Ann: Goulamina - Progressing a World Class Lithium Project, page-193

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Just keeps goin’ and goin’ and goin’

Again, Stock head readers invested in lithium stocks like Pilbara (ASXLS), Liontown (ASX:LTR), Core (ASX:CXO) and others are well aware that the boom is underway. The dramatic share price performance of the companies this year tells the story.

But not all in the lithium space have run as hard. And the best example of that Garimpeiro can find is Firefinch (ASX:FFX). It is trading at 65c for a market cap of about $600m.

Three recent broker reports set an average share target on the stock of $1.21, with Sprott on the low-side at $1.15, and Canaccord on the high side at $1.30.

Now Firefinch is not your average lithium stock because it is also a fast-growing gold producer, courtesy of its restart of its 80% owned Morila gold mine in Mali.

The West African nation is also home to the company’s Goulamina lithium project, now a joint venture with Chinese lithium heavyweight Ganfeng, with Firefinch to demerge its 50% interest in to a new ASX company (Leo Lithium) in March next year.

Firefinch will be hanging on to 20% of Leo, with the rest of the shares being distributed for free to Firefinch shareholders.

Implicit in the average $1.21 share price target of the brokers mentioned earlier is that Firefinch’s 50% Goulamina stake (45% if the government takes up a 10% stake) is worth more than Morila… much more.

Canaccord summed up the situation nicely when it listed Firefinch as one of its top ASX picks for the current December quarter.

“Firefinch offers a ‘sum-of-the-parts is greater than the whole’ opportunity, in our view, with the current share price only reflecting our value assessment of the Morila gold project, let alone a quality lithium development project at Goulamina in joint venture with one of the world’s leading lithium companies, all in a favourable lithium pricing environment,” Canaccord said.

At what will be the ongoing gold business for Firefinch at Morila, the plan is to ramp up gold production to more than 100,000 ounces in 2022 (Morila produced 7.6 million ounces over 20 years under previous owners), with an annual rate of 160,000 ounces the longer term plan.

As for Goulamina, the joint venture has just announced it is considering a 75% capacity expansion in a planned phase two of its development.

As it is, stage one is already of world class scale at a planned rate of 450,000 tonnes of spodumene concentrate. A final investment decision is due before the end of the year.