Ann: Joint Venture with Ganfeng - Overview, page-80

My suspicion is that the deal was done the way it was for tax reasons. No-one has officially mentioned any tax consequences from the Ganfeng buy in.

Without any money in the Lithco, Ganfeng effectively paid Firefinch $US65m for 50% of the project, valuing it at $US130m. They put another $US65m cash into Lithco, provided Firefinch matched it, hence our $US65m went straight into Lithco.
Lithco now owns the Goulamina asset valued at $US130m plus has $130m in the kitty, so all up $US260m of value.

This value has been added to with Ganfeng having an offtake for 50% of production.

I think we are all in agreement that the deal doesn't look that good on paper to outsiders, yet open up a world of possibilities for shareholders of both companies. Ganfeng gained 50% ownership of a large lithium resource for a very cheap price. As there business is making and selling lithium chemicals it gives them huge access to a supply of raw material, that could be as big as they want. Given the cheap cost to set up in Mali, with a shovel ready mine, I can see them getting on with the job ASAP.

We already know that Ganfeng have been known to bail on existing contracts when it doesn't suit them, Altura on price, and Pilbara on purchasing quantity contracted, so IMHO they will want as much SP6 as they can get from the mine they own 50%, while 'stiffing' others on 'binding contracts' (just like they have done before). The contract between Lithco and Ganfeng for offtake, based on downstream prices, means that this mine will always be profitable for them.

IMHO the current DFS with 436,000t/a is just the entree if they can expand resources, so I'm expecting lots of news from Lithco as both building of processing plant and exploration happen in the short term (next year or so).
I've done a lot of research into lithium over a fair few years now, and after this deal is the first time I've become excited about the Goulamina deposit.

Ganfeng are not mugs, so they would have done a lot of work on all aspects of this mine happening and be very happy with the quality of lithium and partner. This becomes a great investment for them based on their cheap entry price and the short term value they are adding by legitimacy, and offtake agreement.

IIRC our director BB would possibly have met a few of the Ganfeng hierarchy a few years ago, so we already had a connection there. I hope he has played a prominent part in this deal and gets a major gurnsey in the new Lithco. All IMHO of course..