Proactive Investors - Run By Investors For Investors

In The News - Birimian Ltd

In The News - Birimian Ltd

Natural Resources

13 March 2019




(LON:BGS) | A$0.16 | US$29m | Buy | TP : A$0.55

Strategy update for the Goulamina lithium project

Birimian has announced a strategy update for its Goulamina lithium project in Mali. This follows the recent changes of management and the capital raising of A$5.25m to progress the definitive feasibility study (DFS). The new team has reviewed the proposed study and identified multiple opportunities to improve the project and its returns. Three focus areas, which have a high impact on returns and where improvements can be made, have been targeted for completion by 3Q19 and will form the basis of the project design. These are: mineral resources and ore reserves, metallurgical recovery and concentrate quality, and water and road infrastructure. The full DFS is planned to be completed by 1Q20 for a final investment decision by 2H20.

To reflect its business the company proposes to change its name to Mali Lithium Ltd and will seek shareholder approval at the AGM in May.


COMMENT: Birimian’s negative share price reaction today reflects disappointment around the change in timing of DFS completion, originally indicated to be June 2019. In reality the delay is not significant for a project of this nature and the new management is upbeat about the potential improvement in returns achievable from the new focus areas. New MD Chris Evans brings strong experience to the Goulamina project as he was the former COO of Altura Mining which, during his tenure, progressed its hard-rock open pit lithium mine in Western Australia from exploration to production.

A significant upgrade of resources to reserves is anticipated, a meaningful improvement in LiO2 recovery is targeted, and any optimisation of truck transportation of the product to the port, which accounts for one-third of operating costs, could yield significant benefits to the project economics. We would anticipate additional financing later this year to complete the DFS by 1Q20, given the work required, the capital raised recently, and that the capital raising only stated that the funds would be used to ‘progress’ the DFS.

In conjunction with project optimisation work management will increase its engagement with the Malian authorities with the aim of securing all the necessary permitting in conjunction with the DFS. It also aims to secure offtake agreements and financing in parallel with the DFS.

We initiated coverage of Birimian in mid-October 2018 [Birimian Limited — High-quality African Lithium Development, 18 October 2018] and maintain our BUY recommendation and Target Price of A$0.55.

Goulamina is one of the Top 10 largest hard-rock lithium deposits — Current resources total 103Mt grading 1.34% Li2O, containing 3.4Mt of lithium carbonate equivalent (LCE). The resource remains open in all directions and a number of significant targets in the vicinity remain to be tested, offering potential for further increases.

PFS showed a 54,000tpa LCE spodumene concentrate producer with a mine life of over 16 years and returned a 40% IRR — The PFS of July 2018 studied the development of Goulamina as an open-pit mine and a gravity/flotation-based processing plant. The 31Mt reserve grading 1.56% Li2O (containing 1.2Mt LCE) supported production of 54,000tpa LCE contained in a 6% spodumene concentrate for 16 years. AISC were US$349/t CIF China and the initial capital costs were US$199m. At an average spodumene concentrate price of US$666/t, the PFS returned a post-tax NPV10 of US$490m and a robust IRR of 40%.

Maintaining BUY rating and target price of A$0.55 — We base our target price on a risked SotP NAV assuming a lithium concentrate price of US$666/t and a TP/NAV multiple equivalent to 0.2x. Having demonstrated attractive returns in the PFS, we believe that securing offtake arrangements, completing the DFS and finalising debt finance will significantly de-risk the project’s development and should act as a catalyst for a re-rating of the company.


This content has been approved under section 21(1) of the FMSA 2000 by RFC Ambrian Limited ("RFC Ambrian") for communication only to eligible counterparties and professional clients as those terms are defined by the rules of Financial Conduct Authority. The contents are not directed at retail clients as RFC Ambrian does not provide investment advisory services to retail clients.  RFC Ambrian publishes this document as non-independent research which is a marketing communication under the Conduct of Business rules. It has not been prepared in accordance with the regulatory rules relating to independent research, nor is it subject to the prohibition on dealing ahead of the dissemination of investment research. It does not constitute a personal recommendation and does not constitute an offer or a solicitation to buy or sell any security. Neither RFC Ambrian nor any of its directors, officers, employees or agents shall have any liability, howsoever arising, for any error or incompleteness of fact or opinion in it or lack of care in its preparation or publication; provided that this shall not exclude liability to the extent that this is impermissible under the law relating to financial services. All statements and opinions are made as of the date on the face of this document and are not held out as applicable thereafter. This document is intended for distribution only in those jurisdictions where RFC Ambrian is permitted to distribute its research. In particular, it is not intended for distribution in and is not directed as persons in the United States.  On the date of this document, RFC Ambrian, RFC Ambrian's holding company, persons connected with it and their respective directors may have a long or short position in any of the investments mentioned in this document.
RFC Ambrian is a member of the London Stock Exchange and is regulated and authorised by the Financial Conduct Authority. RFC Ambrian is registered in England and Wales no. 4236075. Its registered office is at Level 5, Condor House, 10 St Paul’s Churchyard, London EC4M 8AL.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use