Firefinch DFS confirms Goulamina ‘among world’s largest’ lithium sites

Firefinch has updated the definitive feasibility study (DFS) for the Goulamina Lithium project in Mali, West Africa, with annualised spodumene concentrate production of 506,000 tonnes increasing to a peak of 880,000 tonnes.

Firefinch (ASX:FFX) says the DFS places Goulamina as one of the world’s largest lithium developments.

The updated DFS points to some very strong financial returns, with the post-tax NPV now easily topping $4 billion and post-tax IRR 83%.

That’s more than double the prior DFS published in October 2020.

And it’s way over the 15% Internal Rate of Return (IRR) required to progress the Goulamina JV with Jiangxi Ganfeng Lithium to a final investment decision.

The final condition left to confirm the JV is the transfer of the project exploitation licence to a single purpose Malian subsidiary – which is expected to occur in early 2022 and will allow the final US$90 million of Ganfeng’s US$130 million contribution to become payable.

The DFS considered a conservative spodumene concentrate price of US$1,250/tonne real applied for the first five years of production – and a long-term weighted average of US$900/tonne real applied for the balance of the mine life.

Leo Lithium demerger expected in Q1

The company intends to demerge Goulamina into a new ASX listed company, Leo Lithium Limited, and will retain up to 20% of the issued capital of Leo following the demerger.

“We are absolutely delighted with the outcome of the DFS update which confirms Goulamina as a world leading lithium development with outstanding returns,” managing director Dr Michael Anderson said.

“Only 14 months ago in delivering the original DFS we said that, given market conditions for lithium, we would be patient to ensure we maximise shareholder returns – that patience has been rewarded. We thank our shareholders for their support.

“Our strategy has been to deliver a high return project; one with low technical risk, a quality partner in Ganfeng, the world’s largest lithium chemical producer, to provide a funding solution and offtake support.

“That is the project that we will be demerging to form Leo Lithium Limited (Leo).

“We expect to take Leo to market in March-April next year with engineering, construction and drilling works underway and a clear path to first production in early 2024 in front of us.

“Only Firefinch shareholders will be eligible to receive an in-specie distribution of Leo shares and to participate in an entitlement issue upon listing of Leo,” Dr Anderson said.

Stage 2 expansion within 18 months

The DFS now supports production to increase from 2.3 million tonnes per annum (Stage 1) to 4 million tonnes per annum throughput (Stage 2) which is targeted 18 months after the commissioning of Stage 1.

Ganfeng and Firefinch have agreed to proceed with early-stage engineering, drilling and various community and environmental works to fast track the development of the project, with Firefinch’s costs to be reimbursed by the JV once it is established.

The Stage 1 capital cost is US$255 million and Ganfeng will contribute US$130 million in cash and arrange up to US$64 million of debt and is currently in discussion with Chinese banks to consider providing the debt funding.

Further information on final funding arrangements, including the funding of Stage 2 capital, will be disclosed once the JV is formed.

The revised flowsheet has seen the lithium recovery increased to 80%, with the spodumene concentrate successfully converted into lithium hydroxide to a specification that meets the requirements of Ganfeng’s customers.

Drilling has now commenced at the project targeting the conversion of much of the 43.7 million tonnes at 1.35% Li2O inferred mineral resource to ore reserves.