Firefinch higher as “watershed” partnership with leading lithium producer Ganfeng sees Goulamina substantially funded to production

Firefinch Ltd (ASX:FFX) shares are up after the company secured a deal to jointly develop the Goulamina Lithium Project in Mali, West Africa, with the world’s largest lithium producer by production capacity. The ASX-listed miner has teamed up with Jiangxi Ganfeng Lithium Co Ltd (known as Ganfeng) to establish a 50:50 joint venture that will fast-track the Goulamina lithium asset’s development. Under a binding term sheet, Gangfeng has agreed to provide US$130 million in equity funding to support Goulamina’s development, as well as up to US$64 million in debt funding. Following the news, FFX shares have traded more than 25% higher to reach 57 cents, a new high of more than three years, on strong volume of more than 30 million while the company's market cap at pre-open was $357.2 million. “A watershed moment” Speaking to the agreement, Firefinch chairman Alistair Cowden said: “This is a watershed moment for the Goulamina Lithium Project and an outstanding result for shareholders. “Goulamina now stands to be the world’s next lithium mine of scale. Ganfeng is contributing funding and lithium expertise to transform Goulamina into one of the world’s largest global producers. “The offtake deal effectively integrates and elevates Goulamina into the global lithium supply chain at an optimal time for battery metals demand. “We are delighted to welcome Ganfeng as a partner to Goulamina as we jointly work towards fast-tracking the development of the project, leveraging Firefinch’s in-country operational expertise.” Agreement highlights Ultimately, the new agreement and up to US$194 million in funding means the Goulamina Lithium Project is substantially funded to production. As part of the agreement, a life of mine offtake has been secured, including a floor price and termination rights, further de-risking operations across the more than initial 23-year mine life of Goulamina. Ganfeng has also provided a US$2.5 million deposit on the execution of the term sheet to reflect its commitment to progressing the transaction. The deposit will form part of the producer’s initial investment. As part of the debt financing arrangements, Ganfeng will be required to arrange US$64 million in debt from a bank at a commercial interest rate, or otherwise must provide US$40 million in debt itself at an interest rate of no more than the secured overnight financing rate (SOFR) plus 6%. Chairman Cowden continued: “Importantly, the transaction will deliver several benefits for Mali, providing a clear pathway for the country to host the first spodumene concentrate operation in West Africa, thereby opening Mali for further investment focussed on the battery metals and renewables space. “Moreover, the transaction supports the creation of local employment opportunities, the establishment of local infrastructure and the fast-tracking of community engagement plans to assist the needs of local communities.” Offtake agreement Once both parties reach a final investment decision and receive the final investment, Ganfeng will receive rights to 50% of Goulamina’s life of mine spodumene concentrate. Then, Ganfeng will receive rights to the remaining 50% of Goulamina’s life of mine spodumene concentrate once it provides the debt and Goulamina reaches commercial production within four years from completion of the transaction. If events outside of Ganfeng’s control delay commercial production beyond four years, then Ganfeng will still be eligible to receive 100% of the offtake. Under the deal, both parties will establish the offtake price for any lithium from the project via a formula that takes into account the prevailing price of downstream lithium products. Next steps For the transaction to go ahead and for the JV to be established, several conditions need to be satisfied. These include securing Chinese regulatory approvals, shareholder approval from both Ganfeng and Firefinch investors and any applicable Malian government approvals and consents, including any relevant transfer of mining licenses. Additionally, Firefinch still intends to demerge its interest in Goulamina into a separate lithium-focused entity to be listed on the ASX. However, this won’t occur until the transaction goes through and Ganfeng has made its initial investment. Commenting on the deal, Ganfeng vice-chairman Xiaoshen Wang said: “Firefinch and Ganfeng share the same enthusiasm and vision to develop Goulamina as a world-class, high-grade lithium operation in a sustainable manner and I am confident our organisations will work together to supply high-quality lithium products to meet the continuously growing global demand for clean energy metals.”