Kodal Minerals and Hainan Group Finalize Bougouni Lithium Project Funding Arrangement
Kodal Minerals, a company dedicated to mineral exploration and development with a focus on lithium and gold in West Africa, has declared that it, together with its new UK-based subsidiary Kodal Mining UK Limited (“KMUK”), Hainan Mining Co. Limited (“Hainan”), and Xinmao Investment Co. Limited, a wholly owned subsidiary of Hainan in the UK (“Xinmao”, collectively with Hainan, referred to as the “Hainan Group”), have reached an agreement to finalize the funding arrangement previously announced on January 19, 2023 (the “Transaction”). KMUK, designed to hold the Mali lithium assets, will be 49% owned by Kodal and 51% owned by the Hainan Group.
This completion agreement is a follow-up to the waiver of certain preconditions related to the reorganization of Kodal’s lithium assets in Mali, specifically: (i) the transfer of the Bougouni mining license from Future Minerals SARL to LMLB, a new Malian subsidiary of KMUK; and (ii) the assignment of the Sogola-Nord concession to Future Minerals SARL, another wholly owned subsidiary of KMUK. The government of Mali will gain a stake in this subsidiary mining company upon finalizing the transfers and shareholder agreements. LMLB will serve as the license holder for the Bougouni mining operation and its operator. These asset transfers are slated to take place at a later date, pending formal approval from the Direction Nationale de la Geologie et des Mines (“DNGM”) in Mali. In the interim, Kodal is actively engaging with the DNGM to expedite these transfers, and the assets are considered to be held in trust for KMUK’s benefit, allowing Kodal to advance the Bougouni Lithium project using Hainan’s investment.
Kodal has pledged warranties and indemnities totaling up to US$100 million related to the waiver of these preconditions for the Bougouni mining license and Sogola-Nord concession transfers. These warranties and indemnities are applicable from the time of completion (as defined below) until the assets are transferred, with a two-year window for submitting claims. Kodal guarantees the proper standing of the license and concession at the time of their transfer.
The involved parties are aiming to swiftly conclude all remaining compliance matters, anticipating the transfer of funds (totalling US$117.75 million, including a US$3.5 million pre-payment received as disclosed on August 3, 2023) for finalizing the Transaction to occur in early November 2023. Consequently, the deadline for completing the Transaction has been extended to November 15, 2023, or a later date as mutually agreed upon in writing by the parties (“Completion”). Following the receipt of the Transaction funds, the parties intend to expedite the Bougouni Lithium project’s development and mining operations, aiming to initiate production as promptly as possible.
Details of the Transaction were fully outlined in the Company’s January 19, 2023 announcement.
Bernard Aylward, CEO of Kodal Minerals, commented: “Throughout the process of concluding this funding transaction, Kodal and Hainan have maintained open and frequent communication, allowing us to mutually agree on waiving the remaining preconditions to expedite the project’s progression. Both parties are eager to embark on the next crucial phase of mine development as swiftly as possible.
“Development activities are well underway at the site, including road improvements to facilitate the construction of site infrastructure. Meanwhile, Kodal, Hainan, and our consulting teams are diligently finalizing the processing plant’s engineering design, as well as advancing the mine design and site optimization.
“Securing this funding package transaction marks a significant milestone for the Bougouni Lithium project, and we are eager to closely collaborate with our partners to rapidly achieve production at the Bougouni Lithium mine.”
