It has been a long time since Leo Lithium Ltd (ASX: LLL) shares have been seen on the ASX boards.
The Africa-based ASX lithium stock has been out of action since the middle of September.
This has been caused by issues arising from the introduction of a new Mining Code in Mali which impacted its Goulamina Lithium Project.
What's going on with this ASX lithium stock?
The good news for shareholders is that the company's shares could soon return to trade.
That's because this morning, Leo Lithium announced that it has come to an agreement with the Mali Government.
According to the release, Leo Lithium and its joint venture partner, Ganfeng Lithium, have signed a memorandum of understanding (MoU) with the Government of Mali which resolves all outstanding issues.
This includes Leo Lithium entering into a further binding share sale and purchase agreement (SPA) to sell its remaining 40% interest in the Goulamina Lithium Project to Ganfeng Lithium for US$342.7 million.
The previously agreed co-operation agreement, which included offtake rights, will be terminated. However, Ganfeng will pay a 1.5% gross revenue fee over 20 years to Leo Lithium in exchange for the offtake and other rights given up.
Sale breakdown
The ASX lithium stock advised that the US$342.7 million cash consideration that is payable by Ganfeng Lithium is structured as follows:
- US$10.5 million non-refundable deposit to be paid within 10 days of executing the sale and purchase agreement.
- US$161.0 million payable on completion of the transaction following satisfaction of conditions precedent.
- US$171.2 million payable on 30 June 2025 or an earlier date.
Management notes that US$342.7 million is equivalent to A$0.43 per Leo Lithium share. This compares to its most recent share price of A$0.505.
When will Leo Lithium shares return?
With these issues now resolved, it may not be long until we see this ASX lithium stock trading again.
Management advised that it will discuss with ASX the necessary next steps to lift the suspension. Though, it concedes that the lifting of the suspension will be at the discretion of the ASX. An update will be provided in due course.
Leo Lithium Managing Director, Simon Hay, believes the agreement is in the best interests of shareholders. He said:
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.
Our relationship with Ganfeng remains strong, and we look forward to the next phase of our partnership. We have deeply appreciated our shareholders' patience and support whilst we worked to settle this issue with the Mali Government. Given the circumstances, we believe this settlement and sale of the Project to Ganfeng represents the best outcome for all Goulamina stakeholders.
