Galan Lithium announced a significant milestone with the signing of an offtake prepayment memorandum of understanding with Chinese firm Chengdu Chemphys Chemical Industry for its Hombre Muerto West Project in Argentina.
The agreement will see Galan supply Chemphys with 23,000 tonnes of lithium carbonate equivalent in the form of lithium chloride over the first five years of production from the HMW Project.
In return, Chemphys will provide a US$40 million ($59 million) prepayment facility to aid in the development of Phase 1 of the HMW Project.
"I am delighted with this outcome. The high grade, low impurity lithium chloride samples Galan has been producing from the HMW pilot plant have been very well received by lithium converters leading to this agreement with Chemphys," said JP Vargas de la Vega, managing director of Galan Lithium.
Chemphys Director, Alison Dai, added, "Chemphys places great importance on the quality of the lithium supply and visibility of the supply chain. Galan is a great partner for Chemphys on these measures and we look forward to a strong relationship."
The MOU is non-binding and subject to receipt of regulatory approvals and satisfactory due diligence.
The execution of definitive agreements is anticipated as Galan moves forward with its HMW Project, aiming for the first production of lithium chloride in the second half of 2025.
Galan Lithium is an Australia-based lithium exploration and development company focused on its lithium brine projects located in the Hombre Muerto Basin in Argentina.
At the time of reporting, Galan Lithium’s share price was $0.135.