Make no mistake 130M USD for a percentage of something is better than 0% of something.
Prior to morilla, the Goulamina project and MLL (now FFX) was value sub 50M MC at one point.
Deal appears to stand Firefinch with $US130m PLUS a 50% interest in Dutch SPV, Ganfeng 50% interest in DSPV, which owns 80% Goulamina mine, Mali Govt 20% of Goulamina mine.
It's effectively 40% - which ballpark values the project at around 350-400M USD once consideration is given to the debt component. Irrespective of the detail it's a lot higher than the project was previously valued at and the company itself has stated publicly a few times that it wanted to focus on morilla but obtain value creation from a possible spin-off and JV. They've done exactly that. I applaud the management team and congratulate the holders. Personally I think anyone slagging them off is probably coming off more a jealous sister - as most people had attributed no value to that project and now they've got actual real term valuation from a sector leader. Would they have been better off sitting around waving a 1.3bn NPV and never getting anywhere? Or better with the JV deal they've got and actually creating value and getting to production on now, their second focus project. I'll take the latter.
If you look at the project NPV you'll again see that this is around 30-40% of the the purported output which again re-affirms my views that projects/companies are valued at fractions of their NPV in the development stage and that counterparts valued or thinking they should be valued at 100%+ of their NPV or think projects are typically bought or JV'd at premiums to their NPV's are IMO kidding themselves.
Frankly, I think the FFX Goulamina deal is awesome for African developers (disclosure yes I hold AVZ and another and not FFX). As
@Scarpa says it does make a laughing stock of the posters/companies/lithium commentators, whom were constantly pushing a narrative that African lithium would never be developed or if they did only once Australian lithium was exhausted. Nope!
I'm sure the narrative will now shift that only the Chinese will get involved - which again is a little vacuous in nature given the recent FMG proposal in the DRC energy project from one of Australia's biggest sweethearts. Additionally that, some of the African developers have European offtakes for product.
The deal re-affirms the view that projects are ultimately developed where it makes economical sense to do so. Whilst Australian or favourable jurisdictions projects may attract a slight premium in deals it does not guarantee them or make 'poor jurasdictions' projects totally unfeasible. Case and point.
Again, I think it's great for the sector, and I think it's great for FFX holders whom have waiting a long time to get value creation from the stock - Market will decide what it means on paper but medium to long term i think it's a great benefit. It's always nice to sit and say they got peanuts (which personally i don't think they did), but you can only get what the market/companies are willing to offer. Look at the other deals in lithium space "cough" wodgina which is still mothballed - not exactly a great deal that one.
I do often find the African developer bickering palpable, IMO more on the same page than they are different and this deal goes a long way to improve the optic here at AVZ, lithium development and African development projects as a whole.
SF2TH
