(Yicai) May 8 -- Chinese battery materials supplier Ganfeng Lithium Group is paying USD342.7 million for the 40 percent equity held by its partner Australian miner Leo Lithium in a lithium mine in Mali to take full ownership of the mine and ensure a better supply of lithium resources.

Mali Lithium, which was set up as an equal joint venture by Ganfeng and Leo Lithium, is a Goulamina spodumene mine. Xinyu-based Ganfeng has hiked its stake to 60 percent in two separate purchases from Leo Lithium since September last year.

The goulamina mine has proven reserves of 13.1 million tons of spodumene and 210,000 tons of lithium oxide, according to Ganfeng Lithium. There are speculated reserves of 211 million tons of lithium ore, including 2.9 million tons of lithium oxide.

The first phase of the project, which will have an annual output of 506,000 tons of spodumene concentrate, is underway and should be up and running by the third quarter, Leo Lithium said yesterday.

Once the sale is complete, Ganfeng Lithium will have full ownership and will be the sole funder of the remaining construction, Perth-based Leo Lithium said. Leo Lithium will remain as a contractor until the fourth quarter to ensure a smooth handover.

In return for Leo Lithium waiving its distribution rights, Ganfeng Lithium will pay Leo Lithium a commission of 1.5 percent of all lithium ore sales for 20 years after the mine starts production, Leo Lithium said.

Although Ganfeng Lithium will hold a 100 percent stake in Mali Lithium after the transaction, the Mali government is entitled to get a minimum of 10 percent stake and together with the local government, the possible combining holding could rise to as much as 35 percent, according to the country’s 2023 Mining Code, the two companies said. The transaction is still pending approval from Leo Lithium’s shareholders and the Chinese and Mali governments, they added.

Ganfeng Lithium’s share price in Shenzhen [SHE:002460] was trading down 1.9 percent at CNY35.90 (USD5) as of 2 p.m., while in Hong Kong its stock [HKG:1772] was trading down 2.7 percent at HKD24.90 (USD3.20).

Editor: Kim Taylor