Lithium developer Leo Lithium Corp. has solidified an equity investment agreement with Ganfeng Investment, a leading lithium producer.
As part of this deal, Ganfeng will exclusively fund $137.2 million toward the capital costs of the Goulamina lithium project located in Mali.
This funding will be directly injected into the project’s holding company, Mali Lithium BV (MLBV), granting Ganfeng an additional 5% stake. Upon finalizing the agreement, Ganfeng’s total interest in Goulamina will rise to 55%.
Moreover, Leo, via its joint venture subsidiary Lithium du Mali SA (LMSA), has initiated the drawdown from its $40-million Ganfeng debt facility, established in July 2022. The facility was designed to finance the Goulamina joint venture. Leo confirmed that LMSA has met all necessary prerequisites for the debt facility and has proceeded with its inaugural drawdown.
Leo’s Managing Director, Simon Hay, expressed the company’s enthusiasm regarding the deal. “This collaboration not only solidifies our strong alliance with China’s premier lithium producer but also paves the way for smoother regulatory clearances in China,” Hay remarked.
He further elaborated on the agreement’s objectives, which include potential expansion plans for Goulamina’s Stage 2 and explorations into future collaborative ventures, such as developing a downstream conversion facility.
Previously, Leo communicated to shareholders the myriad of long-term advantages stemming from the Ganfeng agreement. These benefits encompass augmenting Goulamina’s Stage 2 capacity to an impressive 500,000 tons annually and considering joint investments in a European downstream conversion facility.
Both parties are also contemplating adjusting an offtake arrangement for a potential conversion facility that produces lithium hydroxide and formulating a joint exploration venture targeting Australian opportunities.
Projected capital investments for Goulamina stand at $318 million. When factoring in additional duties that could amount to $50 million, the total capital expenditure reaches $368 million. Leo disclosed that the joint venture might need another $60.8 million in 2024, with Leo’s contribution being 45%. The required funds are expected to be sourced from Leo’s current cash pool, approximately $43 million.
Leo assured its shareholders of the company’s robust financial standing leading up to initial production. However, the firm also cautioned about potential shifts in the Mali government’s stance on direct shipping ore and duty exemptions, which could significantly lessen financial obligations.
Last week, Leo reported having disbursed $4 million in import duties and taxes. If the duty-related issue remains unresolved, Leo might incur an additional $16.1 million in the current quarter. The company indicated that unforeseen import duties and taxes during the project’s capital phase could oscillate between $45 million and $50 million.
