Galan Lithium Raises A$20M at 21% Premium to Fund Phase 1 Construction
Galan Lithium has locked in a A$20 million equity placement from strategic partner Clean Elements, providing crucial funding to complete Phase 1 construction of its Hombre Muerto West lithium project in Argentina, targeting first production in early 2026.
- A$20 million placement at 21% premium from Clean Elements
- Placement includes shares and options exercisable at A$0.15
- Funds to complete Phase 1 construction for 4ktpa lithium chloride concentrate
- Production expected to commence in H1 2026
- Equity raise replaces debt financing, strengthening balance sheet
Strategic Equity Injection
Galan Lithium Limited (ASX – GLN) has secured a significant A$20 million equity placement from its existing shareholder, The Clean Elements Fund. The placement, priced at A$0.11 per share, represents a 21% premium to Galan’s last closing price, underscoring investor confidence in the company’s flagship Hombre Muerto West (HMW) lithium project in Argentina.
This capital injection is structured in two tranches, each accompanied by unlisted options exercisable at A$0.15, providing Clean Elements with additional upside potential. The placement is subject to due diligence and shareholder approval, with the first tranche expected to settle shortly after a general meeting slated for early September 2025.
Funding Phase 1 Construction Amid Market Challenges
The proceeds from the placement will fund the completion of Phase 1 construction activities at HMW, targeting production of lithium chloride concentrate at a rate of 4,000 tonnes per annum of lithium carbonate equivalent (LCE). This milestone is pivotal, with first concentrate production anticipated in the first half of 2026.
Galan’s decision to pursue equity funding over debt reflects the current challenging macroeconomic environment, where debt financing terms have become less favourable. By opting for equity, Galan aims to strengthen its balance sheet and reduce financing risk as it transitions from development to production.
A World-Class Lithium Asset with Growth Potential
HMW is a multi-decade lithium brine project boasting a substantial resource base of 9.5 million tonnes LCE and a cost profile within the global first quartile. The project’s phased development plan envisages scaling production up to 60,000 tonnes per annum LCE over time, mitigating execution and funding risks.
Lithium chloride produced at HMW is a critical input for lithium iron phosphate (LFP) batteries, which dominate the global battery market. Galan’s strategic partnership with Authium Limited further enhances project economics through innovative processing technology and offtake agreements, de-risking the pathway to production.
Endorsement from Strategic Partner
Clean Elements’ Chairman, Ofer Amir, highlighted the project’s compelling scale, grade, and execution capability, emphasizing their confidence in Galan’s transformative potential within the lithium sector. This investment aligns with Clean Elements’ disciplined approach to backing high-quality lithium assets with strong fundamentals and experienced management.
Galan’s Managing Director, Juan Pablo Vargas de la Vega, expressed optimism about the company’s trajectory, noting the placement as a validation of HMW’s unique attributes despite prevailing industry headwinds. The funding positions Galan to focus on execution during what promises to be a transformational year.
Bottom Line?
Galan’s strategic equity raise not only secures critical funding but also signals robust investor confidence as it advances towards lithium production in a challenging market.
Questions in the middle?
- Will shareholder approval proceed smoothly given the placement’s size and dilution impact?
- How will Galan’s phased scaling strategy adapt if lithium market conditions shift?
- What are the implications of the equity raise on Galan’s share price and future financing options?
