Leo Lithium (ASX: LLL) has secured the future of its Goulamina Lithium Project in Mali, after signing a Memorandum of Understanding (MoU) with the Government of Mali.

The MoU includes a US$60 million settlement resolving all outstanding issues and facilitates the completion of the US$65 million sale of 5% of the Goulamina Project to Ganfeng, which will fund the settlement.

The MoU will see the Goulamina Project aligning with the new 2023 Malian Mining Code, raising the potential Government project interest up to 35%.

In addition to the MoU, Leo Lithium has entered into a binding agreement with Ganfeng for the sale of its remaining 40% interest in the Goulamina Project for US$342.7 million.

This sale will see Ganfeng taking over full funding of the remaining capital until first revenue, while Leo Lithium transitions management rights to Ganfeng yet acting as a contractor to ensure a smooth handover, projected into Q4 2024.

Despite the challenges posed by the operational environment in Mali and the implications of the new Malian Mining Code, the Board of Leo Lithium says it believes the sale is in the best interest of its shareholders.

The company addresses the increasingly challenging sovereign and security risks, the economic impact from the adoption of the 2023 Mining Code, and the company's financial position to fund remaining working capital requirements.

"Our relationship with Ganfeng remains strong, and we look forward to the next phase of our partnership. We have deeply appreciated our shareholders' patience and support whilst we work to settle this issue with the Mali Government," said Leo Lithium Managing Director, Simon Hay.

Leo Lithium says its looking forward to completing the transaction, transitioning management responsibilities to Ganfeng, and focusing on the commissioning and ramp-up of the Goulamina Project, eying first production in Q3 2024.