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- Galan Lithium (ASX:GLN) shares are up nearly 20 per cent in early morning trade on Thursday
- The move comes following an offtake execution deal
- World mining giant Glencore will offtake lithium from Galan’s flagship project
- That project is set to produce in 2025
- Glencore is also offering a US$70-100 million loan facility to fast-track phase one construction
- Shares last traded at 82 cents
Galan Lithium (ASX:GLN) has announced its execution of an offtake agreement with international mining behemoth Glencore.
Shares soared in early morning trade today, up nearly 20 per cent to 83 cents.
Under the deal, Galan’s lithium feedstock from its Hombre Muerto West (HMW) project will go to Glencore.
Glencore will offtake either lithium chloride “and/or” lithium carbonate from phase one of HMW. No export licence is required.
Further, Glencore is also offering Galan a facility worth between US$70-100 million “subject to conditions.”
That payment will ultimately see Galan produce lithium in a shorter timeframe than expected.
Phase one appears locked in
Construction of phase one kicked off in September this year. First production is tipped for 2025.
“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,” Galan Managing Director Juan Pablo Vargas de la Vega said.
Also referenced by the company this morning was the “open” nature of discussions pertaining to the development of phase two of HMW.
Fast-track financing
“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,” Mr Vargas de la Vega added.
“Importantly, Glencore’s funding assistance via the prepayment facility endorses our lithium chloride concentration strategy to deliver the HMW project.”
Management also pointed towards an accelerated production timeframe.
With lithium production set to commence in 2025, according to some analysts, Galan could find itself offering materials to a well-fed market.
Exxon Mobil recently announced it will move into lithium.
Its analysts predict a lithium surplus running into 2027, but that from 2028 onwards, lithium prices might go higher, with upward pressure from a shortage.
Galan shares last traded at 82 cents.
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