Atlantic Lithium Limited (AIM: ALL) (ASX: A11) (OTCQX: ALLIF) has received a mining lease from authorities in Ghana for the country’s first lithium mine.
On Friday, the Australian mining company announced receiving the lease from Ghana’s Ministry of Lands and Natural Resources for the Ewoyaa hard rock lithium project. The open-pit mine is expected to produce 3.6 million tonnes of spodumene concentrate over a 12-year life span.
Atlantic says Ewoyaa will become one of the top 10 spodumene concentrate producing operations throughout the world. Ghana’s government will be entitled to a 13 per cent free carried interest and a 10 per cent royalty rate.
Atlantic will now be able to engage with mining and commercial production at the site for 15 years. The company will be required to commence commercial production within two years and list its shares on Ghana’s national stock exchange as part of the agreement.
The project will cost approximately US$185 million to develop, which will be largely funded by Piedmont Lithium (ASX: PLL) (NASDAQ: PLL) and a minerals investment fund from the Government of Ghana.
Once commercial production begins, Atlantic and Piedmont will both hold a 40.5 per cent stake while Ghana’s government has a 13 per cent interest and the minerals investment fund holds the remaining 6 per cent share in the project.
“The mining lease is a major endorsement of the viability of the project and a landmark de-risking milestone in its advancement towards production,” said Atlantic’s Executive Chairman Neil Herbert.
“As a first mover in Ghana, we look forward to working closely with our in-country partners to set an example for responsible modern mining, delivering long-lasting benefits to all stakeholders in the process,” he added.
“With our sights set on first production, work is now well underway to prepare Ewoyaa for shovel readiness.”
The historic moment that Hon. Samuel A. Jinapor granted Ghana's first Mining Lease for lithium to Atlantic Lithium’s Ewoyaa Lithium Project.#ALL #A11 $A11 $ALLIF #Lithium #Ghana pic.twitter.com/GZrB5cxvsW
— Atlantic Lithium (@AtlanticLithium) October 20, 2023
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Piedmont will have the opportunity to earn up to a 50 per cent interest in Atlantic’s lithium operations in Ghana, including 50 per cent of spodumene concentrate sales.
The company will be funding an initial US$70 million for development of Atlantic’s project and 50 per cent of future expenses building on an agreement established by the two companies in July, 2021.
Pursuant to the agreement, Atlantic will also be conducting a scoping study to assess the viability of establishing a lithium processing plant in Ghana. If found to be feasible, the country’s government would provide funding incentives.
Atlantic will be conducting a feasibility study at the site for producing feldspar as a byproduct of spodumene concentrate production as well, which would potentially generate significant revenue. Feldspar is a large group of minerals that are primarily used in the production of glass, ceramics, paints, plastics and other products.
Earlier this month, Atlantic received approval from authorities in the country to divert two transmission power lines that are currently running across the proposed mining area at Ewoyaa.
In addition to a 560 square kilometre land package in Ghana, Atlantic holds 774 square kilometres of relatively unexplored tenure in Côte d’Ivoire.
Ghana is estimated to hold 180,000 tons of lithium resources and is Africa’s number one producer of gold as well. In 2020, gold mining accounted for 48.4 per cent of the country’s gross merchandise exports.
Atlantic shares stayed flat Friday at C$0.42 on the Australian Securities Exchange.
