Ganfeng Lithium to invest in Leo Lithium, study hydroxide JV
China’s largest lithium producer Ganfeng Lithium will invest AUD 106.1 million ($69.46m) in Australia-listed miner Leo Lithium to accelerate expansion in their Goulamina lithium project in Mali, Kallanish reports.
According to the Shenzen-listed company, Ganfeng Lithium or its subsidiary will subscribe to 131 million new shares in Leo Lithium at AUD 0.81 each. This corresponds to a 9.9% share in Leo Lithium. The companies are partners in the 50-50 joint venture developing the Goulamina project.
As part of a wider agreement, the partners plan to raise Goulamina’s Phase 2 annual spodumene concentrate production capacity to 500,000 tonnes. This will bring the total production capacity to 1m t/y.
Ganfeng said that based on the production expansion plan, it may offtake 350,000 t/y of spodumene concentrate, with Leo Lithium’s offtake set at 150,000 t/y. The second-phase offtake agreement may be amended if the companies decide to jointly invest in a downstream conversion facility. They are currently studying the feasibility of such a project in Europe or “other places within a reasonable distance of West Africa.”
In future, they may also add a third phase to this project, Ganfeng says, while Leo Lithium notes they might jointly fund an exploration JV to focus on opportunities in Australia.
The strategic placement is still subject to changes based on approvals from the Chinese regulatory departments, as well as the execution progress.
The Goulamina mining right in southern Mali is valid until 23 August 2049. The project has 1.97m t of lithium oxide resources at an average grade of 1.38%. It was originally developed by Australia-listed Mali-focused gold miner Firefinch Limited, which is now Leo Lithium’s largest shareholder with a 17.61% stake.
“The proposed tolling agreement with Ganfeng provides Leo Lithium with a highly beneficial, low-risk solution to gain exposure to lithium hydroxide production and the attractive margins that are available from moving further downstream,” comments Leo Lithium managing director Simon Hay.
He adds Ganfeng’s existing strong market relationships and technical reputation will enable cost savings and operational efficiencies in tolling the Goulamina Phase 2 product to lithium hydroxide. The Chinese firm already produces a large volume of high-quality battery-grade lithium chemicals, supplying Tier 1 OEMs.
Goulamina’s first spodumene concentrate production is set for 2024. Direct shipped ore sales are planned for the fourth quarter of this year.
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