Short-Seller Says Lithium Miner Firefinch is Wildly Undervalued

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A rare positive report from J Capital said Firefinch’s main assets – the Goulamina project in Mali in West Africa – were significantly undervalued because of ‘political risk’.


The Australian lithium miner Firefinch should be valued 90% above its current market capitalisation, a short-seller’s report said on Thursday, sending shares in one of the world’s top producers of electric vehicle battery materials makers soaring.

The rare positive report from J Capital said Firefinch’s main assets were significantly undervalued.

“We believe Firefinch’s under-appreciated lithium asset, Goulamina, alongside its operational gold mine, Morila, are significantly undervalued based on the current market capitalisation.”

Firefinch’s Sydney-listed stock rose more than 5% on Friday to A$0.94 ($0.70). The shares have risen more than 40% in the year to date.


West African Project with Ganfeng

The Goulamina lithium project is a large low-cost hard-rock lithium project in the West African nation of Mali.

“Comparing Goulamina to eight other hard-rock projects due to come online over the next two to three years, we found [it would] be the highest-producing mine [and had the] third-largest resources, third-lowest costs and second-lowest capital intensity,” J Capital said.

Firefinch shares rose as much as 5% after the report’s publication. “We believe Firefinch should be trading at a valuation of between A$1.68 billion and A$2.28 billion” the short-seller said in the report.

The midpoint of the range is 90% above the Firefinch’s current market cap of A$1.04 billion.

The Goulamina lithium project is fully funded by its joint-venture partner, China’s Ganfeng Lithium, one of the world’s largest lithium chemical producers.

Ganfeng has also agreed to a 100% of the mine offtake. The Chinese company’s shares rose 0.2% in Hong Kong trading on Friday.


Mali ‘Risk’

“The political risk in Mali has scared investors away from investigating the value of Firefinch,” J Capital said in the report.

Ganfeng owns seven producing lithium mines, which include four of the world’s top 10 producing projects.

In addition, China dominates investment in Mali and has strong political and economic ties with the country. China has invested about $10 billion in Mali over the past decade, including in railways, roads, bridges, and educational and cultural facilities.

In 2021, J Capital settled a lawsuit with another lithium miner, Vulcan Energy, after the company had rejected the contents of a report, branding them “misleading”. J Capital also had to issue an open letter of apology to Vulcan.





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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.