Leo Lithium Limited (ASX: LLL) has entered into a binding agreement with China’s largest lithium producer, Ganfeng Lithium.
Leo Lithium managing director, Simon Hay, commented, “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 tier 1 quality of Goulamina, including the significant potential upside of our development pathway.”
Leo will raise A$106.1M through the issue of 131M new fully paid ordinary shares in the company, representing 9.9% of Leo Lithium’s total pro-forma shares on issue, at an offer price of A$0.81 per new share.
The strategic placement and key terms underpinning the proposed cooperation agreement strongly endorse Leo Lithium’s Goulamina project and reflects the excellent working relationship that both companies have established.
Proceeds from the strategic placement will ensure Leo Lithium is fully funded for its share of Goulamina stage 1 development and operational ramp-up costs, in addition to being well-positioned to progress its various co-commitments with Ganfeng as part of the cooperation agreement.
The cooperation agreement is expected to deliver several long-term strategic benefits to Leo Lithium, both at Goulamina and beyond.
Details of the cooperation agreement includes conducting a study into raising planned stage 2 capacity of Goulamina to 500Ktpa, lifting overall planned capacity at the project to 1Mtpa.
Both companies will jointly study the concept of co-investing in a downstream conversion facility in Europe or other suitable region within a reasonable distance of west Africa. The agreement also stipulates the amending of the offtake agreement for stage 2 of the Goulamina project for the potential future downstream conversion facility to produce lithium hydroxide.
Further, both companies will seek to establish and jointly fund an exploration joint venture to focus on opportunities in Australia.
Upon settlement of the strategic placement, Leo Lithium will be well-capitalized with pro-forma 31 March 2023 cash of A$177M, in addition to US$93M cash and US$40M undrawn debt held within the Goulamina JV.
The strategic placement is subject to the granting of regulatory approvals in China, as well as the execution of a binding cooperation agreement.
‘We are proud to be partnering with Ganfeng, who are a recognized global leader across the lithium value chain and look forward to continuing to build on our strong existing relationship.” Added Simon.
To find out more, please visit www.leolithium.com
