PERTH (miningweekly.com) – Lithium developer Leo Lithium has cemented its equity investment agreement with lithium producer Ganfeng Investment.

Under the equity investment agreement Ganfeng will sole fund $137.2-million of capital costs for the Goulamina lithium project, in Mali, via direct cash injection into the Goulamina holding company Mali Lithium BV (MLBV) in exchange for an additional 5% interest in MLBV.

Post completion of the equity investment, Ganfeng will have a 55% interest in Goulamina.

In addition, Leo, through its joint venture (JV) subsidiary Lithium du Mali SA (LMSA) has also commenced drawdown of its $40-million Ganfeng debt facility, which was put in place in July 2022 to fund the Goulamina JV. LMSA has satisfied all the conditions precedent to the Ganfeng debt facility and issued the first drawdown notice under the facility.

“We are extremely pleased to have executed the equity investment agreement with Ganfeng, which cements our solid relationship with China’s largest lithium producer, and the direct project investment is set to facilitate regulatory approvals in China,” said Leo MD Simon Hay.

“Our cooperation agreement is meant to deliver a range of key strategic benefits, including a commitment to expand the capacity at Goulamina Stage 2, as well as a framework for further cooperation on a downstream conversion facility and other business opportunities.

“Satisfaction of all the conditions precedent to the Ganfeng debt facility is an important milestone with drawdown of funds now underway.”

Leo has previously told shareholders that the cooperation agreement with Ganfeng included several long-term strategic benefits, including raising the planned Stage 2 capacity to 500 000 t/y to lift the overall capacity at Goulamina to one-million tonnes a year, jointly studying the concept of co-investing in a downstream conversion facility in Europe, amending an offtake agreement for the Stage 2 project for the potential downstream conversion facility to produce lithium hydroxide, and establishing and jointly funding an exploration JV to focus on opportunities in Australia.

Goulamina is expected to require a $318-million capital investment, with additional duties of up to $50-million, bringing total capital expenditure up to $368-million. Leo said on Thursday that the JV would require a further $60.8-million in funding in 2024, of which Leo would need to contribute 45%, with the funds to come from the company’s current cash reserves of around $43-million.

Leo told shareholders that the company was well funded to first production.

However, the miner warned that changes to the Mali government’s views on direct shipping ore and exonerations of duties could reduce this cash requirement substantially.

The company last week stated that $4-million had been paid in import duties and taxes, and Leo is expected to pay a further $16.1-million this quarter, if the import-duty issue is not resolved. Total exposure in the capital phase of the project for unplanned import duties and taxes could amount to between $45-million and $50-million, the company said.