Leo Lithium has been granted conditional approval from the Mali government for the sale of its remaining 40% stake in Mali Lithium BV (MLBV) to China’s Ganfeng, a key step towards its planned exit from the Goulamina lithium project.

The ASX-listed explorer announced in May that it had agreed to sell its remaining interest in MLBV, a joint venture holding with GFL International, having failed to reach an agreement with the government over issues relating to the  Goulamina project, one of the biggest lithium developments globally.

The project, located in the Bougouni Region, is progressing steadily and aims to become West Africa's first spodumene producer, addressing the increasing demand in the lithium-ion battery industry by producing its initial spodumene concentrate by mid-2024.

Mali’s Mines Minister has conditionally approved the transaction, requiring the submission of transaction documents and payment of capital gains tax (CGT), Mining Weekly reports. Leo already paid $7.6mn for CGT on a 5% sale finalised on May 6. Any additional CGT on the 40% sale will be paid in due course.

“While our preferred outcome would have been for Leo to remain involved in Goulamina, we believe in the absence of a viable agreement with the Mali government, this course of action is in the best interest of all stakeholders,”  commented Leo managing director Simon Hay.

The Goulamina project is expected to have a minimum mine life of 23 years, producing 15.6mn tonnes of spodumene concentrate over that period. Stage 1 spodumene concentrate production is estimated at 506,000 t/y, increasing to a peak of 880,000 t/y in Stage 2.

Ganfeng has agreed to pay Leo $342.7mn for the remaining stake in Goulamina and will assume management responsibilities of the project in June, prior to the completion of the sale. Ganfeng will engage Leo to provide management services to the Chinese group for up to six months.