The Galan Lithium Ltd (ASX: GLN) share price is having a day to remember on Thursday.
In morning trade, the ASX lithium stock was up over 30% to 91 cents.
Its shares have since pulled back but remain up 12% to 78 cents.
Why is the ASX lithium stock rocketing?
Investors have been buying the company's shares today after the lithium developer announced an agreement with one of the world's largest miners.
According to the release, Galan Lithium has signed a binding term sheet with Glencore for offtake of up to 100% of its premium lithium chloride concentrate from the Hombre Muerto West lithium project in Argentina.
In addition, Glencore has offered to provide or facilitate a secured financing prepayment facility for US$70 million to US$100 million, subject to conditions precedent being met.
Management believes the agreement endorses Galan's low-cost, low-risk lithium chloride development strategy to become the next lithium producer in Argentina.
It also revealed that discussions for the larger Phase 2 Hombre Muerto West development are open and well advanced.
But it will still be a little time until we see phase 2. As things stand, phase 1 is scheduled to commence production during the first half of 2025.
The ASX lithium stock's managing director, Juan Pablo Vargas de la Vega, said:
We are very delighted to announce Galan's achievement of this very significant milestone on the path towards commencing commercial production at HMW in H1 2025. The agreement with Glencore is a validation of the quality our world class project and endorses the calibre and experience of Galan's team.
Our agreement with Glencore significantly de-risks our project and we are very well poised to secure finance for Phase 1 of the HMW Project. Importantly, Glencore's funding assistance via the prepayment facility endorses our lithium chloride concentration strategy to deliver the HMW project, and provide returns to shareholders, in a shorter time frame.
