The decision was made possible by the two parties agreeing to waive an FID condition to the payment of a final US$91 million upon the formation of the Goulamina JV, and follows a positive update in December to the original October 2020 definitive feasibility study.
"Clearly the outcomes of the DFS update have been extremely compelling to the boards of both companies and it is a testimony to the project's credentials that the partners have moved so quickly and collaboratively to commit to the development of Goulamina," Firefinch managing director Michael Anderson said.
Canaccord Genuity analyst Reg Spencer noted that the updated DFS, which was released on December 6, saw a significant expansion in planned concentrate production from 430,000 tonnes per annum to greater than 800,000tpa through an increase in plant throughput to 4 million tonnes per annum 18 months after commissioning.
The commissioning is currently expected in late 2023 or early 2024, he said.
"The larger plant capacity delivers a significantly larger production profile than our previously modelled development scenario, noting that at the targeted rate, Goulamina would be among the world's largest spodumene operations," Spencer said.
The updated DFS for the West African project has a post-tax net present value of A$4.1 billion and post-tax internal rate of return of 83%, which is more than double the prior DFS.
Firefinch said the operating cost is US$312/tonne of spodumene concentrate and the product has been successfully converted into lithium hydroxide to a specification that meets the requirements of Ganfeng's customers.
"Following the DFS update, the capital cost for the 2.3 million tonnes per annum operation (stage one) increased from $194 million to $255 million," Firefinch said, noting that this was partly driven by associated costs in providing the flexibility to readily move to the stage two, 4Mtpa operation.
Subsequently, Ganfeng has agreed to either supply $40 million in Ganfeng-provided debt or to arrange up to $120 million in third-party debt, which is up from the previously agreed $64 million.
There remains one major condition precedent to the formation of Firefinch's and Ganfeng's Goulamina JV, which is the transfer of the project exploitation licence (PEL) to a single purpose Malian subsidiary as required by the country's legislation.
The PEL transfer is expected early this year and, along with allowing the JV formation, will trigger the payment of the final $91 million of Ganfeng's $130 million contribution, and the release from escrow of the $39 million first payment made last year.
