Firefinch lithium mine valued at $4.1bn

A revised study for Firefinch’s West African lithium development has more than doubled the project’s value and boosted forecasted mine production from 2.3 million tonnes to 4 million tonnes per annum.

Firefinch revealed an updated definitive feasibility study for Mali-situated Goulamina lithium this morning, which had been undertaken to inform a final investment decision for the project heralded as one of the world’s largest lithium deposits.

The study has estimated Goulamina's after tax net present value at $4.1 billion compared to a before tax NPV of $1.7 billion appraised in October 2020.

Annual mine throughput is estimated at 4 million tonnes annually with spodumene concentrate expected at 506,000 tonnes to a peak of 880,000 tonnes.

Increased expectations have also driven up costs however, with stage one capital expenditure priced at $US255 million ($A363 million).

Initial estimates had capital costs for the project at $US194 million ($A276 million) in 2020.

Recently onboarded funding and joint venture partner Jiangxi Ganfeng Lithium will cover a portion of this however in exchange for a 50 per cent interest in the project as part of an arrangement between parties.

Ganfeng, which is a subsidiary of one of China’s largest lithium producers by capacity, struck a deal for a slice of Goulamina earlier this year.

Under the arrangement, Ganfeng has agreed to supply $US130 million ($A185 million) in total cash for the project and arrange up to $US64 million ($A91 million) worth of debt.

The funds will be invested into Mali Lithium BV, which will hold Firefinch’s interest in Goulamina.

Post-tax internal rate of return for the project is estimated at 83 per cent, which Firefinch says is well clear of the 15 per cent required for a positive final investment decision once the joint venture is formed.

Firefinch expects to make its money back on Goulamina 1.5 years from first production, working on an assumed spodumene concentrate price average of $US978 ($A1,393) per tonne.

Firefinch managing director Michael Anderson said he was delighted with the updated study.

“Only 14 months ago in delivering the original DFS we said that, given market conditions for lithium, we would be patient to ensure we maximise shareholder returns - that patience has been rewarded,” he said in a statement.

The company is set to demerge Goulamina and list the asset within a new company, Leo Lithium, next year.

“We expect to take Leo to market in March-April next year with engineering, construction and drilling works underway and a clear path to first production in early 2024 in front of us.”

Firefinch shares are off 9.88 per cent on the back of the news to trade at 73 cents.