ASX-listed Leo Lithium has received conditional approval from the Mali government to sell its remaining 40% stake in Mali Lithium BV (MLBV) to China’s Ganfeng. This move is a significant step in Leo’s exit from the Goulamina lithium project.
The Mines Minister approved the transaction, pending the submission of transaction documents and the payment of capital gains tax (CGT). Leo has already paid $7.6 million in CGT for a 5% stake sale finalized on May 6. Additional CGT on the 40% sale will be paid later.
Last month, Leo announced its decision to sell its remaining interest in MLBV after failing to reach an agreement with the Mali government on project-related issues. Leo MD Simon Hay commented, “While our preferred outcome would have been for Leo to remain involved in Goulamina, we believe this course of action is in the best interest of all stakeholders, given the lack of a viable agreement with the Mali government.”
Goulamina is one of the world’s largest lithium developments. Stage 1 spodumene concentrate production is estimated at 506,000 tonnes per year, increasing to 880,000 tonnes per year in Stage 2. The project has a minimum mine life of 23 years, producing 15.6 million tonnes of spodumene concentrate over that period. Ganfeng will pay Leo $342.7 million for the remaining stake in Goulamina.
With Ganfeng moving to full ownership of MLBV, the joint venture partners agreed that Ganfeng would assume management responsibilities this month, even before the sale’s completion. As Ganfeng builds its operational team, Leo will provide management services under a six-month agreement ending on November 13.
The approval from the Mali government is a critical milestone for Leo Lithium as it navigates its exit strategy. The company’s initial attempt to stay involved in the Goulamina project faced hurdles due to disagreements with the government. However, the conditional approval provides a clear path forward, allowing Leo to focus on ensuring a smooth transition.
The Goulamina project is not only significant for Leo and Ganfeng but also for Mali’s economic landscape. The project’s substantial production capacity positions it as a key player in the global lithium market. The successful transfer of ownership and management to Ganfeng is expected to enhance the project’s efficiency and output.
As the transition progresses, stakeholders will be watching closely to see how Ganfeng’s management influences the project. The agreement to allow Leo to provide management services during the transition period highlights the importance of continuity and expertise in maintaining the project’s momentum.
Overall, the Mali government’s conditional approval marks a pivotal moment for the Goulamina lithium project, setting the stage for its next phase under Ganfeng’s stewardship.
Source: Mining Weekly
