Firefinch closing in on Goulamina JV with Ganfeng shareholder nod
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Firefinch’s joint venture with Jiangxi Ganfeng is another step closer to reality after the Chinese lithium producer’s shareholders approved the partnership.
This fulfills the first of three outstanding conditions that Ganfeng – a leading supplier of lithium to top tier battery producers such as BMW, LG Chem and Tesla – requires to proceed with its acquisition of a 50% interest in the world-class Goulamina lithium project in Mali by investing a total of US$130m in three tranches.
Firefinch (ASX:FFX) managing director Dr Michael Anderson said the shareholder approval marked an important milestone for the Goulamina JV transaction and the establishment of the company’s partnership with the world’s largest lithium producer.
“There are two remaining items to complete the Goulamina JV Transaction – Chinese regulatory and Malian Government approvals – both of which are well progressed. This is an exciting time for Firefinch shareholders, and we expect an outcome on these items within the next 2 – 3 months,” he added.
“Once the two remaining conditions precedent are satisfied, Ganfeng will then make an initial US$39 million cash investment into the joint venture, with a further US$91 million cash (in addition to up to US$64 million in debt funding), to be provided shortly after a final investment decision (FID) on Goulamina.
“As previously announced, Firefinch and Ganfeng have agreed to expedite FID to the December Quarter 2021 given the strong lithium market dynamics and we look forward to updating the market in due course.”
Once an FID is made, the company will vend its 50% interest in Goulamina into new ASX-listed company Leo Lithium.
While existing shareholders will benefit from an in-specie distribution of Leo Lithium shares, Firefinch will also retain exposure to the project through a 20% stake in the new company.
The Goulamina project in Mali is currently envisaged as producing an average of 436,000 tonnes per annum (about 64,700t of lithium carbonate equivalent) of high quality spodumene concentrate over an initial 23-year mine life.
According to the previous DFS, this will deliver a highly attractive pre-tax net present value and internal rate of return – both measures of a project’s profitability – of about US$1.7bn and 55.8% respectively.
This article was developed in collaboration with Firefinch, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.