Galan Lithium : Quarterly Activities & Cash Flow Report

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ASX ANNOUNCEMENT

28 July 2022

QUARTERLY ACTIVITIES REPORT

JUNE 2022

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HIGHLIGHTS

• Outstanding initial well test results reported from first Pata Pila pumping well (PPB-01-21) at HMW Project
• • Brine sampling confirmed high grade resource (Li > 910 mg/L)
  • Hydraulic testing demonstrated favourable conditions for high volume brine production (15 - 20L per second)
  • Long term (30-day) pumping tests underway and flowing steadily
• Positive results returned from porosity test (RBRC) on second Pata Pila well core samples (range of 10.21 - 21.0%, mean of 14.1%)
• Pumping tests to be completed on three further wells: a second well at Pata Pila and two wells at Rana de Sal
• HMW Project Definitive Feasibility Study activities continued during the quarter
• First pegmatite lens discovered at Greenbushes South
• • Airborne radiometric, magnetic and DEM survey data processed
  • Interpretation provided 18 key target zones for lithium pegmatites near the mineralising Donnybrook-Bridgetown Shear Zone
  • Further soil samples and rock chips sent for geochemical analysis
• Key appointments
• • Mr Alvaro Henríquez (ex SQM) commences as Geology Manager
  • Ausenco commences as EIA consultant
• Galan continues to adhere to Covid-19 protocols in Argentina, Chile and Australia with personnel and community health and safety its number one priority
• Cash on hand at end of quarter was ≈A$54 million

The Board of Galan Lithium Limited (Galan or the Company) is pleased to provide this Quarterly Activities Report for the quarter ended 30 June 2022 to the date of this report. The main focus for the quarter was the ongoing Definitive Feasibility Study (DFS) and associated works/activities and further drilling at its high-grade Hombre Muerto West (HMW) Project in Argentina as well as continued exploration at the Greenbushes South lithium project in Western Australia.

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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

OPERATIONS

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Figure 1: Galan's HMW and Candelas concessions in Argentina have a current combined total Indicated Resource of ~ 3Mt

LCE @ 858mg/l Li.

Hombre Muerto West (HMW) Project

On 14 July 2022, Galan provided an update on its well drilling and other DFS activities.

Galan's Managing Director, JP Vargas de la Vega, said:

"We are extremely pleased with the outcomes from the 3-day constant rate pump test at the first Pata Pila well, PPB-01-21. High lithium grades, porosity and brine flow rates are a powerful combination for driving operational efficiency and economic performance. These outstanding hydrological outcomes are paramount to the project DFS foundations and further validates the world-class nature of the lithium brine resource we hold at HMW.

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The results are a ready demonstration of the substantial progress we are making in advancing the Project. They also represent key de-risking of the planned HMW development. While we are focussed on a substantially lower risk, conventional process route and project development at HMW, we are ensuring that every aspect of our planned operation at HMW is comprehensively evaluated and proven, both technically and commercially."

Well pump testing program update

The well pump testing program is advancing at the HMW Project to evaluate the hydraulic properties of the target brine bearing aquifers. A series of hydraulic tests have been successfully performed on the first pumping well at Pata Pila (PPB-01-21) including a step test and constant rate test.

Long term (30-day) pumping tests at PPB-01-21 began on 30 June 2022 and are set to conclude on 30 July 2022. Brine levels and samples for geochemical analysis will be collected throughout the testing period. This series of pump tests are planned to be conducted across a further three wells, being a second well at Pata Pila and two wells at Rana de Sal. Testing of the first well at Rana de Sal (PBRS-01-21) has now commenced.

All well pump test data is to be incorporated into the upcoming HMW Resource/Reserve model. This will form part of the current DFS for the HMW Project, being undertaken by Hatch Engineering.

Constant rate test outcomes at Pata Pila: High lithium grades and brine flow rates

The constant rate test was performed for 72 hours and observed with three (3) different piezometers. Aquifer response during the pumping test indicates favorable conditions (permeability) for brine production with expected flowrates between 15 - 20 L/s per well at Pata Pila.

Fourteen brine samples were collected throughout the duration of the test and analyzed for lithium (Li) at the Alex Stewart laboratory. Chemical results positively confirm a high-grade brine resource, with an increasing Li grade during pumping, stabilising at approximately 910 mg/L (see Figure 2 for results). The site operations and sampling procedures were supervised by SRK Consultants.

Figure 2 - Lithium grade [mg/L] samples obtained during the 72 hours constant rate test at PPB-01-21.

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Porosity test (RBRC) outcomes at Pata Pila

Data from the first batch of twenty (20) core samples obtained from the Pata Pila Diamond Drillhole undergoing Relative Brine Release Capacity (RBRC) testing has been received. These analyses were conducted at the Daniel B. Stephens & Associates (DBS&A) laboratories based in Albuquerque, USA.

The RBRC results are positive with specific yield values consistent with reported values in the literature for medium-to-fine sand lithologies, and as previously described with respect to the core samples. The RBRC values ranged between 10.1% and 21.0%, with a mean specific yield value of 14.1%.

A second batch consisting of 39 core samples has already been selected by SRK geologists on site and is being prepared for transportation to the DBS&A laboratory. This batch includes samples from both Rana de Sal and Pata Pila.

Figure 3 - Brine discharge at PPB-01-21 during long term pumping test.

Candelas

Candelas is Galan's other Preliminary Economic Assessment (PEA) study level project and is located on the south-east side of the Hombre Muerto West salt flat in Catamarca, Argentina.

Apart from project and environmental monitoring, no significant work was undertaken on the Candelas project during the June 2022 quarter.

Greenbushes South

As announced on 15 June 2022, the Company provided the following update on its ongoing exploration activities at the Greenbushes South Lithium project (joint venture between Galan (80%) and Lithium Australia Ltd (ASX: LIT) (20%)) (Greenbushes South). The project is located approximately 3 kms south of the world-class Greenbushes Lithium Mine which is owned and managed by Talison Lithium Pty Ltd.

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Airborne geophysics processed and key target zones identified

Galan has received the processed data and target generation report from the recent airborne geophysical survey campaign for its Greenbushes South tenement (E70/4790). This survey provided high-resolution radiometric and magnetic data from a fixed-wing aircraft flying at an average of 45 metres of terrain clearance, a significant improvement for resolution over previous publicly available data sets (Figure 5).

Southern Geoscience Consultants (SGC) provided processing and interpretation of this new data as well as the development of key target zones for lithium-bearing pegmatites. Target generation incorporated structural and lithological information (provided by the airborne data), as well as field mapping and surface geochemistry undertaken by Galan.

The new magnetic, radiometric and DEM data gives more precision to the location of the mineralising Donny-Brook Bridgetown Shear Zone (DBSZ), associated with the Greenbushes pegmatite. The final report from SGC identified twelve (12) pegmatite targets within Galan's granted E70/4790 tenement, and an additional six (6) pegmatite targets within Galan's pending tenements (Figure 6).

Sampling and mapping program commenced; pegmatite outcrop discovered

Following the above, Galan initiated a soil sampling and field mapping program over the first of the newly identified targets on E70/4790 (GS11 target zone; Figure 7).

Field mapping activities over the GS11 target area revealed an outcrop of approximately 200 m long by 40 m wide pegmatite. This pegmatite has similar macroscopic mineralogy to those pegmatites described at the Greenbushes Lithium Mine to the north. The assemblages are albite-quartz ± microcline ± muscovite ± garnet. The pegmatite lens hosts several tourmaline-rich zones at a metre scale and is recognized by coarse-grained tourmaline and high abundances of interstitial albite quartz and muscovite (Figure 4).

Galan has sampled four representative rock chip samples from the surficial pegmatite at GS11. A partially completed soil assay program has also been undertaken, with 65 soil samples to date at 50 m x 100 m grid spacing across the potential target zone centred over the pegmatite outcrop. The soil sampling program is aimed at delineating potential pegmatites at depth through the detection of elevated levels of pathfinder elements at the surface (As, Sn, Cs, Ta, Rb).

Galan has submitted these rock and soil samples for assay and is awaiting results. Completion of the soil grid over GS11, and further follow-up soil and rock chip sampling work on other targets along the major structure that hosts the mineralisation are planned in Q3 2022. The results will help guide the geophysical survey to test for blind pegmatites.

Conservation Management Plan reaches final revisions

Galan has also received its final revisions from the Department of Biodiversity, Conservation and Attractions (DBCA) for the Conservation Management Plan (CMP) for its planned exploration activities on pending Greenbushes South tenements (E70/4889, P70/1702 & P70/1703). The CMP outlines the proposed exploration and prospecting activities, management, and communications for work within the Hester State Forest (30) / Proposed Nature Reserve (154).

Galan has provided the DBCA with its planned soil sampling and ground geophysics activities within these state forests. Planned activities are aimed to commence during Q3 2022. The DBCA has indicated that subject to the final revisions of the CMP, the pending tenements will then be submitted for ministerial approval to undertake these low-impact exploration activities.