UPDATE 1-Australia's Galaxy Resources to sell tenements in Argentina to POSCO for $280 mln

(Adds background, chairman commentary)

May 29 (Reuters) - Australian lithium miner Galaxy Resources Ltd agreed on Tuesday to sell a package of mining tenements in Argentina to South Korean steelmaker POSCO for $280 million.

The land is located in the northern area of the giant Salar del Hombre Muerto salt flat. Galaxy will retain ownership of all tenements in the southern basin.

The company intends to use the proceeds from the deal to fund development of its flagship Sal de Vida project.

“This transaction with POSCO provides a substantial cash injection which underpins the development of Galaxy’s Sal de Vida brine project in the Catamarca Province of Argentina”, Chairman Martin Rowley said.

Galaxy had earlier appointed JP Morgan Australia to evaluate “strategic options” for its Sal de Vida lithium and potash project in Argentina.

Sal de Vida has the potential to generate total annual revenues around $354 million, scaling up to 25,000 tonnes per year of lithium carbonate and 95,000 tonnes of potassium chloride, according to the company’s website.

The transaction is subject to approval from the POSCO board, the company said in a statement. (Reporting by Aditya Soni in Bengaluru; editing by Richard Pullin)