Published on Wednesday May 15, 2024 by New Awakening at Bamako.com
Resolution of the Malian State-Firefinch-Leo Lithium-Ganfeng Lithium dispute: The Malian State recovers the Morila mine and obtains 30% in the very first lithium mine in the country.
We will never stop saying it, Mali has enormous mining potential. However, its exploitation is the exclusive prerogative of foreign multinationals. Which does not benefit not only the State but also the populations. With the implementation of the new mining code, the situation is changing.
Indeed, the new mining code, which only applies to new operations, leaves a special place for the State in the control of its mining resources. Thus, as part of the resolution of a dispute between Firefinch, Leo Lithium and the Chinese Ganfeng Lithium, the Malian State bought the Morila mine and obtained 30% interest in the first mine of lithium.
According to well-informed sources, the Société de Recherche et d’Exploitation des Resources Minerales du Mali (SOREM-SA), the Malian public company, will buy the Morila mine. This re-purchase is part of the resolution of the dispute.
With more than 200 tonnes of gold delivered during its two decades of existence, Morila is one of the most productive mines in Mali. Firefinch acquired it in 2020 with the aim of giving new life to this end-of-life asset. It is this mine that will ultimately come under state control. At least this is the information given on May 8 by its current Australian owner Firefinch who announced the sale of the mine to the Société de Recherche et d’Exploitation des Resources Minerales du Mali (SOREM-SA) for a symbolic dollar.
This marks the end of Firefinch's ambitious project to revive the Morila gold mine.
Operated for two decades with more than 7.5 million ounces of gold delivered over this period, Morila was purchased in 2020 by Firefinch. The Australian company then put in place a plan to operate the mine until 2030, before deciding to sell Morila due to a lack of liquidity to support activities.
And that's not all.
Also as part of the settlement of the dispute, Ganfeng agreed to pay $60 million to the Malian government, on behalf of Leo and Firefinch.
According to Firefinch, Bamako initially vetoed the Morila sale process and demanded that this transaction be part of the resolution of another dispute relating to Mali's first lithium mine, Goulamina, owned by Leo Lithium and Ganfeng.
Goulamina belonged until 2021 to Firefinch which created Leo Lithium in order to entrust its flagship project to an entity different from the owner of the Morila gold mine.
However, the Malian government considers the two companies as a single entity and considers the transfer of mining title which allowed Leo Lithium to take control of Goulamina to be irregular, explains the two Australian companies.
“Any finding that Goulamina's permits and licenses are invalid or irregular would have a material adverse impact on Firefinch, given Firefinch's 17.6% interest in Leo and Leo's interest in Lithium du Mali SA, the Malian company which directly owns the Goulamina mine." [Editor's note].
This indicates the Firefinch press release which thus justifies its decision to sign the Morila sale agreement.
Furthermore, the agreement also established the participation of the Malian State in Goulamina at a maximum of 30%, compared to 20%.
The Malian state's interests in the country's first lithium mine increases from 20 to 30%.
Still according to our sources, Mali should establish itself in 2024 as the leading producer of lithium in West Africa, thanks to the Goulamina project.
Under the previous mining code, the government should have obtained a maximum 20% interest in the country's first lithium mine. But with the new mining code, Mali's first lithium mine will be 30% owned by the government, with an additional 5% interest for local investors. This is the announcement made on May 8 by the Australian mining company Leo Lithium, which also specifies that it has sold its stake in Goulamina to the Chinese Ganfeng Lithium, already a shareholder in the project.
For several months, Leo Lithium and the Malian State have been holding discussions relating to the application of the new mining code adopted in 2023 by Bamako to the Goulamina project which until then benefited from the rules of the previous code.
For the Malian state, the transfer of the Goulamina mining permit between the previous owner Firefinch and the new Leo Lithium took place irregularly, requiring the obtaining of a new permit.
Leo Lithium challenged this irregularity without winning its case, leaving the Goulamina project in a sort of legal limbo, preventing the expected start of production this year.
With its Chinese joint venture partner, the Australian company finally reached an agreement, with the Malian authorities winning their case.
As a result, the project will be entirely driven by Ganfeng Lithium which is expected to pay $342.7 million to acquire Leo Lithium's 40% stake.
Note that the entry into production of the Goulamina deposit is now expected in the third quarter of 2024, which will make Mali the leading West African producer of lithium. The mine has a mine life of more than 23 years, with annual production of up to 1 million tonnes of spodumene concentrate.
Youssouf Konaré
Source: The New Awakening
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