Mali approves Leo Lithium’s stake sale to Ganfeng

Australia’s Leo Lithium (ASX: LLL) said the government of Mali had conditionally approved the sale of its remaining 40% stake in Mali Lithium to China’s Ganfeng Lithium for almost US$343 million.

The company also said it had secured two outstanding permits for its Goulamina lithium project, which it held through Mali Lithium.

Leo emphasized the significance of one of the permits — Goulamina’s self-generation power licence. This approval, the West Perth-based company said, authorizes on-site power generation for 20 years, facilitating the transition from smaller temporary power units to a single large-scale power station, in time for the project’s commissioning and operational phases.

Leo Lithium decided to sell its stake in the project in May, after failing to reach a “viable agreement” with the military-led government regarding the project’s ownership. 

A new mining code in the West African nation, adopted in 2023, was expected to increase the government’s potential ownership in the Goulamina project from 20% to 30%, with an additional 5% stake likely to be allocated to a local entity.

Leo Lithium restated that the risks of operating in Mali, combined with the effects of the new mining code, led to the conclusion that selling the stake would be most beneficial for its shareholders.

“While the preferred outcome would have been for Leo to remain involved in Goulamina, we believe in the absence of a viable agreement with the Mali government, this course of action is in the best interest of all stakeholders,” Leo Lithium managing director, Simon Hay, said in the statement.

The executive noted the company and Ganfeng are progressing the transfer of management responsibility of the project, with final documentation expected to be signed next week.

Leo Lithium will cease any involvement with Goulamina from a project, management, and operational perspective on Nov. 13 at the latest, it said.

Goulamina, in southern Mali, is on track to produce its first spodumene in the third quarter of 2024.

Shares in Leo traded at A51¢ apiece on Friday, valuing the company at A$493.5 million ($448.8 million). Its shares traded in a 52-week range of A48¢ and A$1.29.