Galan Lithium (ASX: GLN) has been granted a full Phase 2 mining permit for its wholly- owned Hombre Muerto West lithium brine project in Argentina.

The permit was granted by the Catamarca Ministro – Ministerio de Mineria (Mines Department Minister) and covers all construction activities including ponds, processing plant, onsite laboratory, power and other required infrastructure.

It secures a pathway for the production of 21,000 tonnes per annum (tpa) of lithium carbonate equivalent (LCE) subject to financing arrangements and following the delivery of up to 5400tpa under Phase 1.

Lithium economics

Galan managing director Juan Pablo (JP) Vargas de la Vega said the mining permit comes at a time of positive lithium economics.

“This permit will allow us to increase production over threefold from Phase 1 and produce a premium quality lithium chloride product which is in high demand,” he said.

“Importantly, it positions Hombre Muerto West in the first quartile of the cost curve and ensures that Phase 2 production will be cash flow positive even at today’s prevailing lithium carbonate prices.”

Phased development

He said a phased development strategy would position the project to be a “long-term and resilient” source of lithium supply with global significance.

“Our plan for Hombre Muerto West remains unchanged, beginning with finalising the finance and offtake arrangements for Phase 1,” he said.

“Once secured, our operations team will complete construction and commence first production of lithium chloride concentrate while our corporate team and advisors will begin the project financing process for Phase 2.”

Long-term relationships

Galan chairman Richard Homsany said the Phase 2 mining permit highlighted the strong long-term relationships fostered with the Government of Catamarca and local communities.

“We have demonstrated the benefits of our operations economically though the generation of employment, procurement and trade opportunities and socially through education, community programs and training opportunities,” he said.

“We look forward to working in co-operation with the Government of Catamarca and all stakeholders to maximise the benefits of Galan’s operations in the community, and ensure these benefits are sustainable.”

The Phase 2 permit also supports Galan’s application for the Argentinian Régimen de Incentivo para Grandes Inversiones (RIGI), which is a new incentive regime for large-scale investments featuring a lower corporate income tax rate and concessions on import duties, value-added taxes (VAT) and withholding tax.