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LONG Firefinch Ltd. (FFX AX)
Initiation Report: March 23, 2022
J Capital Research ("J Cap") is a stock-research company. J Cap has analyzed the Australia-listed company Firefinch Ltd. (“FFX”) and is hereby publishing the outcome and the conclusions of our analysis, based on publicly available information. We may be long shares of FFX AX and, for this reason, there might be a conflict of interest.
, respectively,The political risk in Mali has scared investors away from investigating the value of Firefinch (FFX ASX). We believe Firefinch’s under-appreciated lithium asset, Goulamina, alongside its operational gold mine, Morila, are significantly undervalued based on the current market capitalization.
We view both the gold and the lithium project as de-risked, as they are, respectively, operational and fully funded. We believe Firefinch should be trading at a valuation of between $1.68 bln and $2.28 bln. With the current market cap at $990 mln, the upside is between 70% and 130%.
The catalyst for a reappraisal of the company’s value is when Goulamina is spun out and separately listed as Leo Lithium at the end of this month. Only Firefinch shareholders, on the day of record, will receive pro-rata entitlement of Leo Lithium shares and an entitlement offer for an additional capital raise for Leo Lithium. One last step, the establishment of an approved Malian subsidiary to hold the mining and exploration rights of the project, is now required before the de-merger proceeds.
Spodumene, a pyroxene mineral consisting of lithium aluminium inosilicate, a source of lithium | Photo: Firefinch Goulamina DFS Update, December, 2021