This article is a sponsored feature from Mining.com.au partner Leo Lithium Holdings Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
“Success occurs when opportunity meets preparation.”
Those words from late American author and motivational speaker Zig Ziglar are as apt as any to describe the journey of emerging lithium miner Leo Lithium (ASX:LLL).
Leo Lithium is developing the ‘world-class’ Goulamina Project in Mali – a pure-play hard rock lithium project, which will be the first of its kind in West Africa.
Goulamina is being developed in a 50:50 joint venture with Ganfeng, China’s largest lithium chemical producer, which is providing funding, offtake, and operational support to de-risk development.
Knowing that Goulamina is one of the few global spodumene projects with financial investment decision (FID) approved and in the execute phase, Managing Director Simon Hay explains pending success all comes down to preparation.
The outlook for Leo Lithium looks incredibly powerful – Goulamina has thick pegmatite intercepts, is open at depth and along strike, meaning there is scope for the resource to continue growing.
The MD explains that while construction works continues to ramp up on site with delivery of key equipment to now start, Leo Lithium has been working on many aspects in parallel to take Goulamina to the next level.
“We’re active on all different fronts. We’re active on geology, mine planning, on the project”
“We’re active on all different fronts. We’re active on geology, mine planning, on the project. We’re now pushing into the operational side of things, we’re engaging with the Mali community and government, we’re engaging trucking contractors, and we’re engaging stakeholders in Côte d’Ivoire as well as Mali. The maturity of the company and the whole project is advancing at a meticulously planned rate and it’s on track.”
The Goulamina Project also remains on budget, with engineering and design advancing and the construction supervision team now on site, with updated and detailed construction plans to be provided in Q2 2023.
Leo Lithium intends to expand Goulamina production in stage two to about 831,000 tonnes per annum of spodumene production after stage one is fully operational, based on the first five years of steady state stage two production. Early conceptual works are getting underway and an outline of the project plan is expected to be announced in H2 2023. This work will in part inform the execution strategy and plan for stage two.
Hay notes that in order to develop Goulamina stage one Leo Lithium needed a management team with technical, operational experience across lithium and West Africa. Experienced Perth-based executive Ron Chamberlain was appointed Chief Financial Officer (CFO) and Joint Company Secretary.
Mining engineering executive Tim Richards recently joined as Chief Operating Officer. With over 20 years of mining experience including in West Africa, he has worked across multiple projects in Ghana and Mauritania, as well as in South Africa.
Meanwhile, Alan Rule was appointed as Non-Executive Director, and follows the resignation of Mark Hepburn. Rule has covered the role of CFO for a number of ASX-listed mining companies with operations and projects in Australia and Africa including Galaxy Resources, a lithium producer. At a board level, Rick Crabb was appointed Non-Executive Chairman. He brings over 30 years of high-level mining experience in Australia and Africa.
Parallel planning
With the A Team now secured, Hay says that maintaining the project’s planned schedule is paramount.
The MD explains that the project schedule continues to outline a 27-month construction and commissioning timeline, which started in February 2022. The critical path continues to run through concreting, installation of the ball mill, supply, and installation of plant buildings, and electrical services. The installation of the overland water piping package from Sélingué Dam is now being designed (after ground truthing) and will remain a key area of focus due to the importance of providing site process water.
All areas of the plant are planned to undergo mineral commissioning in Q2 2024 culminating in the first product towards the end of the quarter. The production ramp up schedule will be further refined over the next 3 months and will be a key responsibility of Chief Operating Officer Tim Richards.
During the 2022 resource definition drilling campaign, Leo Lithium drilled 60 reverse circulation (RC) holes (including 6 pre-collar RC holes) for 9,292m and 17 diamond (DD) holes (including 6 diamond tails) for 3,428m. In Q4 2022, significant intersections were reported at the Danaya Domain with resource drilling revealing thick, ‘high-grade’ spodumene intercepts, followed by further ‘high-grade’ drilling results.
Since the last published Mineral Resource Estimate (MRE) on 20 July 2020, the Danaya mineral resource has increased by more than 150% to 56.1Mt @ 1.24% Li2O. The indicated resource classification at Danaya expanded by 213% to 24.4Mt @ 1.34% Li2O, and the total Goulamina resource base increased by 31% from 108.5Mt @ 1.45 % Li2O to 142.3Mt @ 1.38% Li2O.
While such an upgrade is impressive, Hay chimes in that he had already flagged it would happen for over a year, so the move had not come as much of a surprise to most investors.
Drilling at the Northeast Domain is ongoing with one reverse circulation (RC) rig and one diamond (DD) rig on site, with a further resource update targeted for about June 2023 following a 31% upgrade in the existing JORC compliant resource in mid-January, the MD notes.
Once the resource drilling is completed, Leo Lithium will then move onto geotechnical and sterilisation drilling.
“These drill results are fantastic, and that resource update takes us to 142 million tonnes of resource and we’re clearly in the top 10 and we’ll be approaching the top 5 scale spodumene resources globally. So, it’s becoming clearer each day that Goulamina is a terrific globally significant deposit.
From there we will look at the reserve. We’ll then hand it over to the mining engineers and they’ll look at the upgraded resource and then reshape the mine plan. We’d then expect some conversion of that new resource into reserve to grow our life of mine beyond 23 years.”
Plant design, engineering, and drafting
In total, about 80% (by value) of EPCM tender packages have been issued to vendors so far.
Leo Lithium awarded Lycopodium the contract for engineering and procurement (EP) and associated project management (PM) services for the Goulamina Project stage one. Valued at some $22.7 million, the EP and PM contract will be executed over the next 12-18 months. The project transport and logistics contract has been awarded to coincide with the planned completion of manufacturing or supply of various goods. The first shipments are expected to arrive on site during the current quarter.
The concrete installation, steel, and platework fabrication contracts were awarded during the December quarter.
DSO the way to go!
Hay notes that detailed planning has started into how its stage one product will be transported from mine site to port and eventually to end users. He says Leo Lithium is now assessing trucking contractors to move the spodumene concentrate from mine to port, which is most likely to be in Côte d’Ivoire, where the company has signed a 10-year contract for the storage and ship-loading of concentrate. While it’s still early days with first spodumene concentrate product on track for Q2 2024, the company will require a fleet of about 250 trucks over a 6-7-day cycle when at full rate.
In advance of spodumene production, Leo Lithium is examining the export of Direct Shipped Ore (DSO).
Hay says the reasons for pursuing DSO were obvious.
“We’re looking at DSO because one, the price is so positive that we can make a good margin exporting DSO. Secondly, it enables us to commission some parts for the project early. Rather than wait until mid-2024 we can bring some aspects forward including drill and blast, mining, and crushing. That’s all tested this year and not next year.
“So, with that preparation time we get to optimise and refine it and learn early. De-risking project ramp-up, it’s important”
So, with that preparation time we get to optimise and refine it and learn early. De-risking project ramp-up, it’s important. And thirdly, a key one of course is bringing forward revenue. If we didn’t do DSO our first revenue wouldn’t come until mid-2024, this can accelerate it by 6, 9, maybe even 12 months. And fourth, the market needs the lithium feedstock.”
Early stage planning has been completed targeting two 30,000 tonne DSO shipments in Q4 2023. The mine schedule and starter pit concept were developed with the DSO area demarcated from the construction activities so as not to impact the stage one schedule. Early engagement with various operational contractors has commenced with a view to understanding acceleration options and early mobilisation. Leo Lithium’s JV partner Ganfeng is supportive of the concept and interested in purchasing the DSO, Hay adds.
Leo Lithium will use the DSO operation as a means of assessing trucking contractors before appointing a contractor for the longer term business of spodumene transport.
Hay adds: “With DSO we haven’t yet worked out the exact trucking frequency but it could probably be half of spodumene trucking rate. If we get to start at a slower rate, we start with a less valuable product, so it’s a great way to test that part of the operation as well.”
In essence, the earlier and more prepared Leo Lithium engages the trucking contractor the more time it has to iron out any kinks when transporting the product from Goulamina ramps up.
The initial focus on product transport logistics is centred on analysing the regional bulk haulage market in the preferred transport corridor from the Goulamina site to Abidjan, Côte d’Ivoire. The Abidjan Port is the critical seaport and one of the most prominent African deep-water ports. It also serves as a transhipment hub for Mali and Burkina Faso but is located some 1,000km from Goulamina.
The 10-year contract provides port access and services, including product unloading, storage and ship loading of Goulamina spodumene concentrate product at the Abidjan Port. The agreement stipulates a minimum product throughput of 250,000tpa, with product receival and export to start from 1 July 2023.
Hitting the ground running
In parallel with that, major site works are also underway, including the pioneer camp and services commissioned. As part of the pioneer camp construction, 73 modular buildings were built, and the mobilisation of the first teams occurred during the period.
Earthworks activities have advanced in the plant area (including the grinding, magnetic separation, flotation, reclaim, and primary crusher areas) and the tailings storage facility (TSF) in line with the plan. This results in multiple work fronts now available for concrete activities including the temporary construction offices and permanent accommodation, which will occur in Q1 2023.
Hay notes that Leo Lithium will have equipment delivered to site likely by the end of the current quarter.
“We placed orders last year, that equipment is being fabricated now in China and Asia, and we’re having some of our team inspecting completed equipment. The team was in China to inspect the ball mill and now it’s completed it needs to be boxed up and put on a ship to Mali. There’s a whole bunch of equipment coming late this quarter and into the second quarter that we’re well and truly prepared for.”
ESG starts with community
Leo Lithium has now contracted a senior Environmental, Social and Governance (ESG) professional to develop a Sustainability Program in 2023. Initial tasks include conducting a materiality assessment, choosing an ESG framework and preparing the company’s first sustainability report.
The company continues to work on developing strong ties with local communities. Company representatives from the Community Department meet regularly with the communities to provide updates on the project including upcoming impacts as well as opportunities for employment and supply of goods and services, as outlined in the Stakeholder Management Plan.
At the end of Q4 2022, about 120 community members were employed on the Goulamina Project and 100% of unskilled jobs were held by Malians, on average 70% of the skilled jobs were held by Malians and 50% of supervisors were Malians.
The MD notes: “Our workforce is growing on site, so now we have over 400 contractors and staff on site. Of those 400, about 120 are locals from villages just 20-30km from site. This time last year we had maybe 15 employed and 3 months ago it was about 70 and now it’s 120. It’s growing and that translates to an economic benefit to the community, which is already starting.”
The company has also committed to improving access to water in the 4 local villages near the mine by installing potable water distribution systems.
“That’s being designed at the moment and will be rolled out in the middle of the year. We want to do that because Goulamina is the first substantial project in a long-term partnership that we’ll have with the government and the local community. And ESG is incredibly important to our organisation and our way of working.”
“Through sheer preparation, and the aim of becoming West Africa’s first lithium producer, we remain on track of first spodumene production by H1 2024″
Meanwhile, the Environmental and Social Impact Assessment (ESIA) was approved as part of the Exploitation Permit in 2019 and has a validity period of 30 years. The ESIA has been updated to reflect minor changes to the Project and this will be submitted to Malian authorities in the current quarter.
Leo Lithium has a lot going on, yet through diligence, organisation, and meticulous preparation the company is seamlessly advancing its Goulamina Project in a burgeoning but not yet mature lithium market.
Hay notes: “Through sheer preparation, and the aim of becoming West Africa’s first lithium producer, we remain on track of first spodumene production by H1 2024, alongside the accelerated revenue opportunity from our Direct Shipped Ore in 2023.”
Write to Adam Orlando at Mining.com.au
Images: Leo Lithium Ltd
