Leo Lithium (ASX: LLL) has entered into a binding agreement to sell 5% of the Goulamina Lithium Project to Ganfeng for US$65 million ($98 million).

Under the sale agreement, Ganfeng will receive an additional 5% interest in the Goulamina holding company Mali Lithium BV (MLBV).

Once the transaction is completed, Leo Lithium’s interest in Goulamina via MLBV will be 40% and Ganfeng’s interest will be the remaining 60%.

Leo Lithium says the consideration from the transaction should not be considered an indication of the potential settlement amount.

The company adds that the Mali government has yet to take an equity position in Goulamina.

Leo Lithium Managing Director Simon Hay says Leo is proud to be partnering with Ganfeng, a cornerstone partner of Leo Lithium.

“And the transaction reiterates their continued endorsement and commitment to Goulamina. The project has the potential to become a world class operation, and construction is advancing steadily.”

Ongoing discussions with the government regarding correspondence received have been progressing towards a potential negotiated settlement, which if reached, would likely require a settlement payment being made.

The company notes that as discussions are ongoing, incomplete, and confidential, it is not yet in a position to provide any further details of the potential settlement with the Mali government.

The US$65 million will be paid by Ganfeng to Leo Lithium in two tranches.

Shares in MLBV will transfer pro rata at the time of payment of the two tranches. The previous investment in Goulamina by Ganfeng (as announced in September 2023) was a sole funding arrangement in return for an ownership increase.

Leo Lithium remains the operator and manager of Goulamina.

Write to Adam Orlando at Mining.com.au

Images: Leo Lithium