Leo Lithium Suspends Trading Due to Mali Government Dispute
LEO LITHIUM LIMITED (LLL) Share Update July 2024 Wednesday 17th
Leo Lithium Faces Suspension Amid Mali Government Dispute
Leo Lithium Limited (ASX: LLL) has announced a suspension of its securities until November 3, 2023, due to ongoing disputes with the government of Mali regarding the Goulamina Project.
Instant Summary:
- Trading suspension extended until November 3, 2023.
- Dispute with Mali government over Goulamina Project.
- Concerns about irregular permit transfer and new mining code.
- Potential negative impact on project and company investment.
Background
Leo Lithium Limited has extended the suspension of its securities until November 3, 2023, due to unresolved issues with the government of Mali. The company initially requested a trading halt on September 15, 2023, followed by a voluntary suspension on September 19, 2023. The suspension was extended on October 3, 2023, to address ongoing negotiations and correspondence from the Mali government.
Government Correspondence
The Mali government raised several concerns regarding the Goulamina Project. These include allegations of irregularities in the transfer of the original Goulamina permit from Firefinch Limited to Lithium du Mali SA, the current owner of the permit. The government also invited Leo Lithium to apply for a new exploitation permit and proposed migrating the project to the newly promulgated 2023 Mali Mining Code.
Impact of the 2023 Mining Code
The 2023 Mali Mining Code, which was promulgated on August 29, 2023, introduces significant changes compared to the 2012 Mining Code. These changes include an increase in the Mali government's stake in mining projects, a reduction in exploitation license terms, additional social fund payments, and the elimination of corporate tax, VAT, and customs incentives. Leo Lithium believes these changes will have a significant negative impact on the Goulamina Project and its investment.
Company's Position
Leo Lithium has repeatedly communicated to the Mali government that it has no corporate relationship or common control with Firefinch, except for Firefinch being a shareholder. The company maintains that the permit was validly transferred and regulated under the 2012 Mining Code, and that the new code should not apply to the Goulamina Project. Despite these assertions, the Mali government remains firm in its stance.
Additional Information
Leo Lithium has released several announcements to keep the market informed, including its 2023 Annual Report and updates on the transfer of project management to Ganfeng. The company has also held a webinar to address shareholder questions about the proposed transaction involving its remaining interest in the Goulamina Project.
The suspension of Leo Lithium's securities and the unresolved issues with the Mali government are likely to have a negative impact on the company's stock. The potential application of the 2023 Mining Code could significantly affect the project's profitability and investor confidence. The market may react negatively to the prolonged suspension and the uncertainty surrounding the project's future.
Investor Reaction:
Investors and analysts have expressed concern over the ongoing dispute with the Mali government and the potential negative impacts of the 2023 Mining Code. Some investors are cautious about the prolonged suspension and the uncertainty it brings to the company's future prospects.
Conclusion:
Investors should closely monitor the situation and await further updates from Leo Lithium. The resolution of the dispute with the Mali government and the company's strategic response will be crucial in determining the long-term impact on the stock. Staying informed about developments in the Goulamina Project and the broader mining industry will be essential for making informed investment decisions.