Leo Lithium has agreed to offload an additional 5% stake in the Goulamina lithium project in southern Mali to Chinese lithium producer and joint venture partner GFL International (Ganfeng) for $65m.

According to the terms of the binding agreement, Ganfeng will acquire the additional stake in Mali Lithium BV (MLBV), the holding company of the Goulamina project.

Following the completion of the transaction, Leo Lithium’s stake in the lithium project through MLBV will be reduced to 40%, while Ganfeng’s share will increase to 60%.

The Mali government has not yet acquired an equity stake in the project.

Leo Lithium said that its ongoing discussions with the Mali government concerning received correspondence are moving towards a possible negotiated settlement. Should such an agreement be reached, it is expected that a settlement payment would be made to the government.

Given that the discussions are still in progress, are incomplete, and are confidential, the company stated that it is unable to provide further details about the potential settlement with the Mali government at this time.

Ganfeng will disburse the consideration to Leo Lithium in two separate payments. The first tranche, amounting to $34.8m, will be paid to Leo Lithium contingent upon the formalisation of settlement documents with the Mali government.

Following the initial payment, a second tranche of $30.2m will be transferred to Leo Lithium 60 days later, on the condition that the settlement with the government remains valid and in good standing.

Leo Lithium managing director Simon Hay said: “We are proud to be partnering with Ganfeng, a cornerstone partner of Leo Lithium, and the Transaction reiterates their continued endorsement and commitment to Goulamina.

“The project has the potential to become a world class operation, and construction is advancing steadily.”

The Goulamina lithium project encompasses a 100km² area within the Bougouni Region, situated roughly 150km away from Mali’s capital city, Bamako.

The project’s definitive feasibility study (DFS) outlines a large-scale, long-duration, hard rock open pit lithium mining operation, with a post-tax net present value of $2.94bn.

Goulamina is on track to produce its first spodumene concentrate by mid-2024, aiming to cater to the lithium-ion battery industry. It is expected to become West Africa’s first spodumene producer.

Last July, Leo Lithium awarded a $348m mining services contract for the Goulamina lithium project to Corica Mali, a subsidiary of Corica Mining Services.