Under the terms of the agreement, POSCO will acquire the tenement package situated to the north of Galaxy’s Sal de Vida project for $280m.

Galaxy retains 100% of the tenements in the southern area of Salar del Hombre Muerto in the Catamarca Province.

The tenements were recently included in the updated feasibility study for the development of Sal de Vida.

POSCO will acquire nearly 1.58 million tonnes lithium carbonate equivalent (LCE) of JORC compliant measured and indicated resources and 2.54 million tonnes of LCE of JORC compliant total resources.

Galaxy chairman Martin Rowley commented that “this transaction with POSCO provides a substantial cash injection which underpins the development of Galaxy’s Sal de Vida brine project in the Catamarca Province of Argentina.

“The development of Sal de Vida by Galaxy, as a 40-year mine life project producing the equivalent of 25ktpa of battery grade lithium carbonate, will be based on the 100% retained reserves and will not include any of the estimated resource contained in the tenements being sold to POSCO.”

Galaxy will utilize the proceeds from the sale to progress the development of Sal de Vida in the Catamarca Province.

The sale is also claimed to place Galaxy in a strong financial position to continue the planned development of the project.

The transaction is conditional on completion and execution of definitive documentation and receipt of board approval of POSCO, which are expected to be satisfied during the third quarter of 2018.

Besides, the two companies will enter into cooperation agreements that are intended to maximize potential development, operational, infrastructure and logistical synergies for their respective projects.

Rowley said: “This transaction allows Galaxy maximum flexibility with the parallel formal process being conducted with JP Morgan. We look forward to working closely with POSCO on our projects for long term mutual benefit.

“With the geographical coverage of Galaxy and POSCO’s tenements spanning across both Catamarca and Salta Provinces, this transaction is also strategically significant as it means there will now be two new lithium projects developed concurrently on the Salar del Hombre Muerto, with obvious benefits for all stakeholders in the region”