The gold and lithium miner has announced 2 significant agreements for its West African projects.
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The Firefinch Ltd (ASX: FFX) share price is soaring following news of two significant developments for the company, which is headquartered in Australia but focused on mining operations in Mali, West Africa.
At the time of writing, the Firefinch share price is trading at 50.5 cents – 10.99% higher than its previous closing price. In early trade, the share price reached an intraday high of 57 cents.
The gold and lithium miner has announced a joint venture with the world’s largest lithium company by production capacity, Ganfeng Lithium Co Ltd.
Ganfeng is a Chinese lithium chemicals and metals producer listed on the Hong Kong Stock Exchange
and Shenzhen Stock Exchange with a market capitalisation of about US$26 billion.
The companies plan to jointly develop and operate the Goulamina Lithium Project in Mali, which is wholly owned by Firefinch.
Firefinch says Goulamina is among the world’s highest quality and largest undeveloped lithium deposits.
Additionally, Firefinch has awarded a joint venture mining contract for its 80%-owned Morila Gold Mine, which it acquired in November 2020. The mine is also located in Mali.
Firefinch shares entered a trading halt early yesterday. Today is their first trading session since Friday’s close.
Let’s take a detailed look at the latest news from Firefinch.
New joint venture with Ganfeng
Firefinch shares are having a bumper day after the company announced it has signed a binding term sheet with Ganfeng to enter a 50:50 joint venture to develop and operate the Goulamina Lithium Project.
The joint venture will see the project funded by Ganfeng and operated by Firefinch.
A separate company, Mali Lithium BV, will be formed to hold Firefinch’s 50% interest in the joint venture and US$130 million of Ganfeng’s funding. As the project develops, Ganfeng will progressively gain a 50% interest in Mali Lithium.
Ganfeng will also provide up to US$64 million in debt facilities. Ganfeng’s debt facility and funding is expected to finance Goulamina through to production.
Additionally, Ganfeng will enter an offtake agreement to buy the products of Goulamina, providing a guaranteed revenue stream.
The companies expect a final investment decision on the project in 6 months, dependant on transaction approvals.
Goulamina’s pre-feasibility study found the project’s production will likely be around 436,000 tonnes of spodumene concentrate annually. That would make around 64,700 tonnes of lithium carbonate equivalent.
Goulamina is expected to have an initial 23-year mine life.
As previously announced, Firefinch plans to demerge the Goulamina project to a separate lithium-focused ASX listed entity named Lithium Co. The demerger won’t happen until a final investment decision is made on Goulamina.
Mining contract awarded
Additionally, after yesterday’s close, Firefinch announced it has awarded the mining contract for its Morila Gold Mine to a joint venture between international mining contractor, Mota-Engil and Malian contractor Inter-Mining Services.
The contract is worth around US$360 million. Work at the mine will commence in August.
Firefinch share price snapshot
Today’s boost has added to the stellar performance of the Firefinch share price on the ASX lately.
Currently, Firefinch shares are around 178% higher than they were at the start of 2021. They have also gained around 376% since this time last year.
The company has a market capitalisation of around $392 million, with approximately 785 million shares outstanding.
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.