Australia-listed Leo Lithium said Wednesday it will exit its Goulamina lithium project in Mali, selling its remaining 40% interest to JV partner Ganfeng, Kallanish reports.

The Chinese giant will pay $342.7 million for the stake and compensate Leo Lithium for the termination of its offtake and other rights with a 1.5% gross revenue fee over 20 years. Leo will act as a contractor to Ganfeng into Q4 2024 to ensure a smooth transition.

Leo says the decision comes amid a $60m settlement with the Mali government “resolving all outstanding issues” burdening the spodumene concentrate project in West Africa. This will be paid with funds from a previously announced $65m sale for 5% of the project to Ganfeng.

Simon Hay, Leo’s managing director, says that given the circumstances, the settlement and sale of the project to Ganfeng represents the “best outcome” to all Goulamina stakeholders.

“Despite our best efforts to reach a viable agreement with the Mali government and considering the increasing risks associated with operating in Mali, the impact of the new 2023 Mining Code and the company’s financial position for future funding, the board of Leo Lithium has determined that a sale of the company’s remaining interest in Goulamina is in the best interests of Leo Lithium shareholders,” he adds.

First spodumene production is now expected in Q3 2024. Under the MOU settlement signed with the government, Mali authorities will facilitate the granting of any permit and authorisation needed for the project. With 211m tonnes of resources, Goulamina is the fifth largest global spodumene deposit. Its planned capacity currently stands at 1m t/y, when fully operational.

Last July, Leo announced a trading halt due to issues with the Mali government; the quotation suspension should be lifted in due course. Among the problems challenging the project, was the introduction of a new mining code last year, under which the government potential ownership in mining projects increased to 30%, from a previous 20%. Additionally, a further 5% can now be ceded to locals, lifting total state and private Malian interests to 35%.  

The government also prohibited the sale of direct ore shipment (DSO) last year, reducing project revenue ahead of its production start-up; and didn’t recognise terms of previous agreements including customs and exemptions on equipment and petroleum product imports.

With the settlement, the dispute over the irregularity of the licence transfer and all other legal disputes have been settled, including the exemption of customs duties and fees on equipment for the remaining construction phase of the project.

Leo and Ganfeng expect the transaction to be completed in October 2024, subject to regulatory approvals and other conditions.