Leo Lithium
(ASX:LLL) experienced a significant decline in its shares after the company revealed the suspension of work on a lithium mine in Mali by the government. Despite claims to the contrary, Leo Lithium's shares dropped by 50% to 56 cents when it emerged from a trading halt. This news coincided with Albemarle's increased bid for Liontown, boosting other lithium company shares.
The company asserted that the suspension would not delay the project and emphasized that mining activities were ongoing according to the pre-existing plan. Despite these assurances, shares hit a low of 51 cents during trading.
Leo Lithium had been under trading suspension since July 20 and a two-day halt since July 18, following correspondence from the Malian Ministry of Mines. The government formed a commission to examine matters related to the Goulamina Lithium Project, including the status of the government's stake and progress, along with issues concerning the Morila Gold Mine.
Leo Lithium and its joint venture partner, Ganfeng Lithium Group, presented information to the commission to establish their disconnection from Firefinch Limited and the Morila Gold Mine. However, the Ministry of Mines directed Lithium du Mali SA to suspend the direct shipping ore (DSO) component of the project while discussions were ongoing.
Furthermore, Leo Lithium faced challenges related to the Malian government's demand for a 10% project free carry interest in the Goulamina Project. Although Leo Lithium has progressed in fulfilling this requirement, the government has the option to acquire up to a 20% interest in the project-holding company.
Additionally, the government did not exempt the company from certain taxes, resulting in unexpected expenses for import duties and taxes. Leo Lithium anticipates potential further payments of up to $US16.1 million in the current quarter, with a total potential exposure of $US45 million to $US50 million.
Despite the setbacks, Leo Lithium's CEO, Simon Hay, expressed the company's commitment to advancing the spodumene project and engaging with the Ministry of Mines. The company looks forward to an updated Ore Reserve estimate later in the month.
In contrast, Resolute Mining, another company operating in Mali, revealed positive news about its Syama North project. The measured and indicated resource at the project increased by 47%, leading to a rise in Resolute Mining's shares by 0.5%. The company reported improved earnings and profitability compared to the previous year.
Resolute Mining's interim profit for the first half of 2023 reached $US79.8 million, in contrast to a $US8 million loss for the same period in 2022. The company's gold production and sales increased, contributing to higher revenues and improved profitability.
