporation’s Fenix operation which has been in production for over 27 years.
Importantly, Galan has a wealth of experience on its board: managing director Juan Pablo Vargas de la Vega has over 15 years’ experience in ASX mining companies, stockbroking and private equity firms and was a specialist lithium analyst in Australia.
He also has operated a private copper business in Chile and has worked for BHP, Rio Tinto and Codelco.
Priority target – Candelas
Priority target, Candelas, lies adjacent to Sal de Vida and encompasses an approximately 15km long by 3-5km structurally controlled basin, infilled with sediments hosting the brines.
According to Galan’s interpretation of CSAMT (Controlled Source Audio‐frequency Magnetotellurics) surveys, the project showed “…very conductive and shallow units that are compatible with units being saturated with brine, which constitute a great potential for lithium exploration.”
With the geophysical results defining the brine potential, Galan set about planning a maiden drill program to test the geophysical model as well as detailed data on the stratigraphy within the Candelas channel.
After getting the greenlight from the Argentinean government, Galan kicked off a five-diamond hole program in January to test the 12-15-kilometre extent of the Candelas channel.
Results so far from the program have sent tongues wagging in the minerals investment community.
Living up to the hype
Drilled immediately to the southeast of the Hombre Muertos salar, Galan’s maiden hole (C-01-19) certainly lived up to the company’s expectations.
The hole hit a substantial intercept of brine from depths of approximately 200m metres to the end of the hole (401m).
An exceptional high-grade intercept of 192m at 802mg/I Li was returned.
Importantly impurities (magnesium and sulphate) were very low and similar to those observed nearby at the Fenix and Sal de Vida operations.
The maiden hole results sent Galan’s share price skyrocketing to an all-time high of 68 cents in early March 2019.
With their tails in the air, Galan quickly set about drilling their second hole some 9.5km south of the maiden drillhole and located on geophysical CSAMT line 4.
The hole, unfortunately, didn’t quite live up to its predecessor.
While geology was largely similar to that observed in the maiden drillhole, the tectonic basin in the area was much deeper, perhaps up to around 750m, than in the north where C-01-19 was drilled.
Assay results from the hole confirmed field observations that a lower grade lithium bearing aquifer was intercepted.
The lower values were a result of heavy dilution from hydrothermal waters being sourced from an adjacent deep-seated fault zone.
Nearby fumaroles observed at surface supported this interpretation.
C-02-19 was eventually completed to a depth of 662m with basement encountered at 632m.
Third time’s a charm
Despite this slight setback, Galan remained optimistic that Candelas hosted a large lithium resource.
“Much has been achieved to date in a short time frame,” Vargas de la Vega said.
“We are dealing with a unique geological setting for lithium brines and our knowledge of the region increases with the more work we do.
“The lithium potential remains strong for Candelas as it does for our prospective Western tenements at Hombre Muerto.”
Galan quickly set about drilling its third hole (C-03-19) at Candelas, this time 2.5km south of its highly successful maiden hole.
In what was a great relief for the company, the hole intercepted highly conductive brines over around 154m from 276m to the end of hole (430m).
“The discovery of further brines within the Candelas channel reinforces our view that the project has the very real potential to host a significant lithium resource in one of the world’s premium salars at Hombre Muerto,” Vargas de la Vega said.
Downhole geophysics indicated highly conductive and high Specific Gravity (SG) brine was still being encountered to the bottom of the hole resulting in the hole being further deepened to a final depth of 454m.
Several packer tests were performed using the downhole data as guidance which indicated a preferred section from 313m to 454m with conductivities in excess of 200mS/cm and SG readings approximately 1.19 g/cm3.
The rig has now been moved around 3km south of C‐03‐19 and 5.3km south of drill hole C‐01‐19 on CSMAT Line 3 where it has begun drilling the fourth hole.
Galan is also seeking permits from Catamarcan authorities for further drillholes at Candelas beyond the initial five holes approved.
Shortly after announcing the positive results from its third drillhole in April, the company set about raising $4 million at 27.5 cents per share to fund its ongoing drill campaign at Candelas and start initial resource work.
The share placement received strong support from Australian and North American professional and sophisticated investors.
“We are pleased to have received such strong support from a range of Australian and North American investors, who now join our existing shareholders in aligning themselves to the success we are looking to achieve through our ongoing exploration at the Hombre Muerto lithium project,” Vargas de la Vega said.
“We have achieved positive results to date, which we plan to expand through well planned exploration activities.”
With significant results under its belt so far from its maiden drill program at Candelas and a $4 million boost to its coffers, Galan is fast tracking exploration with a potential resource estimate targeted for third quarter 2019.
Lithium demand has jumped since 2015 fuelled by the spike in demand for lithium batteries in electric vehicles with current prices around the $US12,550 per tonne lithium carbonate equivalent (LCE).
This demand is only expected to increase with the number of electric vehicles on the world’s roads set to triple by 2020, placing further upward pressure on prices.
Directors: Nathan McMahon, Christopher Chalwell, Terry Gardiner, Juan Pablo Vargas de lea Vega