Leo Lithium partners with Ganfeng Lithium in $106m deal

Leo Lithium Limited (ASX: LLL) has announced a significant milestone in its growth strategy with a strategic placement and a transformational cooperation agreement with Ganfeng Lithium, China’s largest lithium producer.

The agreement encompasses various strategic benefits and marks a substantial investment in Leo Lithium’s future.

Leo Lithium managing director Simon Hay expressed excitement about the partnership with Ganfeng, a recognised global leader in the lithium industry.

“The Strategic Placement and terms of the proposed Cooperation Agreement with Ganfeng represent a transformational opportunity for Leo Lithium and provide further validation of the tier1 quality of Goulamina, including the significant potential upside of our development pathway,” he said.

Under the terms of the agreement, Ganfeng will participate in a strategic placement to raise $106.1m through the issuance of 131m new shares, representing 9.9% of Leo Lithium’s total pro-forma shares.

The placement was priced at $0.81 per share, which reflects a 6.5% premium to Leo Lithium’s 5-day volume-weighted average price.

The proceeds from the strategic placement will provide Leo Lithium with full funding for its share of the Goulamina Stage 1 development and operational ramp-up costs.

Additionally, it positions the company to advance its cooperation commitments with Ganfeng as part of the broader cooperation agreement.

The cooperation agreement is expected to yield long-term strategic benefits for Leo Lithium.

It includes plans to expand the capacity at Goulamina to 1mtpa and explores opportunities for a downstream conversion facility in Europe or another suitable region.

The agreement also involves amending the offtake agreement for Goulamina Stage 2 to potentially produce lithium hydroxide.

Upon settlement of the strategic placement, Leo Lithium will have a strong financial position with pro forma cash of $177m as of 31 March 2023, in addition to US$93m in cash and US$40m in undrawn debt held within the Goulamina joint venture.

The strategic placement is subject to regulatory approvals in China and the execution of a binding cooperation agreement.

Leo Lithium expects to leverage the cooperation agreement to unlock significant value and accelerate its development plans.

Leo Lithium’s Goulamina Lithium Project in Mali is poised to become a globally significant lithium producer, with forecasted spodumene concentrate production of up to 831,000tpa.

The project benefits from a large-scale, high-grade orebody and a partnership with Ganfeng, which brings expertise and support across the lithium value chain.

The company remains committed to sustainable and responsible lithium production, providing a critical raw material for the growing lithium-ion battery industry and contributing to the global decarbonisation efforts.