Leo Lithium sinks claws into $106 million strategic placement to advance Goulamina Project in Mali

ASX-listed Leo Lithium (ASX:LLL) has struck a deal with GFR International (Ganfeng) (SHE:002460) to raise $106.1 million to support the development of the Goulamina Lithium Project in Mali.

Under the agreement, Leo will issue 131 million new shares at $0.81 to raise the funds, representing 9.9% of Leo’s total pro-forma shares on issue. This offer price represents a 6.5% premium to the company’s 5-day volume weighted average price (VWAP) of $0.76 per share up to and including 26 May 2023.

The company reports the new shares will be issued in a single tranche and will rank equally with existing shares on issue. Once the placement is complete, Ganfeng will hold a 9.9% interest in Leo, while other substantial holder Firefinch (ASX:FFX) will retain a 15.9% interest in the company.

Shares in Leo Lithium have spiked 14.48% to $0.83 at 11:10 am AEST.

Leo reports it has agreed to several co-commitments with Ganfeng that will be documented in a cooperation agreement, including a stage 2 capacity expansion, downstream cooperation, and an offtake for Goulamina.

As part of the stage 2 capacity expansion at Goulamina, both companies agree to undertake a study to expand the Goulamina production capacity to about 500,000 tonnes per annum. This will increase the combined capacity of Goulamina stage 1 and 2 to 1 million tonnes per annum. The companies will jointly fund the study and examine opportunities to expedite the timing of stage 2.

Leo also reports it will conduct and manage a feasibility study into a joint downstream conversion facility in Europe or a region within a reasonable distance of West Africa. Both companies will fund this study, and Leo notes it will be responsible for finding a suitable location, identifying and engaging with potential partners, and economic analysis.

Ganfeng will be responsible for analysing conversion technology, considering the application of its existing technology to the downstream facility, and leading the engineering and design for the construction of the downstream facility.

Further, with a larger production capacity and potential for a downstream conversion facility, Leo and Ganfeng have agreed to amend their lithium offtake agreement in regard to stage 2 production.

Ganfeng will have offtake rights to 350,000 tonnes per annum for the life of mine, while Leo will have offtake rights to 150,000 tonnes per annum for the life of mine.

Ganfeng will also process 150,000 tonnes per annum of its offtake in China on a permanent basis, while the remaining 200,000 tonnes per annum will be processed in China until a joint downstream conversion facility with Leo is established in Europe or elsewhere.

Meanwhile, Leo’s 150,000 tonnes per annum will be tolled in China by Ganfeng until the downstream conversion facility is available to process the product. If the agreement is not reached on a downstream conversion facility within 5 years from the date of this agreement, then Leo is free to deal with its 150,000 tonnes per annum offtake for Goulamina stage 2 as it sees fit.

Commenting on the placement, Leo Lithium Managing Director Simon Hay says: “The strategic placement and terms of the proposed cooperation agreement with Ganfeng represent a transformational opportunity for Leo Lithium and provide further validation of the tier-1 quality of Goulamina, including the significant potential upside of our development pathway.

By utilising the tolling arrangement with Ganfeng, Leo Lithium stands to benefit from Ganfeng’s existing strong market relationships and technical reputation, enabling enhanced cost savings and operational efficiencies in tolling the Goulamina stage 2 product to lithium hydroxide.

This is an exciting chapter for Leo Lithium, with a number of near-term deliverables also underway”

This is an exciting chapter for Leo Lithium, with a number of near-term deliverables also underway, including our first spodumene product in 2024 and accelerated revenue from direct shipped ore (DSO) with shipments planned in the fourth quarter of this year. We are proud to be partnering with Ganfeng, who are a recognised global leader across the lithium value chain, and look forward to continuing to build on our strong existing relationship.”

Subject to the ore reserve estimate for Goulamina being upgraded sufficiently in Q3 2023, and potentially future upgrades, Leo and Ganfeng have also agreed to investigate the opportunity for a further expansion of Goulamina in a third stage.

Under stage 3, both companies agree to form a jointly funded exploration joint venture (JV) to focus on Australia initially. This agreement is not exclusive and will not interfere with Ganfeng’s exploration ventures.

Leo Lithium is an ASX-listed company focused on bringing its Goulamina Lithium Project into production in the first half of 2024. The project lies in Mali and is held in a 50/50 JV between Leo and Ganfeng.

Write to Harry Mulholland at Mining.com.au

Images: Leo Lithium Ltd
Written By Harry Mulholland
Hailing from the Central Coast region of NSW, Harry is a passionate journalist with a background in print, radio and ESG news. When not bashing away on his keyboard, he can be found brewing a coffee or playing with his dog.