Australia-based Galan Lithium has increased the initial capital cost (capex) required to develop its fully-owned Hombre Muerto West (HMW) lithium brine project in Argentina to $429m, based on the results of the phase 2 definitive feasibility study (DFS).

According to the phase 1 DFS published in July 2023, the lithium exploration and development company estimated an initial capex of $118.4m for the Argentinian lithium brine project.

The DFS for the Hombre Muerto West project is separated into two phases. The initial phase 1 DFS was based on a production level of 5.37 kilo-tonnes per annum (ktpa) lithium carbonate equivalent in the form of lithium chloride concentrate.

Phase 2 DFS of the lithium brine project has raised the overall annual production rate to 20,851 recoverable tonnes of lithium carbonate equivalent, contained in a concentrated lithium chloride product for a period of 40 years.

Galan Lithium said that the Hombre Muerto West lithium brine project is estimated to bring an average annual free cash flow of $236m, based on the Phase 2 DFS.

Located in Catamarca Province, the lithium brine project comprises exploration permits covering nearly 11,600ha.

Galan Lithium managing director Juan Pablo Vargas de la Vega said: “The release of the Phase 2 DFS for Hombre Muerto West clearly demonstrate the world-class nature of Galan’s 100% owned Project.

“The production volumes and low cost of production from HMW means it is truly worthy of being considered a tier one lithium brine project.

“These results fully support our DFS reevaluation process and long-term production strategy, delivering a high-quality lithium chloride product into the market and providing Galan with strong early cash flows.”

The phase 2 DFS estimates a post-tax net present value (NPV) of $1.99bn for the Argentine lithium brine project, while the phase 1 DFS reported an after-tax NPV of $460m.

Phase 2 DFS also projects an after-tax internal rate of return (IRR) of 43% for the Hombre Muerto West project with an after-tax payback period of 2.9 years.

In August 2023, Galan Lithium commenced full Phase I pond construction at the Hombre Muerto West project.