Ground Breakers: Ghana moves ahead in African Cup of Lithium Nations

Ghana into the African Cup of Nations … and a new lithium mine

Atlantic Lithium banks $51m from Ghana’s mining investment fund for 6% of Ewoyaa lithium project and 3% of the company in vote of confidence

Miners sag as weekend approaches

What a way to celebrate your soccer team, led by newly-minted West Ham United Star Mohammed Kudus, winning its way into the African Cup of Nations.

Fresh from its come from behind 2-1 win over the Central African Republic, the Republic of Ghana was in celebration mode as they advanced to the finals in neighbouring Ivory Coast in January next year.

In the haze, plenty we’re sure was said and done, much to be regretted and much to be celebrated.

And in the aftermath of the hangover Ghana’s Minerals Income Investment Fund has gone and splurged US$32.9 million ($51.4m) on a stake in local lithium player Atlantic Lithium (ASX:A11).

We jest, this has obviously been a long time in the making and is completely unrelated to Ghana’s stunning bounce back into Africa’s top football tournament.

But it is welcome news for investors in the African lithium play and its partner Piedmont Lithium (ASX:PLL), both of whom needed to bring out the lawyers to counter some scuttlebutt about their dealings with Ghanaian movers and shakers from a pesky short seller a few months ago.

More on that and the companies’ riposte here.

Given concerns about the ability of ASX-listed lithium players to get often volatile African governments onside, especially in light of issues at AVZ Minerals (ASX:AVZ) and Leo Lithium (ASX:LLL) of late, news Ghana’s mining investment fund is taking a direct interest in Atlantic and the Ewoyaa project is no doubt good news for investors to hear.

As part of the deal, MIIF will tip US$27.9m ($43.6m) into Atlantic’s Ghanaian subsidiaries including the companies holding its main game the proposed Ewoyaa mine, taking a 6% contributing interest — aka skin in the game.

It will also subscribe for 19,245,574 Atlantic shares at a price of US$0.2598 or 41c Aussie per share to be held in escrow, a $7.8m commitment amounting to 3.05% of the company.

All about conviction

Aussie investors have plenty of reasons to be wary of African adventures. While the African discount on stocks with operating histories in West Africa (and elsewhere on the continent) is clearly overblown, some jurisdictions are hairy for new operators.

Even Fortescue (ASX:FMG) and its $65 billion heft could be facing challenges in Gabon after a recent military coup, while Perseus Mining’s (ASX:PRU) push out of West Africa into Sudan has proved ill-fated so far after a civil war broke out in the infamously tempestuous country.

But Ghana, where gold miners like Gold Fields and AngloGold Ashanti have operated for years, ranks creditably on the stability index – and above South American countries like Peru and Chile on the Fraser Institute’s mining Investment Attractive Index – fifth in Africa behind Botswana, Morocco, Ivory Coast and Burkina Faso.

It’s not Port Hedland, but it is better than many of the alternatives, and A11 is understandably happy with the message behind the investment.

“We consider Ewoyaa as a Ghanaian project for Ghanaians. Having MIIF as a shareholder not only de-risks the Project from a funding perspective but, equally importantly, further aligns the Company with the best interests of its Ghanaian stakeholders, who we are proud to represent,” he said.

“Furthermore, an investment by Ghana’s sovereign wealth fund demonstrates the Government of Ghana’s conviction in the Project, showcasing its intent to support the critical minerals agenda and position the country as a leading mining investment jurisdiction in Africa. In Ewoyaa, Ghana has a new pillar in its diversified minerals offering, further developing its esteemed mining credentials, which date back over a century.

“MIIF’s investment in the Company’s Ghanaian subsidiaries will be used towards ongoing development, exploration and study expenditure across Ewoyaa and the Company’s broader portfolio. MIIF’s contributions will significantly derisk the success of the Project.

“In this way, we feel MIIF will share ownership in Ghana’s efforts to drive the country’s position in the global EV supply chain.”

MIIF CEO Edward Nana Yaw Koranteng said: “The acquisition of a 6% contributing interest in the Company’s Ghanaian subsidiaries will support the funding of ongoing capital and exploration expenditure requirements across Ewoyaa and the broader Atlantic Lithium portfolio.

“This is just our initial investment in Atlantic Lithium and its Ghanaian subsidiaries. We hope to later invest in the value chain and the development of other by-products, such as feldspar, in line with the Government of Ghana’s critical minerals policy.

“Our investment highlights Ghana as arguably the best mining investment destination in Africa in view of the options MIIF provides to investors. For us at MIIF, this is the start of a partnership with Atlantic Lithium beyond Ghana.

“We are confident that this initial investment will enhance and accelerate Ghana’s efforts as an African critical minerals hub and to establish the country’s position in the global EV supply chain.”

Last month Piedmont exercised its option to acquire an initial 22.5% option in Atlantic Lithium’s Ghanaian portfolio, planning to fund the first US$70m in development costs to take a 50% stake. The material from Ewoyaa would likely be used to feed a downstream processing facility in the US state of Tennessee.

According to a DFS from Atlantic the project would produce 365,000t of spodumene a year for an initial 12-year mine life at a build cost of US$185m with a 19-month payback.

Atlantic Lithium (ASX:A11) and Piedmont Lithium (ASX:PLL) share prices today

And on the markets?

How’s Friday starting?

Err… not great. Falling lithium prices and Chinese economic sentiment is sending the materials sector off on a 2.99% weekly loss and 1.01% daily fall.

The bright spots are all in gold, with the ASX All Ords Gold sub-index up a tidy 0.69%.

Gold equities have performed creditably in a mild market this year, up 11.58% YTD and 39.73% over the past 12 months.