EnergyX Founder Teague Egan isn’t discouraged by low battery metal prices. His company just made a C$206 million dollar bid for Argentina lithium brine assets held by Galan Lithium Limited (ASX: GLN).
Although companies like Albemarle Corporation (NYSE: ALB), Lake Resources N.L. (ASX: LKE) and Piedmont Lithium (Nasdaq: PLL) have been laying off employees and cutting costs due to the metal’s plunge, Egan says that demand for it isn’t going anywhere.
“There’s no doubt in my mind that lithium demand will continue to grow later this decade,” he told Reuters Monday.
If Galan accepts the offer from EnergyX it will be paid through a combo of cash, shares and project financing. Furthermore, Galan would receive a 10 per cent royalty payment during the initial 10 years of commercial production at the Catamarca province’s Hombre Muerto West (HMW) operation.
“The proposal remains subject to consideration by Galan’s board,” Galan said in a press release, “and given the early stage nature of discussions and its conditionality, there is no certainty a transaction will eventuate.”
A couple weeks ago, Galan decided that it would be slowing construction at HMW due to the commodity’s low price and market conditions. Anticipated production at the site has been pushed back from H1 to H2 next year. However, like Egan, Galan’s Managing Director Juan Pablo Vargas doesn’t believe the current slump will last.
“The current lithium pricing environment and market oversupply is not expected to be a long term trend,” Vargas said in July.
If Galan sells its Argentina assets it will be able to solely focus on its Greenbushes South hard rock lithium project in Australia. It is notable that EnergyX’s head of South American lithium operations, Juan Carlos Barrera, currently serves as a project and board consultant for Galan.
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Egan’s company isn’t new to Argentina. EnergyX has set up a demonstration plant for its proprietary Lithium Ion Transport and Separation (LiTAS) technology in the Salta province. Its efficiency and minimal water consumption has attracted significant attention from major operators like POSCO Holdings (NYSE: PKX).
In October, POSCO helped EnergyX raise US$50 million in a Series B funding round. The EnergyX plant is situated next to POSCO’s Sal De Oro project. It resides near one of the South Korean steelmaker’s joint venture sites with Lithium South Development Corporation (TSX-V: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ) as well.
“Having POSCO as a partner is a true honour and validation of EnergyX’s technological progress, innovations, and capabilities,” Egan said last fall. He thinks his company’s technology will be a go-to means of lithium extraction for POSCO in the coming years.
“We’re viewing POSCO as our flagship customer for Argentina.”
Lithium South Development Corporation is a sponsor of Mugglehead news coverage
rowan@mugglehead.com
