Firefinch Ltd has announced the results of an update to the definitive feasibility study published on 20 October 2020 for the Goulamina Lithium Project in Mali, West Africa.
The DFS update demonstrates exceptional financial returns and a higher production rate than outlined in the October 2020 DFS. The update revised engineering design, flowsheet and metallurgical testwork to DFS standard with additional targeted production for the 4 million tpy operation (Stage 2) determined at pre-feasibility standard. Spodumene concentrate price assumed was increased to an average US$978/t.
Increased capital costs compared to the original DFS relate to the infrastructure and equipment changes to accommodate increased production from Stage 2 expansion and industry cost inflation.
Firefinch Managing Director, Dr Michael Anderson, said: “We are absolutely delighted with the outcome of the DFS update which confirms Goulamina as a world leading lithium development with outstanding returns. 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 Ltd. 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.”
Ganfeng agreement and demerger
The DFS update follows Jiangxi Ganfeng Lithium Co. Ltd and Firefinch agreeing to form an incorporated joint venture (Goulamina JV) to develop Goulamina. The key criteria for the Goulamina JV to approve a final investment decision (FID) was the DFS update returning a post-tax real internal rate of return (IRR) of more than 15%, which has been greatly exceeded, returning 83%. Firefinch and Ganfeng will confirm FID upon formation of the JV. The JV has not been formed yet as an internal reorganisation of Firefinch subsidiaries is in progress to permit the formation of the JV company.
The remaining condition precedent to completion is the transfer of the project exploitation licence to a single purpose Malian subsidiary as required by Malian legislation. This is expected to occur in early 2022 and will allow the formation of the JV and the final US$90 million of Ganfeng’s US$130 million contribution will become payable. The first payment (US$39 million) was deposited by Ganfeng into an escrow account (refer to the ASX release dated 1 December 2021).
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. Firefinch costs will be reimbursed by the JV once it is established.
The 2.3 million tpy operation (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. Ganfeng has advised it 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.
Firefinch has announced its intention to demerge Goulamina into a new ASX listed company, Leo Lithium Ltd. Firefinch will seek shareholder approval for the demerger in 1Q22, with ASX listing approximately one month later (subject to regulatory approvals and rulings). The only way to receive an in-specie distribution of Leo shares at no cost as part of the demerger is to be an eligible Firefinch shareholder.
Firefinch will retain up to 20% of the issued capital of Leo following the demerger. Firefinch has progressed regulatory requirements and is finalising documentation to implement the demerger.
In conjunction with Leo seeking admission to ASX, Leo will undertake a pro rata entitlement offer to fund working capital, costs of the demerger and enable flexibility to accelerate expenditure at Goulamina. A prospectus for the entitlement offer will be made available when the Leo shares are offered under the entitlement offer. Only eligible Firefinch shareholders will be able to participate.
Read the article online at: https://www.globalminingreview.com/finance-business/23122021/firefinch-announces-update-to-goulamina-lithium-project-dfs/