Galan Lithium : Excellent PEA Results for Candelas Project

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ASX ANNOUNCEMENT

30 November 2021

Excellent Preliminary Economic Assessment Results for

Candelas Project in Catamarca, Argentina

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Highlights:

• Robust economic results, unleveraged Pre-tax NPV of US$1,225m (8% discount rate) and IRR of 27.9% with a four (4) year payback period
• Long life project 25 years of 14ktpa of battery grade lithium carbonate (LCE)
• Competitive cash production cost for Li2CO3 of US$4,277/t positioning the Candelas project as a low-cost developer in the lithium industry
• Galan now has two (2) PEA study level projects with combined long term production potential of 34ktpa LCE
• Long term average real lithium price assumption (2025-2040) of US$18,594/t LCE used as the basis for the economic assessment
• Initial capital cost of US$ 408M (US$ 302M direct costs)
• Average life-of-mine annual pre-tax EBITDA of US$188m
• Scoping Study/PEA completed under the guidance and assistance of engineering consultancy Ad Infinitum

Galan Lithium Limited (ASX: GLN) (Galan or the Company) is very pleased to announce the results of the Preliminary Economic Assessment (PEA) for its 100% owned Candelas Project ("the Project") in Catamarca Province, Argentina. The PEA, at a minimum, complies with the Canadian NI 43-101 regulation known as a PEA and is equivalent to a JORC Scoping Study.

The Study estimated a production profile of 14,000 tonnes per annum of battery grade lithium carbonate product including some technical grade product for the first three (3) years. The PEA process has provided significant economic outcomes for the Candelas Project which Galan believes can be optimised and enhanced further to refine the Project's obvious potential.

The preparation of the Project's PEA was managed by Ad Infinitum and Galan's Project Manager for the engineering inputs including the recovery method, project layout and infrastructure, capital cost and operating cost estimates and overall economic evaluation. The other sections of the study were managed by consultants and employees of Galan Lithium Limited.

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Level 3, 30 Richardson Street, West Perth, WA 6005	PO Box 396, West Perth, WA, 6872
Ph. [phone]	Fax. [phone]
www.galanlithium.com.au	ABN: 87 149 349 646

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Key financial highlights are presented in Table 1.

Table 1: Preliminary Economic Assessment Results

Parameters	Units	Values
Lithium Carbonate Production	Tonnes/year	14,000
Project Life Estimate (excluding ramp-up)	Years	25
Capital Cost (CAPEX)	US$M	408
Capital Cost (ex-contingency and indirects)	US$M	302
Average Annual Operating Cost (OPEX)	US$/tonne	4,277
Average Li2CO3 Selling Price (2025-2040)	US$/tonne	18,594
Average Annual EBITDA	US$M	188
Pre-Tax Net Present Value (NPV)	US$M	1,225
After-Tax Net Present Value (NPV)	US$M	660
Pre-Tax Internal Rate of Return (IRR)	%	27.9
After-Tax Internal Rate of Return (IRR)	%	20.9
Payback Period (After-Tax)	Years	4.75

Galan's Managing Director Juan Pablo (JP) Vargas de la Vega said:

"We are delighted by the strong and competitive results of the Candelas Project PEA. Our projects continue to show healthy economics and upside despite using a conservative long term price assumption at a time when new lithium projects are scarce. Galan now has two potential production fronts combining for a long-term production rate of 34ktpa of LCE. This rate could be even higher once we finish drilling at our flagship HMW project.

We remain excited about the potential value add for our shareholders once we enter the lithium market with prices expected to be +US25k/t LCE. Our projects would now be among the lowest cost of any future producers in the lithium industry, due to their high grade and low impurity setting, green credentials and a low carbon footprint. Galan is excited to be a part of the solution to the global decarbonisation story.

I would like to thank all of Galan's teams in Argentina, Chile and Australia, and the strong support from the Board to take this study forward. Special thanks to the Ad Infinitum team in Chile that understood our challenge and worked with us to deliver the study on time and on budget.

Galan now has a solid commercial base to move forward with a clean, proven, low tech and low energy solution with no JV or non-statutory royalties involved. We also believe we have capability to further review and reduce Opex and Capex. We have learnt so much more about Candelas on this journey and will continue to apply our findings in optimising our next steps at the Pre-Feasibility and/or Definitive Feasibility studies. Importantly, we will also continue to review the possibility to produce lithium chloride concentrate to reduce time to market and capital expenditure at both of our projects.

As a result, we remain determined to bring our projects to market in the shortest possible time so that we can supply lithium for future lithium battery requirements needed for electric vehicles."

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Cautionary Statement

The Preliminary Economic Assessment (PEA) is a preliminary technical and economic study (equivalent to an enhanced JORC Scoping Study) of the potential viability of the Candelas Lithium Brine Project which is required to reach a decision to proceed with more definitive studies. It is based on preliminary/low- level technical and economic assessments that are not sufficient to support the estimation of Ore Reserves or provide certainty that the conclusions/results of the PEA will be realised. Further exploration and evaluation work and appropriate studies are required before Galan will be in a position to estimate any Ore Reserves or to provide any assurance of an economic development case.

The economic analysis results should be treated as preliminary in nature and caution should be exercised in their use as a basis for assessing project feasibility. The PEA was based on material assumptions including assumptions about the availability of funding. While Galan considers all of the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the PEA will be achieved.

To achieve the range of proposed feasibility studies and potential mine development outcomes indicated in the PEA, additional funding may be required. Investors should note that there is no certainty that Galan will be able to raise funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of Galan's existing shares. It is also possible that Galan could pursue other 'value realisation' strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce Galan's proportionate ownership of the project.

All of the material included in the mining schedules used in the PEA are within Galan's Indicated Mineral Resources.

Process and engineering works for the PEA were developed to support capital and operating estimates (and following AUSIMM Guidelines for this study level) and given the preliminary and confidential nature of the plant information, the capital cost margin of error is ±30% on the 'factored cases' estimated figures and operating cost is ±30%. Key assumptions used in the PEA are outlined in the body of this announcement. Galan has concluded it has a reasonable basis for providing the forward-looking statements in this announcement.

The Mineral Resources information in this report is extracted from the ASX announcement entitled "High Grade Maiden Lithium Resource Exceeds Expectations" dated 1 October 2019 available at www.galanlithium.com.auand www.asx.com. Galan confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. Galan confirms that the form and context in which the Competent Person's findings are presented have not been materially modified.

Given the uncertainties involved, all figures, costs and estimates quoted are approximate values and within the margin of error range expressed in the relevant sections throughout this announcement. Investors should not make any investment decisions based solely on the results of the PEA.

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Project Background

Location

The Candelas Project ("the Project") is part of the Hombre Muerto basin, one of the most globally prolific salt flats, located in the Argentinean Puna plateau of the high Andes mountains at an elevation of approximately 4,000 m above sea level. The Project is in the geological province of Altiplano Puna, 90 km north of the town of Antofagasta de la Sierra, province of Catamarca, Argentina as shown in Figure

1. The Project is located to the East and South of the Salar del Hombre Muerto. Candelas lies approximately 40km ESE of the Hombre Muerto West project under feasibility study, also by Galan. The Candelas Project is hosted within a ~15km by 3-4km wide structurally controlled basin that has infilled with sediments that host the Li bearing brines.

The Project is in close proximity to other world class lithium projects owned by Orocobre (formerly Galaxy Resources), Posco and Livent. It is around 1,400 km northwest of the capital of Buenos Aires and 170 km west-southwest of the city of Salta (in a straight line).

Tenements

The Candelas Project comprises fourteen exploration permits (Candelas and Jazmin), covering an area of ~24,072 hectares.

Design work shows the Candelas brine wells will be located in the North of the Candelas tenements. The main objective of these wells is the extraction of brine, rich in lithium, from the Salar which is then pumped to the first preconcentration solar evaporation ponds. The preconcentration and precipitation ponds will be located in the east of the Candelas tenements away from the Rio De Los Patos river that feeds the salar.

Climate

The climate in the Project area is classified as cold, high-altitude desert with sparse vegetation. Solar radiation is intense (especially during the summer months of October to March) resulting in high evaporation rates. Very strong winds are also typical, reaching speeds up to 80 km/h during the dry season. However, in summer, warm to cool winds normally develop after midday and reduce in strength during the evening hours.

Precipitation data from meteorological sources showed a mean annual precipitation of around 86.4 mm. Precipitation typically occurs between the months of December and March, during which about 82% of annual rain fall occurs. From April to November, it is typically dry with average daily mean temperatures of approximately 5.3°C

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Figure 1: Candelas Project, Hombre Muerto Salar, Catamarca Argentina