Key Agreements Executed with Ganfeng
Firefinch Limited (ASX: FFX) and a wholly owned subsidiary of Jiangxi Ganfeng Lithium Co. Ltd, have executed a suite of full form legal agreements to progress the 50-50 Firefinch-Ganfeng incorporated joint venture (JV) at the Goulamina Lithium Project,together, the Goulamina JV Transaction).
Firefinch Managing Director, Dr Michael Anderson, also confirmed a new ASX-listed lithium-focused entity will be called Leo Lithium Limited. The name Leo was chosen as the lion is an iconic African animal, commonly referred to as “King of the Beasts”, and known for demonstrating strength, authority and fierce pride loyalty – fitting for a company run for its shareholders. The components of Lion, Li-ion and the connection to Africa, are very appropriate for a company with a world-class Malian lithium asset. Sundiata Kieta, the founder of the Malian empire in the 13th century was known as the Lion of Mali.
On listing, Leo Lithium is expected to be a leader in the ASX lithium landscape:
- Goulamina will be the next large scale global lithium hard rock project to enter production, and the first of its kind in West Africa, with production targeted for 2023.
- A partnership with the world’s largest lithium chemicals producer Ganfeng, which has committed to taking up to 100% of the spodumene concentrate produced from Goulamina.
- Substantially funded to production with total funding commitments of up to US$194 million.
- Prior to listing, Goulamina is expected to have reached FID and commenced engineering and preliminary works.
- A current Mineral Resource of 109Mt at 1.45% Li2O for 1.57Mt contained Li2O, with substantial upside potential.
- Current Ore Reserve of 52Mt at 1.51% Li2O for 0.79Mt contained Li2O.
- The scale of Goulamina’s Resource supports organic growth via further potential expansions in production capacity (subject to market conditions).
- Developing best-in-class responsible mining (ESG) credentials, underpinned by the Company’s existing strong performance at its Morila Gold Operation in safety, local workforce participation, commitment to maximising local expenditure, strong community and government relationships and green power initiatives.
- The October 2020 Definitive Feasibility Study (DFS) for Goulamina reported a pre-tax NPV (8%) of approximately A$1.7 billion using US$666/tonne 6% minimum Li2O spodumene concentrate; the price is now ~US$850/tonne.2
“Another significant milestone has been achieved in progressing Goulamina toward construction and production. Formal documentation has been completed, and satisfaction of the remaining conditions precedent to completing the US$194 million Ganfeng deal is well underway,” Dr Anderson said.
“In consultation with our partner Ganfeng, we have also agreed to bring forward FID to the end of this year. Off the back of a positive FID, we will be in a very strong position to demerge Goulamina into a dynamic new ASX-listed lithium player, Leo Lithium, and list in early 2022. All Firefinch shareholders will receive a pro-rata entitlement to Leo Lithium shares, together with the opportunity to increase their interest, should they wish, under a planned entitlement offer.
“On completion of the entitlement offer and listing, Leo Lithium is expected to have a fully funded interest in a global scale lithium development with pre-production engineering underway and imminent commencement of construction.
“Firefinch will be aligned with its shareholders as it intends to retain up to 20% of Leo Lithium and will support Leo Lithium in building operational capability and a world class management team.”
Under the terms of the JV, Ganfeng is obliged to contribute the second equity investment of US$91 million within ten business days of Goulamina FID.
In the period since announcement of the Goulamina JV Transaction on 16th June 2021, Firefinch and Ganfeng have worked collaboratively on engineering scope and design, including the incorporation of suggested changes to the processing flowsheet based on Ganfeng’s lithium processing expertise and experience at other similar projects.
Firefinch and Ganfeng have now appointed Lycopodium to execute an update of the October 2020 DFS (Updated DFS), which will support FID.
In light of the prevailing strong lithium market conditions, Firefinch and Ganfeng have agreed to expedite FID, and are now targeting completion of the Updated DFS and FID in the December Quarter, 2021.
The early completion of FID will also mean Ganfeng will provide the second cash investment of US$91 million and arrange debt funding of up to US$64 million earlier than initially anticipated.
For further information please visit: https://firefinchltd.com/