Australian lithium explorer Leo Lithium [ASX:LLL], spin out of broader metals and materials group Firefinch [ASX:FFX], has announced a $106 million strategic placement via a transformational cooperation agreement with Chinese company Ganfeng Lithium.
LLL was trading for 82 cents a piece by the mid-morning, the Australian miner having enjoyed a surge in share price of more than 13%.
Year-to-date, LLL is trading 70% higher in share value, and it’s currently tending nearly 16% above the S&P:
Source: TradingView
Leo Lithium’s strategic placement with Ganfeng
Among the benefits of this agreement, Leo Lithium will receive the commitment to expand capacity at the Goulamina Lithium Project to 1 million tonnes a year and receive a framework for further cooperation on a downstream conversion facility.
The company will raise the $106.1 million from the issue of 131 million new shares, representing 9.9% of Leo Lithium’s total pro-forma shares on issue.
A strategic placement offer price has been set at 81 cents per share based on a 6.5% premium to Leo Lithium’s 5-day VWAP (Leo Lithium’s all-time share price high is 82 cents).
Leo says proceeds from the placement will ensure the group is fully funded for its share of Goulamina Stage One development and operational ramp-up costs.
It will also add more leverage for a better position to progress its various co-commitments with Ganfeng as part of the cooperation agreement.
Under the agreement, Leo expects to conduct a study into raising planned Stage Two capacity to 500k tonnes a year, which lifts the overall planned capacity at Goulamina to 1 million tonnes a year.
The group will also be able to investigate co-investing in a downstream conversion facility in Europe or a suitable region around West Africa, as well as amend offtake agreements for Goulamina Stage Two — and even establish an exploration joint venture for Australian opportunities.
Once the strategic placement is officially settled, Leo believes it will be well-capitalised with pro forma cash of AU$177 million, in addition to US$93 million cash and US$40 million undrawn debt held within the Goulamina joint venture.
The usual regulatory approval grants will need to be passed, and the cooperation agreement will also need to be made binding.
Leo’s Managing Director, Simon Hay commented:
‘The Strategic Placement and terms of the proposed cooperation agreement with Ganfeng represent a transformational opportunity for Leo Lithium and provide further validation of the tier-1 quality of Goulamina, including the significant potential upside of our development pathway.
‘This is an exciting chapter for Leo Lithium with a number of near-term deliverables also underway, including our first spodumene product in 2024 and accelerated revenue from Direct Shipped Ore with shipments planned in the fourth quarter of this year.’
Copper mining stocks 2023
That’s enough about lithium for now.
One metal you’d be wise not to let slip under your radar is one of an unmistakable reddish hue.
There are certain copper stocks worth watching in 2023. If you subscribe to Fat Tail Commodities, you could instantly download James Cooper’s most recent insider report on the subject — all for free.
James will give you instant tips on three of the latest top stock picks for the copper industry and talk about the copper supply crisis. He’ll also discuss how you can position yourself to take advantage of incoming changes to the industry.
Interested in jumping at a potentially lucrative opportunity reserved for the shrewdest of investors?
Find out more and click here today.
Regards,
Fat Tail Commodities
Comments