REUTERS: Ganfeng Lithium Co, one of the world's biggest lithium producers, said on Monday it would pay US$130 million for a stake in the Goulamina hard-rock mine in Mali and take at least half of its first-phase output.
The purchase marks the Chinese firm's first investment in lithium mining in Africa as it seeks to expand production for the commodity used in electric-vehicle batteries.
Ganfeng, which has projects in China, Mexico, Australia, Argentina and Ireland, said in a filing it would take a 50per cent stake of a special purpose vehicle set up by Goulamina's current licence holder, Australia-listed Firefinch Ltd, that will fully own operating company Lithium du Mali SA.
The filing said Mali's government had the right to take 10per cent of the equity free of charge and pay in cash for up to 10per cent more.
Firefinch said Goulamina, which lies about 150 km (93 miles) by road south of Mali's capital Bamako, was "one of the world's highest quality lithium assets."
A feasibility study was completed last year but it was not immediately clear when production would start.
The project has 108.5 million tonnes of resources and high-grade spodumene concentrate, Firefinch said in a presentation last month. Spodumene is a lithium-rich mineral that can be converted into battery-grade lihium products.
Ganfeng said it would acquire offtake rights to 50per cent of first-phase annual production capacity of 455,000 tonnes of spodumene concentrate but may obtain 100per cent if it helps Lithium du Mali raise debt or gives financial assistance.
The Chinese company might help raise at least US$64 million from banks or other financial institutions for development and construction of the mine, and might also opt to provide up to US$40 million in direct financial assistance, the filing said.
Ganfeng signed an initial five-year deal in December to buy spodumene concentrate from the Manono mine in the Democratic Republic of Congo but did not take an equity stake.
This story corrects paragraph 3 to show Ganfeng has a project in Mexico, not Canada.
(Reporting by Tom Daly; Editing by Edmund Blair)