China’s appetite for all things lithium has continued into 2017 after Chinese interests pounced on an Australian-owned lithium deposit in West Africa with a $107.5 million cash offer.
Little-known exploration play Birimian said yesterday it had signed a letter of intent to sell its Bougouni lithium project in Mali to Shandong Mingrui Group.
The offer, which requires the payment of a $10.75m deposit by January 20, comfortably eclipses Birimian’s market capitalisation of $60.6m before the news.
Should Birimian consummate the offer, it would cap a meteoric rise for the company. Its shares have surged by 421 per cent over the past 12 months amid broader investor interest in the lithium boom.
China is the world’s biggest consumer of lithium, which it manufactures into batteries.
Forecast growth in demand for electric vehicles is expected to drive a surge in demand for lithium and lithium-ion batteries.
Birimian recently announced a maiden mineral resource at Bougouni of 15.5 million tonnes grading 1.48 per cent lithium.
Shares in Birimian shot from 33c to 45c on the back of the news before closing at 37c, indicating a degree of scepticism among investors around whether the proposal would ever come to fruition.
The company said it would continue to work on the project as it awaited the completion of the deal.
“Birimian has formulated a clear and well defined pathway for the potential development of the Bougani project,” the company said in a statement.
“It has been mutually agreed by the parties that on-the-ground evaluation studies and drilling will continue pending completion of the proposed transaction.”
Hartleys analyst Trent Barnett late last year said Bougouni was a good resource that was likely to grow, although the project continued to carry “substantial risk” in part due to its location in Mali.
“Birimian is high risk, but for those that have a bullish view on the next several years for spodumene demand, it could have significant upside,” Mr Barnett wrote.
While Mali has attracted investment from several Australian-listed exploration plays in the past, its reputation has suffered in recent years amid a series of terror attacks around the country.
