Leo signs shareholding and cooperation agreement with Ganfeng

Leo signs shareholding and cooperation agreement with Ganfeng

Photo by Reuters

29th May 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – ASX-listed Leo Lithium has struck a A$106-million shareholding and cooperation agreement with Chinese lithium giant Ganfeng Lithium.

Under the terms of the agreement, Ganfeng would take a 9.9% shareholding in Leo Lithium, subscribing for 131-million shares in the company at a price of 81c each. The placement is subject to regulatory approvals in China and the execution of a cooperation agreement.

The cooperation agreement will see the two companies work towards expanding Leo Lithium’s Goulamina project, in Mali, to a Stage 2 production of up to one-million tonnes a year of spodumene concentrate, adding 500 000 t/y to the Stage 1 operation, and examine opportunities to accelerate the timing of the Stage 2 development.

The cooperation agreement will also see Leo Lithium conduct a feasibility study into a joint downstream conversion facility in Europe or another region with a reasonable distance from West Africa, with the two parties to jointly fund the study.

With the enlarged Goulamina Stage 2 capacity and the potential for a downstream conversion facility, the two companies will also clarify and vary an existing offtake agreement with regard to the Stage 2 product.

Ganfeng will have offtake rights to 350 000 t/y of the additional Stage 2 production, over the life of the mine, with Leo to have offtake rights over the remaining 150 000 t/y. Ganfeng will process 150 000 t/y of its offtake in China on a permanent basis, with the remaining product to be processed in China until a downstream conversion facility with Leo Lithium is established.

Leo’s assigned product will be tolled in China by Ganfeng until the downstream conversion facility is available to process product.

In the event that agreement is not reached on a downstream conversion facility within five years from the date of this agreement then Leo Lithium is free to deal with its 150 000 t/y offtake from Goulamina Stage 2 as it sees fit.

Additionally, subject to the ore reserve estimate for Goulamina being sufficiently upgraded in the third quarter of this year, the two companies will also investigate the possibility of adding a Stage 3 expansion to the mine, with the offtake to be split right in the middle, while the two companies will also jointly fund exploration in Australia.

“The strategic placement and terms of the proposed cooperation agreement with Ganfeng represent a transformational opportunity for Leo Lithium and provide further validation of the tier-1 quality of Goulamina, including the significant potential upside of our development pathway,” said Leo Lithium MD Simon Hay.

“The strategic placement was priced at an attractive premium to recent trading levels, being a 6.5% premium to Leo Lithium’s five-day volume weighted average price, and 1c off our all-timeshare price high. Upon settlement, the company will be fully funded for its share of Goulamina Stage 1 development costs and operational ramp-up, and well-positioned to progress its various co-commitment activities with Ganfeng.”

Hay said that the cooperation agreement would deliver a range of key strategic benefits to Leo Lithium, 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.

“The proposed tolling arrangement with Ganfeng provides Leo Lithium with a highly beneficial, low-risk solution to gain exposure to lithium hydroxide production and the attractive margins that are available from moving further downstream. Ganfeng has long operated a number of conversion facilities in China and is already producing a large volume of high-quality battery grade product that is being supplied to tier 1 OEMs.

“By utilising the tolling arrangement with Ganfeng, Leo Lithium stands to benefit from Ganfeng’s existing strong market relationships and technical reputation, enabling enhanced cost savings and operational efficiencies in tolling the Goulamina Stage 2 product to lithium hydroxide. This is an exciting chapter for Leo Lithium with a number of near-term deliverables also underway, including our first spodumene product in 2024 and accelerated revenue from direct shipped ore, with shipments planned in the fourth quarter of this year.”

Edited by Creamer Media Reporter


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