Shares in minerals and gold explorer Firefinch Ltd (ASX: FFX) are climbing today and now trade almost 3% higher at 88.75 cents apiece.
In the last 12 months, the Firefinch share price has soared almost 380% and the company’s shares are already in hot demand to start off the trading year.
This upward momentum came as shares popped off a low of 68 cents in December and leapt northwards to close out the year at 86.5 cents apiece.
Today Firefinch shares are lifting as investors respond positively to a company announcement on its Goulamina Lithium project. Here are the details.
Why is the Firefinch share price lifting today?
Firefinch announced that a Final Investment Decision (FID) for the Goulamina Lithium Project has been approved.
The company gave an update that demonstrated a pre-tax net present value (NPV) of $4.1 billion and a post-tax internal rate of return (IRR) of 83%.
Following these “overwhelmingly positive” results, the boards of both Firefinch and Jiangxi Ganfeng Lithium Co. Ltd. have now approved the FID.
The pair have agreed to waive a final US$91 million payment that was baked into the FID upon the formation of the Goulamina Joint Venture (JV).
Firefinch says the major remaining condition precedent to the formation of the JV is the “transfer of the Project Exploitation Licence to a single purpose Malian subsidiary as required by Malian legislation”.
The transfer is expected in early 2022 and, upon the satisfaction of other condition precedents, will allow the
formation of the Goulamina JV per the release.
Final payment of Ganfeng’s US$130 million contribution and the US$39 million first payment made last year are expected in early 2022.
Ganfeng has also agreed to either provide $40 million of provided debt or to arrange up to US$120 million in third party debt (previously agreed up to US$64 million).
This decision came about after the feasibility study on the JV increased capital costs from US$194 million to US$255 million.
Speaking on the announcement, Firefinch Managing Director, Dr Michael Anderson, said:
The approval of FID represents yet another major milestone for the Goulamina Project. Clearly the outcomes of the DFS Update have been extremely compelling to the Boards of both companies and it is a testimony to the project’s credentials that the partners have moved so quickly and collaboratively to commit to the development of Goulamina. We sincerely look forward to maintaining the positive momentum into the New Year as site-based activities increase.
What’s next for Firefinch?
Firefinch says it will continue working with Gangfeng to move forward with early-stage engineering, drilling and various community and environmental works in order to fast track the development of the project.
Firefinch’s costs will also be reimbursed by the Goulamina JV once it is established, the release notes.
The post Here’s why the Firefinch (ASX:FFX) share price is flying higher today appeared first on The Motley Fool Australia.
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