General Discussion Banter GLN, page-17433

Moin Moin,
the stock market never ceases to amaze me. The non-binding offer from Zhejiang Huayou Cobalt Co, Ltd and the Renault Group is not to be taken seriously in my opinion because it is not based on a realistic valuation of the resources. It is not often that I agree with ‘mondy’. But I do in his assessment of this offer, if you really want to use the term for it.Zhejiang Huayou Cobalt Co, Ltd is one of the top ten players in the lithium industry. They are trying to close the upcoming capacity gap in lithium salt resources step by step. As Chinese domestic resources are limited, the acquisition of foreign lithium mines is unavoidable and is also strongly supported by domestic policy.

However, this behaviour is not exclusive to China. The global race for lithium resources continues to intensify. The most recent example is the open battle between Kobold Metals, Rio Tinto and Zijin over ‘Manono’. Where and at what stage of development are the lithium Tier 1 resources that, according to many supply models, should already be producing in 2024 and 2025? What will come online in 2025? Expansions through ramp-ups in Bouguni (Mali), Chauchari, Mariana and Centenario Ratones (Argentina) Kathleen V. (Australia) and Sigma (Brazil). The capacities of brownfield players will be reduced or stagnate except for SQM.

The term and definition of a Tier One resource is open to interpretation. Manono is a huge resource with exceptional spodumene quality. However, it is also a fact that the DRC jurisdiction, civil war, corruption and considerable infrastructure problems make it unsuitable for me personally to invest.Nevertheless, there is talk of billions of US$ of investment money and Rio, which has actually focussed primarily on brine, is now also throwing its hat into the hard rock ring.

Back to Galan.
The takeover bid is dubious and a miserable attempt to exploit the current macro sentiment, lithum sentiment, Galan's individual weak financial situation, shareholder sentiment and perhaps also a weakness of the board and act quickly before the results of the comprehensive environmental impact study, RIGI and/or Chemphys deal are published to secure a world class resource for an apple and an egg. Shareholder frustration has also reached its peak, as evidenced by some of the comments here that have used the share price rise today to exit.A discussion about the violation of disclosure obligations due to price sensitivity is absurd from a fundamental point of view, because this presupposes a certain degree of seriousness of the offer. Despite this misinterpretation by market participants, I am of course pleased about today's market effect on the share price due to increased attention. So there is still interest.

Nevertheless, a brief evaluation:

• Galan's Hombre Muerto resource position are 9.5 Mt LCE.(places it within the top 10 of lithium construction and production projects globally)
• The majority is in the measured & indicated (not inferred) category
• HMW ranks among the top 20 global lithium resources
• 100 % owned
• The takeover offer would correspond to a resource valuation of USD 15.78 per tonne of LCE.

The last comparable transaction was the purchase offer for 80% of Lithium Chile = ‘Arizaro-Project in Salta. The purchase price offer of 19.12.24 corresponds to USD 225 million scaled to a 100% valuation. An offer for a property of an exploration company. The resource has an enormous magnesium content. An Mg/Li ratio of 14 is above average for Argentinian brines and unfortunately also drives up the process costs exorbitantly due to the enormous need for separating agents. I have written about this frequently. As a reminder, HMW & Candelas have Mg/Li ratios below 2.0! It is a significant and unfortunately often underestimated factor in project economics.Less decisive, but also important in this comparison are the grades. Lithium Chile has reported 297 mg/l for Arizaro. The HMW brine of Galan has more than 2.5 times that! And is thus second in the world ranking after the Atacama. Lithium Chile's Arizaro salar is an undeveloped salar with a lack of infrastructure. HMW has the road right next door and the developed route to Chilean harbours, has a workforce and, very importantly, is fully permitted since January! They are allowed to produce!

To summarise: in December, a multiple of approx. 55 US$/t LCE was offered for a low-quality Argentinian brine exploration project. Potential very questionable.Should we or the Galan board now freak out euphorically and be happy about an offer of US$16/t LCE? In view of the exorbitant undervaluation and the prospects of successful financing, my despair and obviously that of the Galan board is limited.By the way, congratulations on the 3m placement in January to Chemphys and TG for his last insider purchase.

Have a nice weekend

P.S. our ‘new’ neighbour Rio Tinto announced the day before yesterday that it will increase the production capacity of ‘Fenix’ by 10,000 tpa LCE.

P.P.S. Since I didn't emphasise it explicitly in my last post (picture of the Pastos Grandes river). Tomorrow the final report of the environmental impact study for Hombre Muerto will be presented and after approval submitted to the State Attorney General`s Office of Catamarca. If the outcome is favourable, the "sword of Damocles" hanging over Candelas (and also over Rio's Fenix project or the 4 billion POSCO project) would be lifted. And this would make a possible sale of Candelas more likely.