PERTH (Miningweekly.com) – Lithium developer Atlantic Lithium has launched funding discussions with potential offtake partners to secure the last of the funding required to develop its Ewoyaa lithium project, in Ghana.

Atlantic on Friday announced a non-binding heads of terms with Ghana’s Minerals Income Investment Fund (MIIF), which would potentially invest $32.9-million in Atlantic and its Ghanaian subsidiaries to support the development of Ewoyaa.

MIIF will invest an initial $27.9-million to acquire a 6% contributing interest in the Ghana portfolio, including the Ewoyaa project, with the funding to take the form of development, exploration and study expenditure.

MIIF will also subscribe for more than 19.24-million shares in Atlantic Lithium, to the value of $5-million, for a 3.05% share in the company itself. This will entitle MIIF to nominate one person to each of Altantic’s Ghanaian subsidiary boards, while also granting the fund one warrant for every two Atlantic Lithium shares subscribed for at a 40% premium to the subscription price of 25.98c a share.

Furthermore, the agreement would allow MIIF to participate in the competitive process for Ewoyaa's remaining available offtake, Atlantic said on Friday.

The deal with the MIIF comes shortly after lithium developer Piedmont Lithium confirmed that it would continue with its earn-in into Ewoyaa.

As part of a staged investment agreement to earn a 50% interest in Atlanic’s spodumene projects in Ghana, Piedmont has exercised its option to acquire an initial 22.5% interest to fast-track the development of the project.

To earn the full 50% interest in Atlantic’s Ghana portfolio, Piedmont will sole-fund the first $70-million, and 50% of any additional development expenditure, towards the total $185-million development expenditure for the project indicated in the definitive feasibility study (DFS), which estimated a 2.7-million-tonne-a-year steady-state operntion, producing 3.6-million tonnes of spodumene concentrate over a 12-year mine life.

Piedmont has now earned its initial 22.5% interest in the project by sole funding $5-million towards a regional exploration programme, and a further $12-million towards the delivery of a prefeasibility study and DFS.

Piedmont will now self-fund a further $70-million to earn an additional 27.5% interest in the Ghana portfolio, taking its total interest to 50%.

Piedmont’s share of production from Ewoyaa is expected to feed its $809-million Tennessee lithium project, in the US, which is expected to produce 30 000 t/y of lithium hydroxide over an operating life of 30 years.

Speaking on the sidelines of Paydirt’s Africa Downunder conference, Atlantic CEO Keith Muller told Mining Weekly Online that Atlantic has now appointed an investment bank to run an offtake process on the remaining Ewoyaa production in order to fund the capital gap to allow for Ewoyaa’s development.

“We have around 86 interested parties that will be approached, and this will be narrowed down to around ten in the first round of discussions,” Muller said.

Atlantic is hoping to finalise this process by the end of this year, or early next year.

“Our preference would be a pre-payment offtake agreement, with the second option being a debt facility from an offtake partner, a third option would be tapping the debt market, and the fourth would be raising more equity. We will approach the funding in that order to avoid share dilution,” Muller added.

Muller told Mining Weekly Online that Piedmont had been included in the offtake discussions with the newly appointed investment bank, but that its partner would not be an obvious shoe-in for the remaining offtake at Ewoyaa.

“It’s a competitive process, and they won’t be given any favour. Our desire is to supply into an existing operating supply chain,” he added.

Atlantic is hoping to secure its mining licence for Ewoyaa before the end of the year, which will be followed by the environmental permitting process, with the company hoping to break ground at the lithium project by September next year.

“The MIIF announcement today is really important in my view. To some extent, I would suggest that it is almost on par with the award of a mining licence. I can't see a sovereign fund investing almost A$50-million into a company where they don't see a clear line of sight to production coming online. So that's a huge vote of confidence for us,” Muller said.