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Leo Lithium Secure $106m Strategic Placement with Ganfeng

29 May 2023 14:34
Deal 1

Leo Lithium has secured an A$106 million dollar strategic placement and transformational cooperation agreement with China’s largest lithium producer, Ganfeng Lithium to fully fund stage one of development for its Goulamina Lithium Project in Southern Mali.

A Powerful Placement

Ganfeng will raise the funds from the issue of 131 million new shares for the company, which represents 9.9 per cent of Leo Lithium’s total pro-forma shares on issue, at a strategic placement offer price of A$0.81, just one cent shy of Leo’s all-time share price high of A$0.82.

Upon settlement, Leo Lithium will be in a cash position of A$177 million alongside an additional US$93 million cash and US$40 million undrawn debt held within the Goulamina JV, well-positioned to fund its share of the first stage of Goulamina’s development and operation ramp-up cost as it prepares to make the most of one of the world’s best hard rock lithium assets, holding a post-tax net present value of US$2.94 billion.

New Horizons

Alongside the placement, the cooperation agreement on the other hand looks to deliver further long-term benefits for Goulamina and open up new opportunities for the Project’s 142.3Mt at 1.38% Li2O MRE, with the two companies now looking to raise the Project’s planned stage two production capacity to 500ktpa which will bring a whopping 1mtpa total production capacity.

On top of this, the agreement will also see Ganfeng and Leo look into the development of a downstream conversion facility to produce lithium hydroxide from Goulamina’s product, with the Project’s offtake agreement having been amended to allow for both this and the newly increased production capacity.

The conditions of the cooperation agreement are also set to deliver benefits for Leo outside of Goulamina, with the two companies potentially funding a joint venture focused on exploration opportunities in Australia.

Looking Forward

The Company said that the strategic placement and proposed cooperation agreement represent a transformational opportunity for Leo Lithium.

“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,” Leo Lithium Managing Director Simon Hay said.

“The Cooperation Agreement will 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.”

Following the announcement LLL’s Australian Stock Exchange-listed share price has soared 17.24 per cent today, currently selling at 85c (2:13 am UTC+ 8 hours), echoing the last time an international giant jumped on an ASX-listed lithium player with Albemarle’s third attempt to acquire Liontown Resources and its 156Mt @ 1.4% Li2O Kathleen Valley.

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