Shares in gold and lithium exploration company Firefinch Ltd (ASX: FFX) are in the green on Wednesday and currently trading 4.26% higher at 73.5 cents.
Investors are responding positively to a note from Firefinch this morning, where the company gave an update on the Leo Lithium Limited and the Goulamina Lithium Project.
Image source: Getty Images
What did Firefinch announce?
For a quick backdrop, Firefinch and Jiangxi Ganfeng Lithium Co. Ltd. have formed an incorporated Joint Venture
(JV) to develop Goulamina.
Goulamina is one of the world's largest undeveloped high quality spodumene deposits, Firefinch says. Together with Ganfeng, the company will bring the project into production.
In the 50/50 JV, Ganfeng is set to contribute US$194 million in development funding, comprising of US$130 million in equity funding and US$40-64 million in debt funding.
Although it has been formed, the JV is still subject to various conditions. On satisfaction of this criteria, Ganfeng will contribute the US$130 million in cash towards the JV.
Firefinch announced today that the first US$39 million tranche of equity has been deposited by Ganfeng into an escrow account, following receipt of Chinese regulatory approvals.
The company will then restructure its corporate structure in order to separate its lithium activities from its gold activities. Afterwards, the Project Exploitation Licence will be transferred to the JV company, and the cash will be released from escrow.
Investors can expect the transfer to be complete in early 2022, according to the announcement.
Firefinch previously announced it is currently completing a Definitive Feasibility Study (DFS) update on the site. This will consider a "Stage 2 expansion involving a 75% increase in production capacity from 2.3 million to 4 million tonnes per annum".
This expansion would result in "spodumene concentrate production increasing from 450,000 tonnes per annum in line with the planned throughput upgrade, placing Goulamina among the largest producers globally".
Once the updated DFS is complete, both parties will make a final investment decision on the Goulamina site. According to the company, this remains on track for completion in late 2021.
Firefinch share price snapshot
In the past 12 months, the Firefinch share price has soared over 407% after rallying a further 308% this year to date.
It has climbed almost 23% in the past month and is now up more than 7% over the past week of trading. Each of these results is well ahead of the S&P/ASX 200 Index (ASX: XJO)'s return of around 10% in that time.
