Australian mining company Galan Lithium is raising A$25m ($16.6m) to further develop its flagship lithium mine in Argentina. The HMW lithium mine is based in Catamarca province.

The company has received commitments for a A$12m placement to institutional, sophisticated and professional investors at A$0.105 per share. This is 8.7% below the last closing price of A$0.115 and a 16% discount to the five-day volume-weighted average price of $0.125.

Among the participants in the placement is China’s Chengdu Chemphys Chemical, which agreed to an offtake prepayment deal for at least 23,000 tonnes (t) of lithium carbonate equivalent (LCE) throughout the first five years of HMW’s Phase I production life.

Subject to the completion of the definitive offtake agreement, Chemphys will subscribe for up to $4.5m in shares.

Juan Pablo Vargas de la Vega, managing director of Galan Lithium, said: “We are delighted to welcome a number of new investors to our register as well as the participation of Chemphys, which further strengthens the relationship between our companies.

“Funds raised from the offer and the planned Chemphys prepayment provide the means for us to complete this development and keep our planned start to production in the second half of 2025.”

During the Phase I process, Galan has identified 3,200t of LCE in the site ponds and saw a 50% increase in pond flow following connection of new piping from the central-northern part of the project.

“Amid challenging market conditions, we are moving forward with the development of HMW. We remain confident about the economics which underpin this project and the future of the lithium market,” Vargas de la Vega said.

Lithium is a key ingredient in the production of electric vehicle batteries. Last month, Albemarle, the world’s largest producer of lithium, urged governments to intervene to end China’s dominance of the global lithium supply chain.