Lithium company Galaxy Resources has secured an agreement to sell a package of tenements at Sal de Vida in Argentina to Korea’s POSCO for $US280 million ($371 million).
The tenement package is in the Salar del Hombre Muerto northern basin in the Catamarca province, north of Galaxy’s Sal de Vida lithium brine project.
Galaxy will, however, retain 100 per cent of its tenements in the southern area of Salar del Hombre Muerto, which it included in an updated feasibility study for the development of Sal de Vida.
The ASX-listed company plans to use proceeds from the deal to advance development of the Sal de Vida project.
Galaxy chairman Martin Rowley said the cash injection from POSCO would underpin that development.
“The development of Sal de Vida by Galaxy, as a 40-year mine life project producing the equivalent of 25,000t per annum of battery grade lithium carbonate, will be based on the 100 per cent retained reserves and will not include any of the estimated resource contained in the tenements being sold to POSCO,” Rowley said.
The southern tenements contain approximately 4.09Mt lithium carbonate equivalent (LCE) of JORC compliant measured and indicated resource and 100 per cent of the 1.14Mt LCE of JORC compliant reserves.
Galaxy will also form cooperation agreements with POSCO aimed at maximising potential development, operational, infrastructure and logistical synergies for their projects.
“With the geographical coverage of Galaxy and POSCO’s tenements spanning across both Catamarca and Salta Provinces, this transaction is also strategically significant as it means there will now be two new lithium projects developed concurrently on the Salar del Hombre Muerto, with obvious benefits for all stakeholders in the region,” Rowley said.
The agreement, which is conditional on approval from POSCO’s board, is expected to be completed during the third quarter of 2018.