Leo warns of costs increases in Mali

27th April 2023

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia


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PERTH ( – A mid-term review into the Goulamina lithium project, in Mali, has found that the project is on track to deliver its first spodumene by the second quarter of next year, but has flagged a $30-million capital cost increase.

ASX-listed Leo Lithium on Thursday told shareholders that detailed engineering of the Stage 1 development, along with design optimisation, additional scope, and industry-wide inflationary pressures had resulted in the cost increase, which has now placed the capital cost estimate of the project at $285-million.

“After conducting a thorough review of the project's capital costs, expected capital increases were identified due to market conditions and an accelerated mining ramp-up. These include optimising the Stage 1 plant design to enhance the plant’s performance, making necessary scope changes for Stage 2 and responding to industry-wide inflationary pressures,” said Leo Lithium DM Simon Hay.

In addition, as the project increases the construction activities, the company has costed new plans associated with the Operational Readiness Phase. The Operational Readiness Phase is focused on workforce readiness, the ramp-up of mining activities, and the commencement of plant commissioning activities to produce first spodumene. This phase is now expected to cost an additional $33-million and is driven by a more comprehensive costed plan for commissioning spodumene production in Mali.

When combined with the revised cost to complete of $285million, the total project capital from FID to first production in the second quarter of 2024 is expected to be $318-million.

“Despite these cost changes, Leo Lithium remains extremely well positioned to take advantage of high spodumene prices in the next three to five years. Notwithstanding inflationary pressures and shortages along the supply chain, the project is progressing as planned, with engineering and procurement nearing completion, on-site construction activities ramping up, and mining activities set to begin next month,” said Hay.

“Looking ahead, we are encouraged to see early revenue from the targeted export of direct shipped ore (DSO) by the fourth quarter of 2023, further demonstrating our commitment to delivering value as a top-tier, low-cost producer. We appreciate our shareholders' continued support and look forward to delivering on our strategy and becoming West Africa’s first lithium producer.”

Leo Lithium said on Thursday that refinement of the initial mine plan reveals that 185 000 t of ore are surplus to the initial commissioning and ramp up needs of the processing plant. This ore will be available for DSO sales in 2023 and the first half of 2024.

The first shipment is scheduled for the fourth quarter of this year, with an upside case of late in the third quarter. In total, 60 000 t to 90 000 t of shipments are planned for 2023 with the remaining DSO planned to be shipped in the first half of 2024. Should the plant commissioning be pushed out, additional ore will become surplus to requirements and available for DSO sales.

joint venture (JV) partner Ganfeng Lithium Group has expressed interest in purchasing the DSO product, which is not covered in the existing spodumene offtake agreement, and pricing discussions have now started. Leo Lithium noted that some DSO parcels could also be offered to third parties.

Edited by Creamer Media Reporter


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