08-May-2024: 9:24am: MoU-Signed-with-Mali-Gov--Sale-of-Entire-Project-to-Ganfeng.PDF (Leo Lithium)
08-May-2024: 7:07pm: FFX-Settlement-with-Govt-of-Mali--Agreement-with-Leo--Ganfeng.PDF (Firefinch)
08-May-2024: 7:08pm: FFX-Continuation-of-suspension-from-quotation.PDF (Firefinch)
30-Apr-2024: 4:08pm: FFX-Quarterly-Activities-and-Appendix-5B-Cash-Flow-Report.PDF (Firefinch)
30-Apr-2024: 10:03am: 2023-Annual-Report-Lodgement-and-2024-AGM-(LLL).PDF (Leo Lithium)
29-Apr-2024: 10:43am: LLL-Quarterly-Report-for-the-quarter-ended-31-March-2024.PDF (Leo Lithium)
29-Apr-2024: 10:44am: LLL-Quarterly-Cash-Flow-Report-31-March-2024.PDF (Leo Lithium)
What a mess!
So both Leo Lithium (LLL) and Firefinch (FFX) - the company LLL was spun out of, and the largest shareholders of LLL shares with 17.61% of LLL - have settled their dispute with the Mali Government (where the Morila Gold Mine and the Goulamina Lithium Project are both located). The short version is that Chinese company Ganfeng Lithium Co are ending up with 100% of Goulamina, after paying LLL US$342.7 million (equivalent to A$0.43 per LLL share) and paying US$60 million to the Mali Government on behalf of FFX and LLL to settle all outstanding claims.
Ganfeng to sole fund all remaining capital until first revenue at Goulamina, LLL to novate management rights to Ganfeng, and will act as contractor to Ganfeng likely into Q4 2024 to ensure a smooth transition, Ganfeng to compensate Leo Lithium for termination of the Co-operation Agreement, the previously agreed Co-operation Agreement which included offtake rights to be terminated, Ganfeng to pay a 1.5% gross revenue fee over 20 years to Leo Lithium in exchange for the offtake and other rights given up with the termination of the Co-operation Agreement, the Mali Government agreement to attend to all outstanding permits and approvals for the Goulamina Lithium Project, and they say Goulamina remains on track for first spodumene production in Q3, 2024.
Goulamina is to be migrated to the 2023 Mining Code, with Government participation in LMSA (the company that will hold the Goulamina project) to be increased to 30% and a further 5% interest in LMSA to be held by private Malian nationals, but that will only affect Ganfeng, as LLL will have zero interest in LMSA or Goulamina other than the 1.5% royalty over Genfang's revenue from Goulamina.
LLL end up with a bunch of cash and a 1.5% royalty on Ganfeng's gross revenue generated from Goulamina, and that's all Leo Lithium end up with - cash and a royalty, and zero ownership or other interest in Goulamina.
FFX end up keeping most of their cash (that they already have), and no assets. FFX are contributing just A$11.5m to the $60m settlement with the Mali Government. They are signing Morila over to the Mali Government and releasing LLL from all liabilities and debt previously owed by LLL to FFX.
The Mali Government end up with Morila plus US$60m (from Ganfeng, paid on behalf of FFX and LLL to settle all outstanding claims).
Interestingly, in relation to the Morila divestment to the Mali Government, FFX said this:
"Firefinch has agreed to transfer its interest in Morila SA and all mining titles its subsidiaries hold in Mali for nominal consideration to a Government company (SOREM SA), such agreement not being subject to Firefinch obtaining shareholder approval. Firefinch sought to negotiate a shareholder approval condition, however, the Government refused its inclusion."
That's interesting because the ASX's announcement that FFX's suspension from trading will continue stated this:
ASX: "The securities of Firefinch Limited (‘FFX’) were suspended from quotation at FFX’s request on 29 June 2022 pursuant to Listing Rule 17.2. FFX’s securities will now continue to be suspended from quotation under Listing Rule 17.3.1."
"Listing Rule 11.2 provides that an entity must not enter into an agreement to dispose of its main undertaking unless the agreement is conditional upon the entity getting the approval of its shareholders. ASX has determined that FFX’s entry into the relevant agreements to dispose of its main undertaking is contrary to the requirements of Listing Rule 11.2 and is a breach of this rule."
Issued by ASX Compliance.
---ends ---
So, in that light, the chance of FFX ever trading again on the ASX are probably slim to none.
And we await the ASX's determination in relation to LLL, seeing as they are also disposing of their main undertaking (Goulamina and associated tenements in Mali), with LLL saying they, "...will discuss with ASX the necessary next steps to lift the suspension of trading in shares of the Company. The lifting of the suspension will be at the discretion of the ASX and an update will be provided in due course."
The first step would probably be to call an EGM and have a vote on the Goulamina asset sale to Ganfeng, something that Firefinch has not been able to do in regard to Morila (because the Mali government were not prepared to agree to it).
Disclosure: I do not hold FFX or LLL shares, however I am interested because I have a strong view on sovereign risk in relation to West African mining (I don't like it) and this is a classic case of that risk playing out with the Mali Government and a Chinese company ending up with all the assets. I do note that in this case FFX and LLL will end up with significant cash and zero debt, however whether that cash finds its way back to ordinary retail shareholders, and if so, when, and how much, is very much unresolved at this point IMO.
For those who may not know, Ganfeng Lithium is headquartered in Xinyu, Jiangxi, China, and is the largest lithium salt producer in China and the third largest in the world, as well as the second largest lithium processor in the world after the Chilean Sociedad Química y Minera (SQM).
I guess this is somewhat positive news for FFX and LLL shareholders, however for now both remain suspended from trading, and I can't actually see a viable pathway for FFX to ever trade again on the ASX after the ASX have stated yesterday that the Morila gold project sale without a shareholder vote breaches the ASX listing rules. In terms of the cash that both FFX and LLL will have (and the LLL shares that FFX still own) I have no idea if, when, and how much will ever find its way back to FFX and/or LLL shareholders.
