Leo Lithium has signed the binding agreement (equity investment agreement) with Chinese lithium producer GFL International (Ganfeng).

The move establishes the investment structure that was announced earlier this month.

As per the agreement, Ganfeng will invest $137.2m directly in cash into the Goulamina holding company, Mali Lithium BV (MLBV), for an additional 5% stake in MLBV.

The respective boards of Leo Lithium and Ganfeng have already approved the equity investment agreement. The agreement now awaits regulatory approvals.

Once complete, Ganfeng’s interest in the Goulamina lithium project in Mali will rise to 55%. Leo Lithium will hold the remaining 45% interest.

Leo Lithium managing director Simon Hay said: “We are extremely pleased to have executed the Equity Investment Agreement with Ganfeng, which cements our solid relationship with China’s largest lithium producer, and the direct project investment is set to facilitate regulatory approvals in China.”

Additionally, Leo Lithium’s joint venture subsidiary Lithium du Mali (LMSA) has commenced drawdown of a $40m Ganfeng debt facility, which was put in place in July last year to fund the Goulamina joint venture (Goulamina JV).

With the execution of the binding equity investment agreement and debt drawdown, the Goulamina JV is now fully funded to first production.

Leo Lithium will continue to remain the operator and manager of the Goulamina JV. It will also retain customary minority shareholder protections.

The Goulamina Lithium Project is located 50km west of Bougouni in Mali. Leo Lithium plans to develop the project as West Africa’s first operating lithium mine using conventional open-pit mining methods.

In July this year, Corica Mali won a mining services contract worth $348m for the Goulamina project.