(Yicai) Sept. 7 -- Ganfeng Lithium Group, a Chinese battery materials supplier, said it will invest USD138 million for direct control of the owner of a lithium mine project in Mali.

Ganfeng Lithium will subscribe for new shares of Mali Lithium, the joint venture responsible for developing and running the Goulamina lithium project, increasing its stake to 55 percent from 50 percent, the Xinyu-based company announced late yesterday.

The deal replaces one announced in May whereby Ganfeng Lithium would have gained indirect control of the Goulamina project by purchasing 9.9 percent of Australia’s Leo Lithium for AUD106 million (USD67.5 million). Leo Lithium’s stake in Mali Lithium will now fall to 45 percent from 50 percent.

The new funds will be used for the project’s future construction and capital expenditure, in particular the development and construction of spodumene mines and preliminary processing facilities, the firm said.

The deal improves on the earlier plan by ensuring the funds will be used as intended, hikes Ganfeng Lithium’s control over the project, and makes it easier to promote future construction work and fundraisers, it added.

Ganfeng Lithium will keep all exclusive selling rights of lithium concentrates produced in the first stage of the Goulamina project and 70 percent of the rights in the second phase, it said. The firm will split the rights with Leo Lithium in the third stage based on their new shareholding ratios, it said.

The first stage, including mining and processing facilities with an annual capacity of 506,000 tons of spodumene concentrates, is likely to become operational next year, Ganfeng Lithium noted. The company is also in talks with the Mali government on the possibility of exporting lithium crude ore to China, it said.

The Mali government is legally entitled to a free 10 percent stake in every mining firm in the country, Ganfeng Lithium pointed out. It can also acquire up to 10 percent more in cash or by other means. If it decides to exercise the option, which it will likely do before the Goulamina project becomes operational, Ganfeng Lithium's stake would be diluted, it noted.

Ganfeng Lithium’s shares [SHE: 002460] ended 2.6 percent lower at CNY47.65 (USD6.50) apiece today, while the broader Shenzhen market slid 1.8 percent. Its Hong Kong-traded stock [HKG: 1772] dropped 3.2 percent to HKD37.50 (USD4.78) amid a 1.3 percent decline in the benchmark Hang Seng Index.

Editor: Martin Kadiev