Ann: HMW Phase 1 Funding & Offtake Secured with US Based Partner, page-38

I have read this announcement a couple of times now, I don’t know if I’m missing something…

First the deal itself with Authium… nanofiltration tech from the traditional liming plant. My understanding is this increases Capex however decreases costs per ton. I understand Authium is footing the bill for the plant anyway so it seems like a win.

However, I can’t find any mention of stage 2, 3 or 4 that doesn’t just refer back to the DFS speak which will have fundamentally changed since this announcement. Are there any previsions put in this deal to force Authium to expand on to stage 2? Do they become the gate keepers for the expansion?

Considering Authium is footing the bill for stage 1, and no doubt focused on cost savings, are any design measures being implemented for stage 2 expansion?

If the site turns to nanofiltration for the entire staged upgrades, won’t this significantly increase capex for each stage going forward? Or are they planing to build a liming plant separate to this 5kpta operation?

In relation to the 45kt (LCE) over the 6-12 years, considering 5kpta output is 9 years, how are they expecting possible rates to have that level of output in 6 years?

If the contract is not renewed after the 45kpta, who owns the plant? Does Galan take control?

The $23m cash seems to have been outlayed leaving $0 in the bank for Galan. Considering no company will leave itself with no money during a ramp up, I think it’s safe to assume there will have to be another credit raise prior to production if they can’t find another line of credit… either way, this raise feels a little short of what they really should have done. Traditionally on construction, I’ve seen it pretty common place for companies to touch on lines of credit during the build to keep costs assigned correctly. This won’t be open to Galan till after production.

there is a us$6m line of credit available to them at a rate of SOFR +6% (after 6 months.) Considering what we have here, that interest rate if the full us$6m was used is around us$54k a month, or us$660k per year, it’s fairly expensive considering that credit is potentially from first production… if there was a ramp up period needed or issues caused along the way on authiums end (or ours) this tiny debt could start to hurt. And considering percentage points in the project itself are on the line…. Hmm

This whole deal is questionable.. they have thrown out their DFS and gone off script, I feel like they are somewhat under the mercy of Authium. I can’t see any penalties if Authium don’t deliver.

I not sure this deal can justify how Renault’s deal is as easily thrown out as it was, and have absolutely no idea how this moves on to stage 2 from here without the whole lithium industry going back to a market where offtakes fund everything. It’s great we don’t have to foot the plant build… however control in some regards feels a little lost, which is weird when no percentage points in the project have been lost.

See what the webinar says tomorrow.