Ganfeng Lithium Group has reached an agreement to acquire its partner Leo Lithium’s remaining 40% stake in the Goulamina lithium mine in Mali for $342.7m.

This acquisition includes a $10.5m non-refundable deposit to be paid within ten days of executing the sale and purchase agreement.

The remaining $161m is payable upon completion of the transaction, following the satisfaction of conditions precedent. An additional $171.2m is due by 30 June 2025 or earlier.

Leo Lithium also entered a memorandum of understanding (MOU) to settle all outstanding issues with the Malian Government for $60m.

It announced the completion of the previously announced 5% sale to fund the settlement.

The latest move comes after the introduction of Mali’s new mining code last year, which allows the state to have a larger share of new projects.

Leo Lithium’s board believes that divesting the company’s remaining stake in Goulamina aligns with shareholder interests.

The decision factors in the increasingly challenging sovereign and security risks in the country, the expected economic impact from the adoption of the 2023 Malian Mining Code and the company’s financial position to fund the remaining working capital requirements.

The transaction equates to A$0.43 per Leo Lithium share.

As of 31 March 2024, Leo Lithium reported a closing cash position of A$69.3m, with the Goulamina joint venture (JV) holding an additional $21.8m.

Despite the ownership changes, the project construction remains on schedule, with first spodumene production expected in Q3 2024.

In exchange for offtake and other rights, Ganfeng will pay a 1.5% gross revenue to Leo Lithium in the coming 20 years.

These rights were relinquished by Leo Lithium after termination of a previously agreed cooperation agreement.

Leo Lithium managing director Simon Hay said: “After a long period of discussions together with our JV partner Ganfeng, we have signed a MOU with the Mali Government, resolving all outstanding issues concerning the Goulamina Lithium Project.

“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.

“The Board believes the executed sale and purchase agreement with Ganfeng provides our shareholders with certain value under highly challenging circumstances.”