The outlook for lithium, which is being driven by the global need for clean energy sources, remains extremely bullish. For Leo Lithium, the new kid on the mining block, its Goulamina Lithium Project in southern Mali underpins an extremely positive looking future. The project, which is targeting spodumene production at the end of the second quarter 2024, is close to 30% complete on the construction phase, MD Simon Hay, tells Modern Mining.
Global management consulting company, McKinsey Battery Insights’ team, has projected that the entire lithium-ion (Li-ion) battery chain, from mining through recycling, could grow by over 30% annually from 2022 to 2030, when it will reach a value of more than $400 billion and a market size of 4.7 TWh.
“Batteries for mobility application, such as electric vehicles (EVs), will account for the vast bulk of demand in 2030—about 4 300 GWh; an unsurprising trend seeing that mobility is growing rapidly,” McKinsey said.
According to Hay, to meet demand for lithium-ion batteries for the electric vehicle industry more lithium producing mines need to come on-board sooner rather than later.
“The lithium industry is currently pegged at between 650 000 and 700 000 lithium carbonate equivalent (LCE). By the end of the decade, the industry would need to grow between 2.5 and 3.2 million tonnes of ICE per annum. Essentially, in the next six and a half years, the industry will need to, at least, triple and even quadruple output to meet projected demand.”
Goulamina targets production in 2024
ASX-listed Leo Lithium, a spin-off from Australian-listed, Firefinch, which held a 50% stake in Goulamina, prior to its sale last year, remains on-track to complete construction on Stage 1 of the project by year-end.
The pure play lithium company, which floated its shares on both the Australian and Frankfurt Stock Exchanges in June last year, where it raised A$100m, has a first mover advantage in Mali, a country renowned as a leading gold producer.
Mali currently has an estimated 18 gold mines in operation, with lithium mining at an infancy stage, but set to play a leading role in diversifying the local economy.
The battery metals developer is set to become West Africa’s first spodumene producer when the project comes online to deliver product into a booming lithium-ion battery industry.
“Leo Lithium is less than a year old and already has a workforce of over 400 Malian and 30 Australian employees working to get the project into production. We are halfway through the construction period and are pleased with our progress to date. Importantly, we are a fully funded project through our 50/50 joint venture with Jiangxi Ganfeng Lithium (Ganfeng), the world’s largest lithium chemicals producer by production capacity,” explains Hay, an experienced lithium miner, who joined the company in March last year.
The project, which has a Stage 1 price tag of some $318 million ($285 million allocated to construction capital and $33 million to working capital), is a two-stage project, with Stage 1 targeting 330 000 tonnes per annum of spodumene to be ramped up to 506 000 tpa in Stage 2. Stage 2 will lag Stage 1 by between 12 to 18 months.
“Although, the throughput of the Ball Mill is 2.3 million tonnes per annum in Stage 1, the throughput capacity for Stage 2 is yet to be finalised. Interestingly, we are building an additional capacity of 4 million tonnes per annum in the crushing circuit in Stage 1. The plan is to take advantage of that capacity when Stage 2 comes online.”
Discussing construction progress, Hay explains that in mid-May the mining contractor had mobilised, initiated earthworks, cleared the site, and moved the first overburden, which allowed the company to commence with concrete works.
“A large portion of the key equipment such as the Ball Mill, crushing equipment, magnetic separators, etc, fabricated in China, has been delivered to West Africa. Our procurement process is well advanced. Although we have recruited the mining contractor and workers, we are busy recruiting key personnel, including board executives, senior managers, and the operations team.”
According to Hay, given the global supply chain pressures not many projects that are currently under construction, are on schedule. The Goulamina Lithium project is, however, on schedule for commissioning next year.
How does Goulamina stack against its peers?
Goulamina is a long life, large-scale, hard rock open pit lithium mine considered to be one of the world’s top hard rock lithium assets in terms of scale and cost of production when compared to peers with similar sized projects.
A key advantage of Goulamina is the quality of the 6% Li2O spodumene concentrate (SC6) product, being high in grade and low in iron and mica impurities. Furthermore, the project’s low strip ratio and life of mine, which is more than 23 years, enhance its financial standing.
“With the deposit being open at depth and along strike, our drilling initiatives continue to expand the resource and reserve base. There exists a potential to increase the size of the open pit mineral resources and ore reserves through infill and extension drilling – we believe that the resource will continue to grow strongly in scale. The grade is also excellent and, when compared to some of our Australian peers, the Goulamina deposit has a much higher grade of 1.5 to 1.6 bg/t where most mines in Australia contain grades in the region of 1.1 to 1.2 g/t. Given our high grades, relatively low costs of production and capital costs, we believe these characteristics make Goulamina an important strategic asset for the world’s growing demand for lithium chemicals.”
Goulamina’s all-in-sustaining-cost of $365 per tonne, which is significantly lower than the AISC of $1 000/t of spodumene currently produced by peers, makes this an extremely attractive project.
“Spodumene is currently being traded at around $4 000/t, which means Goulamina is at the vastly lower end of the cost curve and will ensure that good margins are achieved. If Goulamina were already producing at 330 000 tpa, the company would rank as one of the globe’s top five lithium producers. There are not many lithium players that will be producing at this scale and if we add the target production of a further 506 000 tons per annum from Stage 2, the company will rank as one of the world’s top three lithium producers, which makes this a really significant and highly attractive project.”
The imminent miner has already inked an off-take agreement with Ganfeng for its spodumene from Stage 1; however, off-take agreements from Stage 2 are yet to be finalised, which offers the company great upside as lithium is expected to fetch higher prices from the fourth quarter of this year onwards.
According to Hay, an essential part of the company’s strategy is to sell its stockpiled direct shipping ore (DSO) before year-end and it “will have shipments going out in the fourth quarter of this year”. The lithium developer will ship 90 000 tons of DSO in the fourth quarter of this year with 90 000 t earmarked for the first quarter of 2024.
“We anticipate a further improvement in the price of spodumene and have therefore only allocated DSO for the last quarter of this year and early next year. Our JV partner (Ganfeng), which has acquired the spodumene from Stage 1, foresees strong demand for its product lines in China. Ganfeng’s products are sold to major automotive producers, such as BMW, Tesla, and Chinese car manufacturers, amongst others. As such, it is safe to assume that Goulamina lithium will end up at top tier vehicle manufacturers.”
The early revenue generation will enable Leo Lithium to commission parts of its project ahead of the scheduled spodumene production. “Although we have an idea of how the product will behave, the DSO will verify how the mine will actually operate and how the ore will behave,” explains Hay.
He adds that, aside from the projected price boon, the company has been able to unlock opportunities associated with logistics. “We will transport our spodumene down to Abidjan port and expect to achieve some backhaul product on the way out. Importantly, we believe that the roads are in better condition than initially thought, which means the cycle time for the trucks will be shorter than initially anticipated.”
Further to this, Hay says that the company itself is highly undervalued when compared to its peer groups with projects of the same scale. “While some imminent Australian miners, with projects of a similar size, are valued at around A$5 billion, Leo Lithium is only valued at A$700 million, which presents an ideal opportunity to investors. Apart from the valuation upside, the project is set to make a major contribution to Mali’s economy and become a front-runner in creating a new industry in the country. Importantly, Goulamina lithium brings employment to an area which currently has very little opportunity. We have a comprehensive sustainability and community development programme in place to ensure that we make a meaningful contribution to the region,” concludes Hay.
