Mali Lithium's DFS confirms Goulamina as economically robust, world-class lithium project

Mali Lithium Ltd (ASX:MLL), which is soon to be renamed FireFinch (ASX:FFX), has delivered a robust definitive feasibility study (DFS) for Goulamina Lithium Project in Mali, confirming a long-life, large-scale, low-cost open pit project. The DFS outlines that Goulamina would deliver strong returns with a pre-tax net present value (NPV) of A$1.7 billion and a pre-tax internal rate of return (IRR) of 55.8%. A key advantage is the quality of the 6% Li2O spodumene concentrate (SC6) product, being high in grade and very low in iron and mica impurities. The study says Goulamina is simple and robust with high grades and low strip ratios enhancing profitability which supports the company's confidence that the project will cater for a lithium supply shortage predicted from 2022 with a sharp increase in demand forecast in 2025. Shares are up more than 8% to 19.5 cents in early trade. “Outstanding returns” Executive chairman Alistair Cowden said: “It is wonderful to have Goulamina confirmed as one of the world’s premier hard rock lithium assets with outstanding returns, few mining projects provide a pre-tax NPV of A$1.7 billion. “Goulamina requires a sharp individual focus and we will be reviewing options to achieve that. “We are aware of market conditions for lithium at the moment and given the quality of the project we will be patient to ensure we maximise shareholder returns.” The ore grade averages 1.6% Li2O in the first five years and 1.51% for the Life of Mine (LoM), one of the highest-grade deposits globally.  Capital cost is estimated at US$194 million, cash costs (LOM) of US$281 per tonne concentrate and an all in sustaining cost (AISC) for years 1-5 of US$306 per tonne concentrate. The project has measured, indicated and inferred resources of 108 tonnes at 1.45% lithium oxide, proven and probable ore reserves of 52 million tonnes at 1.51% lithium oxide and a mine life minimum of 23 years. 23-year open pit mine life A quarterly pit production schedule provides a 23-year mine life, exclusive of two quarters of pre-production in which waste stripping is conducted and a Run of Mine (ROM) stockpile is built. Notably, the ore reserve is entirely open pit making for straightforward and low-risk mining and processing is also simple and low cost given a floatation only approach. The schedule maintains a consistent annual process feed rate of 2.3 million tonnes with a recovery rate of 77% lithium oxide among the best of the project's peers. Average annual spodumene concentrate production is 436,000 tonnes with an annual mine throughput of 2.3 million tonnes. Optimisation opportunities The company is confident that there is considerable potential to increase the size of open pit mineral resources and ore reserves through infill and extension drilling. There is also an opportunity to reduce overall mining costs by running a competitive tender process. Processing optimisation opportunities include, but are not limited to; Configuration of the dewatering cyclones; Relocation of the mill feed surge bin ahead of the HPGR screen; Optimising configuration and layout of the magnetic separators; Refining the de-sliming process; High-intensity conditioning/attritioning of the flotation feed stream; Further separation of process water circuits; and Further reduction of moisture content in the final product to reduce transport costs. Additionally, the haulage strategy will be developed to maximise potential backloading opportunities that may be available with CIM Ivoire with whom the company has agreed an MOU and other haulage contractors. Downstream processing During the DFS a scoping study was completed to evaluate the potential to further process spodumene concentrate to produce a lithium sulphate product. Lithium sulphate can potentially be sold directly to chemical manufacturers for conversion into lithium hydroxide or carbonate. This study identified some promising aspects to the downstream strategy, however further work is required before this can be properly evaluated as a viable option. Funding and project development The company is undertaking a strategic review to consider the optimum path for realising shareholder value for the project which may include joint venture, offtake financing, debt financing, equity financing, sale of project equity, a spin-out or a combination of some of the above. Based on the economic robustness and strategic nature of the project, even at the current low prices, there are reasonable grounds to expect that commercial interest in the project will be high and that the project will be developed. Should the commercial structure chosen to advance the project include an equity issue, this would be dilutive to existing shareholders. The commercial structure selected may also affect the value of the company’s existing shares and be subject to various offtake, financing and other conditions. A schedule looking forwards is forecast to take 24 months from award of the Engineering, Procurement and Construction Management (EPCM) contract to production and shipping of first product. Morila Gold mine The company has recently agreed to purchase the nearby Morila Gold mine in Mali and that transaction will close on October 31, 2020. A strategic review has commenced to evaluate the optimum path to realise value for shareholders from each of these assets.