Kodal Minerals* (KOD LN) 0.40p, Mkt Cap £81m – Flash Note – From maiden production to scaled growth at Bougouni
BUY – 0.86p
- We update on Kodal Minerals, the only AIM listed pure play hard rock lithium producer, highlighting latest developments at the Bougouni Lithium Mine in southern Mali and expansion plans amid a strong recovery in lithium prices.
- Bougouni Lithium Mine (32% KOD) was commissioned in early 2025 and is ramping up Stage 1 (DMS) production to ~120ktpa SC5.5 (~110ktpa SC6), making Kodal the second only lithium producer in the country.
- Stage 2 (FLO) commissioning is targeted for late 2028 and is expected to increase output to ~240ktpa SC5.5 (~220ktpa SC6), supported by a 32Mt @ 1.06% Li2O MRE and a medium-term resource target of 50Mt.
- Stage 2 is expected to deliver higher tonnage at lower unit costs (~220ktpa SC6 at ~$700/SC6 FOB AISC vs ~110ktpa SC6 at ~$750/SC6 FOB AISC for Stage 1) and one of the lowest capital intensities among hard-rock flotation projects (~$94/ore vs >$300/ore peer average).
- At $1,750/SC6 CIF, we estimate ~$190M Revenue and ~ $110M EBITDA pa under Stage 1, rising to ~$375M revenue and ~$225M EBITDA pa following Stage 2 commissioning (100% interest basis).
- ~$190M Stage 2 capex (SPAe; mid point of the guided $175-200M range) is estimated to be self-funded from Stage 1 cash flows at >$1,700/SC6 CIF, with current spot prices >$2,000 providing a meaningful funding buffer.
- Stage 1 (DMS) is expected to deplete by mid-2029 on the current MRE, with scope to extend feed via additional DMS-amenable material, including Boumou, offering downside protection if Stage 2 is delayed.
- Recent fiscal and security developments in Mali raises jurisdiction risk, although, Bougouni continues to operate and export without disruption.
- Strong strategic backing from Hainan Mining (JV partner and ~15% shareholder) that fully funded the Stage 1 (DMS) with a $100M investment and holding 100% offtake from Stage 1 (Stage 2 remains uncontracted and may be used in project funding discussions if required) and continues to provide operational and financial support.
- Leverage to lithium price recovery with base case valuation assuming $1,750/SC6 CIF, below current spot prices, offering meaningful upside to NAV and cash generation if prices remain elevated.
- Solid balance sheet with ~£15M cash (Dec/25) and no bank debt.
Valuation: Risked NAV ~US$230M and TP 0.86p at $1,750/SC6 CIF (base case) implying ~115% potential upside and supporting a BUY recommendation. ~$290M and 1.08p at $2,000/SC6 CIF. Kodal offers compelling upside driven by Stage 1 ramp-up, self-funded Stage 2 expansion and further resource growth potential. A sustained lithium price recovery and successful delivery of the FLO expansion could support valuation upside to >1.0p and beyond, underpinning our positive view on the stock.
*SP Angel acts as financial advisor and broker to Kodal Minerals.
Analysts
Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474
John Meyer –John.Meyer@spangel.co.uk – 0203 470 0490
Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484
Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472
Abigail Wayne –Abigail.Wayne@spangel.co.uk – 0203 470 0534
Rob Rees –Rob.Rees@spangel.co.uk – 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
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