Firefinch Ltd (ASX:FFX) has followed up a robust update to the definitive feasibility study (DFS) for the Goulamina Lithium Project in Mali with the boards of Firefinch and partner Jiangxi Ganfeng Lithium Co Ltd approving a Final Investment Decision (FID).
This key milestone will further advance the partnership arrangements as both parties continue to move forward with early-stage engineering, drilling and various community and environmental works to fast track the development of the project.
“Another major milestone”
Firefinch managing director Dr Michael Anderson said: “The approval of FID represents yet another major milestone for the Goulamina Project.”
An update to the original October 2020 DFS was completed in December 2021 demonstrating a pre-tax NPV of A$4.1 billion and a post-tax IRR of 83%.
Following these positive results, the boards of both companies have approved FID and agreed to waive the FID condition to the payment of the final US$91 million upon the formation of the incorporated joint venture.
DFS update “compelling”
Anderson said: "Clearly the outcomes of the DFS update have been extremely compelling to the boards of both companies and it is a testimony to the project’s credentials that the partners have moved so quickly and collaboratively to commit to the development of Goulamina.
"We sincerely look forward to maintaining the positive momentum into the New Year as site-based activities increase.”
The major remaining condition to the formation of the Goulamina JV is the transfer of the project exploitation licence to a single purpose Malian subsidiary as required by Malian legislation.
Next steps
Firefinch has an internal reorganisation of its subsidiaries in progress to permit this transfer.
This is expected in early 2022 and, upon the satisfaction of other condition precedents, will allow the formation of the JV, the payment of the final US$91 million of Ganfeng’s US$130 million contribution and the release from escrow of the US$39 million first payment made last year.
Financial arrangements
Following the DFS update, the capital cost for the stage-1 2.3 million tonnes per annum operation increased from US$194 million to US$255 million.
This was in part driven by incremental capital associated with providing the flexibility to readily move to a stage-2 4.0 million tonnes per annum throughput operation.
As a result, for the purposes of funding the project, Ganfeng has agreed to either provide $40 million of Ganfeng provided debt or to arrange up to US$120 million in third-party debt (previously agreed up to US$64 million).
Firefinch’s costs will be reimbursed by the Goulamina JV once it is established.
About Goulamina
Goulamina is one of the world’s largest undeveloped high-quality spodumene deposits and in partnership with Ganfeng, Firefinch will bring the project into production.
All permits are in place and the DFS update confirmed Goulamina as a long-life, large-scale and low-cost open pit project expected to produce 726,000 tonnes of spodumene concentrate at an average cash cost of US$312/tonne.
Goulamina has a high-grade, low impurity ore reserve of 52 million tonnes at 1.51% Li2O for 790,000 tonnes contained Li2O comprising 8.1 million tonnes of proven ore reserves at 1.55% Li2O and 44 million tonnes of probable reserves at 1.50% Li2O.
The reserves are within a mineral resource of 109 million tonnes at 1.45% Li2O for 1.57 million tonnes contained Li2O comprising 8.4 million tonnes at 1.57% in the measured category, 56.2 million tonnes at 1.48% in the indicated category and 43.9 million tonnes at 1.45% in the inferred category.
Firefinch is in the process of demerging Goulamina into a new ASX-listed entity, Leo Lithium.
In 2021, the company's share price steadily increased from A$0.165 in January to a 12-month high of A$0.865 on the final day of trading, a new high of more than 14 years while FFX's market cap is approximately A$1.02 billion.
Today shares have been as much as 7.6% higher to A$0.93 with more than 16 million changing hands by 3.25pm AEST.