Lithium Chloride Pathway, page-28

Gday Bucks,

CAPEX - The 2020/2021 PEA utilised a fairly large contingency in comparison with the majority of our peers. The Capex was $338m without contingency and $439 with a 30% contingency.

A few things have changed since December last year worth of noting, I do thatbelieve $300m allows for a healthy contingency:

Increases
- Inflation has gone up, so no doubt you have to account for inflationary increases
- The company will likely build a greater number of ponds than what would have previously yielded 20kt LCE (Will be confirmed in the DFS in Q1)

Decreases
- Reduction in CAPEX as there will be no carbonate plant, in addition the infrastructure + utilities that are required to operate a carbonate plant are taken away


OPEX

The PEA delivered an OPEX of US$3,348/t Li2CO3. Given the molecular weight of carbonate & chloride, the conversion between the two at the assumed grading of the chloride of 4.8% Lithium Metal (29% LiCl or 25% LCE), the 2020 OPEX cost to produce 1 tonne of Chloride would have been in the ~US$900/t range

What has changed ?

- The assumption in the 2020 PEA was that the ponds yield a chloride solution of 4.8% Lithium Metal, Lab results since have proven +6% Lithium Metal (I am reading whispers that 6.5% is being produced from the Pilot Ponds). Means you have a 25% higher grade chloride from the same number of ponds (Higher Grade than previously modelled)
- Reduction in reagents, energy, manpower, maintenance of plant, consumables etc by only going down the Chloride path
- Inflation will need to be taken into account for increases
- Economy of scale, building more ponds will likely lower the overall OPEX

The above reasons are why I estimate that Galan will be able to produce a tonne of Lithium Chloride (Grading 32-33% LCE or 36-37% LiCl) will be in the range of US$1,000-US$1,500/t (I honestly believe this is being conservative, I wouldn't be surprised to see it come in lower in the US$800-US$1,100 range)

US$900-