$100m. That’s how much Firefinch’s spin-off Leo Lithium is looking to raise through its initial public offering on the ASX.

It’s a big ask for sure, but Leo Lithium has much going for it.

First off, the company will hold the 50% interest in the giant Goulamina Project in Mali that Firefinch (ASX:FFX) is divesting.

This is one of the world’s largest hard rock lithium projects with a resource of 108.6 million tonnes grading 1.45% Li2O and an ore reserve of 52Mt at 1.51% Li2O.

It is expected to produce 506,000 tonnes per annum of 6% Li2O spodumene concentrate per year under its first stage before ramping up to a staggering 831,000tpa during the first five years of steady state production under the second stage expansion.

Goulamina also has the proverbial 800 pound gorilla on its side in the form of equal partner Ganfeng – China’s largest lithium producer with a market capitalisation of about US$19b. It has already committed US$130m in cash into the joint venture and will either provide US$40m in Ganfeng debt or secure US$64m in third-party debt to support construction.

Development is also a certainty with both parties having already committed to a final investment decision in January this year while the Mali Government has already approved all material permits for construction to begin.

Ganfeng will also rather coincidentally offtake any produced spodumene under the first stage, which further de-risks the project.

First production is expected in 2024.


IPO details

Under the offer, Firefinch will subscribe for $20m worth of Leo Lithium shares priced at 70c each to both highlight its conviction in the spin-off while maintaining exposure to a giant near-term lithium mine.

Eligible Firefinch shareholders will also have the priority right to participate in the offer for the remaining $80m of the IPO before it is opened to the public.

This is in addition to the free share in Leo Lithium that they will receive for every 1.4 shares that they hold in Firefinch.

Proceeds from the IPO will go towards development of Goulamina.

Firefinch shareholders will vote on approving the demerger on 31 May 2022.

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.