Leo Lithium Finalizes Sale of Mali Lithium BV Stake to Ganfeng
LLL (LLL) Share Update November 2024 Monday 25th
Leo Lithium Completes Sale of Mali Lithium Stake to Ganfeng
Leo Lithium Limited (ASX: LLL) has successfully completed the sale of its remaining 40% shareholding in Mali Lithium BV to Ganfeng, marking a significant milestone for the company.
Instant Summary:
- Completion of sale scheduled for 26 November 2024.
- Leo Lithium to receive US$161 million Tranche 1 consideration.
- Goulamina Services Agreement with Ganfeng has expired.
Completion of MLBV Sale
Leo Lithium Limited has announced the satisfaction of all conditions precedent for the sale of its 40% stake in Mali Lithium BV (MLBV) to GFL International Co., Ltd (Ganfeng). This sale includes Leo Lithium's remaining interest in the Goulamina Lithium Project.
The final approval from the Chinese Government was received, allowing the transaction to proceed. The completion is scheduled for 26 November 2024, at which point Leo Lithium will receive the Tranche 1 consideration of US$161 million. After accounting for the Mali capital gains tax of US$44.7 million, the net payment will be US$116.3 million.
Financial Details
The Mali capital gains tax will be paid directly to the Mali Government by Ganfeng. This tax amount aligns with previous estimates provided by Leo Lithium. Additionally, a Tranche 2 payment of US$171.2 million is expected by 30 June 2025, with interest accruing at the Secured Overnight Finance Rate plus 2% until the payment date.
Leo Lithium plans to distribute the net Tranche 1 payment, along with a US$10.5 million deposit and an A$11.5 million contribution from Firefinch Limited, to shareholders in January 2025. Further details will be provided after the completion of the sale.
Expiration of Goulamina Services Agreement
The Goulamina Services Agreement between Leo Lithium and Ganfeng, which began on 29 June 2024, has expired as of 13 November 2024. Under this agreement, Leo Lithium provided support services to Ganfeng, which assumed management responsibilities for Lithium du Mali S.A.
While the current agreement has ended, both companies may consider future support service arrangements on commercially viable terms if necessary.
The completion of this sale is a significant financial event for Leo Lithium, providing substantial liquidity through the Tranche 1 payment. This influx of capital could positively influence the company's stock price by improving its financial position and enabling potential reinvestment opportunities. However, the cessation of the Goulamina Services Agreement may require strategic adjustments.
Investor Reaction:
Analysts are likely to view this transaction favorably due to the immediate financial benefits and reduced operational obligations. The market may respond positively to the improved cash position, though some may express caution regarding the company's future growth strategy without the Goulamina Project involvement.
Conclusion:
Investors should consider the implications of Leo Lithium's strengthened financial position and the potential for strategic reinvestment. Monitoring the company's subsequent moves post-transaction will be crucial for assessing long-term value.