Ann: Ganfeng to provide up to US$194 million of funding, page-35

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JungleJim1

384 Posts.

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16/06/21

12:39

Post #: 53872497
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Originally posted by dunny29: ↑

Thought I would compare this to the KDR deal from back in 2017, it seems quite similar and considering the clear African risk, I think management have done very well here.

FFX is to receive (all USD) $139 into the JV for a 50% holding of FFX's share of the Goulamina project, currently 90% holding, possibly reduced to 80% should the Malian government elect to take up a further 10% at cost. So $69.5m attributable to FFX if you want to look at it this way.

KDR received $30m plus $80m into the JV, so $70m attributable to KDR looking at it in a roundabout way.

So FFX management have got the same amount of cash value for less % share and African risk, perhaps evens out a bit considering the asset is more advanced though.

KDR had the lure of downstream processing studies, but still needed to raise a considerable amount of capex itself (perhaps as much as $100m for it's own share of capex)

FFX has Ganfeng looking at debt funding the remaining capex and providing extra itself if required, so the company is fully funded to mine. Obviously downstream can still be looked at here. This is a significant advantage on this deal IMO. Plus offtakes are sorted.

It is worth pointing out, KDR ended up getting a $776m AUD takeover offer 2 years later for the it's remaining 50% share of the asset, it is clear that getting a legit partner on board to develop the project adds significant value, although hard to quantify this value in the early stages. If in 2 years there is similar value here (perhaps sooner), then that is more than 200% gain on the current shareprice, for the lithium alone which arguably had minimal value attributed to it currently.

It is clear immense value has been created by this deal, we may not see much of it today, but it is there.

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Its Ganfeng investing US$130m (for its 50% equity ) in Mali Lithium BV (MLB) with
Firefinch retaining 50%. That values MLB at US$260m less 10% free carry interest to the State of Mali ( a further 10% can be acquired at market value)

FFX Price at posting: 52.0¢ Sentiment: Buy Disclosure: Held
8 Upvote

0 Great analysis

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