Galan Lithium (ASX: GLN) has secured key funding and signed an offtake agreement in a major breakthrough as it progresses its world-class Hombre Muerto West project (HMW) in Argentina.

The offtake and operating agreements with Australian firm Authium will not only provide Galan with a market for the sale of 45,000 tonnes of lithium chloride concentrate to a production facility in the US over a six- to 12-year period, but also deliver approximately $9.4 million in offtake prepayments.

Notably, the deal will help fund, supply and operate processing technology at HMW to position Galan with materially lower upfront capital and operating costs.

Superior outcome

Galan said it had elected to move ahead with Authium after assessing its offer against a previously announced memorandum of understanding with Chengdu Chemphys Chemical Industry.

The company said the partnership with Authium would provide superior financial, technical and timing benefits to other identified alternatives and yield the best outcome to complete HMW Phase 1.

Managing director Juan Pablo Vargas de la Vega said that Galan would be able to significantly reduce its capital costs to complete HMW Phase 1 by removing $41.5m of capital expenditure relating to the liming plant.

Galan also expects it to reduce operating costs by around 18% relative to the HMW Phase 1 definitive feasibility study.

Drawdown facility

Galan will also benefit from the ability to draw down on offtake prepayments of up to $9.4m over a six-month period commencing from the date lithium is processed through the plant.

The two companies are now working to secure an additional working capital facility, should it be required.

Alongside the agreements with Authium, Galan has received firm commitments for a placement of approximately $13m to institutional, sophisticated and professional investors.

The company is also preparing to conduct a share purchase plan to raise up to $4m.

Greater efficiency

“This funding package will see Galan move into initial production with greater efficiency while keeping our timeframe for first concentrate production within the first half of 2026,” Mr Vargas de la Vega said.

“We appreciate the path to this point has been challenging and we would like to take this opportunity to thank our loyal and patient existing shareholders for their support and to welcome our new shareholders.”

“In what has been a prolonged and testing commodity environment, Galan will now be able to transform into a lithium production company, which speaks volumes for the quality of HMW.”