PERTH (miningweekly.com) – ASX-listed Firefinch on Monday told shareholders that it would proceed with the demerger of its Goulamina lithium project, in Mali, after transferring the exploitation licence into the joint venture (JV) company with Jiangxi Ganfeng Lithium.

The transfer triggers a $170-million funding package, which will see $130-million of equity funding provided to the JV company by Ganfeng, with $39-million to be released from escrow and received by the JV company and a further $91-million is due to be transferred to the JV company by Ganfeng in the coming days.

Ganfeng is further obliged to provide either $40-million of direct debt or source $64-million of third-party debt.

Firefinch said that taken together, Ganfeng’s debt and equity funding package of at least $170-million is expected to substantially fund the project through the development phase.

“This is a long-awaited and significant milestone. We have been working tirelessly to progress the joint venture and demerger process to deliver value for shareholders and are delighted to be on the brink of achieving the intended result,” said Firefinch MD Dr Michael Anderson.

Firefinch previously flagged the demerger of Goulamina into a separately listed vehicle known as Leo Lithium. If the demerger is approved by Firefinch shareholders, Leo expects to undertake a pro-rata entitlement offer and seek admission to the official list of ASX.

“This is a tremendous step along the path to listing Leo Lithium and developing Goulamina as one of the world’s largest lithium producers,” said Leo MD Simon Hay.

“The combined debt and equity funding package of at least $170-million from Ganfeng means Leo can now accelerate work on the Goulamina project. Behind the scenes we have been working with our partner Ganfeng, who will provide funding, offtake and operational support to significantly derisk development.

“Assuming the approval of Firefinch shareholders, the demerger will bring Leo Lithium to life. I’m incredibly excited about the opportunity ahead and look forward to hitting the ground running come listing.”

The demerger follows on from a final investment decision for the Goulamina project in January.

It is estimated that the project will require an initial $225-million investment for the Stage 1 development, producing 506 000 t of spodumene concentrate a year, increasing to 880 000 t/y in Stage 2, for a further investment of $70-million.

The project is expected to have a minimum mine life of 21 years, producing 15.6-million tonnes of spodumene concentrate over that period.