ASX lithium stock suspended for 8 months gearing up to resume trading

What's going on with this lithium stock? Here's the latest from the company.

| More on:
A man raises his reading glasses in a look of surprise.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

Miner and company person analysing results of a mining company.
Materials Shares

Should you buy BHP shares after recent weakness?

The mining giant's shares pulled back yesterday. Should you be taking advantage?

Read more »

A person wears a roaring lion mask.
Share Gainers

Guess how much a $3,000 investment in Liontown shares ballooned to in just one month

After a lengthy slide, Liontown shares came roaring back this past month.

Read more »

two magicians wearing dinner suits with bow ties wave their magic wands over a levitating bag with a dollars sign on it.
Share Market News

ASX 200 shares vs. property: Which has performed better since the COVID crash?

We reveal which property markets and ASX 200 shares have risen the most since COVID-19 hit us.

Read more »

A woman is very excited about something she's just seen on her computer, clenching her fists and smiling broadly.
Materials Shares

Why did the Sayona Mining share price just leap 5%?

The Sayona Mining share price is smashing the benchmark today. But why?

Read more »

Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.
Mergers & Acquisitions

BHP shares on watch after new $74b Anglo American takeover offer rejected

Is it third time lucky for the mining giant?

Read more »

Two miners standing together.
Materials Shares

Buy one, sell the other: Goldman's verdict on these 2 ASX lithium shares

The broker says lithium prices will not bottom until 2025. Here's what you should do in the meantime.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why did this ASX All Ords stock just crash 24%?

What is weighing down this lithium stock today? Let's find out.

Read more »