Kodal Minerals Plc, the mineral exploration and development company focused on lithium and gold assets in West Africa, announces its unaudited interim results for the six months ended 30 September 2023.
Highlights
Operational
· Funding transaction completed in November 2023 with Hainan Mining Company (“Hainan” or “Hainan Mining”) to provide
o $100m investment in to the Bougouni Lithium Project in Mali (“Bougouni” or the “Project”) to fully finance the development of the mine, with Hainan acquiring a 51% stake in the Project;
o $17.75m subscription for shares in Kodal Minerals, giving Hainan a 14.7% holding in the Company.
· New Mineral Resource estimate for Bougouni announced in November 2023 of 31.9 million tonnes (Mt) at 1.06% Lithium Oxide (Li2O), an increase of over 40% from the previous Mineral Resource estimate.
· Engineering and development work at Bougouni continued including work on construction of a new access road for the mine
· Relationships with the local community in Bougouni remain strong with ongoing discussions to prioritise an extensive community development programme
Financial
· For the 6 months to 30 September 2023, the Company made a loss of £509,000 (6 months to 30 September 2022: £491,000).
· Total investments in lithium and gold assets increased to £17.0 million from £14.5 million as at 31 March 2023
· Cash balances at 30 September 2023 were £1.7 million (30 September 2022: £0.6 million) and following the closing of the Funding Transaction now stand at £11.2 million.
Overview:
The Company has continued to focus on the fast-track development of the Bougouni Lithium mine and to that end the Company announced in January 2023 a major funding transaction for US$117.75 million (the “Funding Transaction”), paving the way for the opportunity for Kodal to be the first London-quoted lithium producer. The Funding Transaction was completed on 15 November 2023 with all funds received.
The Funding Transaction was agreed with Hainan Mining Co. Limited (“Hainan” or “Hainan Mining”) and its wholly owned UK-incorporated subsidiary Xinmao Investment Co. Limited (“Xinmao” and together the “Hainan Group”), and provides full funding for the development and commencement of production at the Bougouni Lithium Project in Mali (“Bougouni” or the “Project”), as well as supporting ongoing exploration and development programmes designed to continue the expansion of the Project.
The Funding Transaction consists of a US$17.75 million equity subscription by the Hainan Group into Kodal, with these new ordinary shares admitted to trading on AIM. As a result, the Hainan Group now holds 14.72% of the issued share capital of the Company. The Funding Transaction also includes a US$100 million investment into Kodal’s UK subsidiary company, Kodal Mining UK Limited (“KMUK”), by the Hainan Group, primarily to provide the financing to construct the Bougouni lithium production operation. Following the transaction, KMUK is 49% owned by Kodal and 51% by the Hainan Group.
Bougouni Lithium Project – Mineral Resource Update
In November 2023 Kodal announced a new JORC Mineral Resource estimate (MRE) for the Bougouni Lithium Project of 31.9 million tonnes (Mt) at 1.06% Lithium Oxide (Li2O), an increase of over 40% from the previous Mineral Resource completed in 2019. The significant increase relates to the Ngoualana and Boumou deposits following the drilling programmes completed in early 2023.
The updated Mineral Resource estimate has been prepared as part of the development plans for Bougouni. As previously announced, the Company plans for a two-stage development strategy: Stage 1 involves processing ore from the Ngoualana deposit through a dense media separation (“DMS”) process plant; and Stage 2 processing ore from the Boumou and Sogola-Baoulé deposits through a flotation plant.
Highlights of the Mineral Resource estimate include:
· The 40% increase in Bougouni’s spodumene resource adds 10.6Mt to bring the overall MRE to 31.9Mt at 1.06% Li2O following 3,230 metres of RC/diamond drilling during 2023.
· New JORC Mineral Resource estimates have been prepared for the Boumou and Ngoualana prospects:
o Boumou: 13.1Mt at 1.04% Li2O, an increase of 236% from the 2019 estimate
(Boumou Resource reported using a 0.75% Li2O lower cut-off, no top cut-off)
o Ngoualana: 6.7Mt at 1.00% Li2O, an increase of 9% from the 2019 estimate
(Ngoualana MRE reported using 0.5% Li2O lower cut-off, no top cut applied)
The MRE update also improves Kodal management’s confidence in the previously defined resource at the Ngoualana prospect ahead of the proposed DMS mining development.
· Sogola-Baoulé prospect has a resource of 12.2Mt at 1.1% Li2O, which is unchanged from the 2019 resource estimate, and the next phase of drilling will include additional metres with potential to expand Sogola-Baoulé.
· Boumou prospect remains open along strike and drilling is planned to target an additional 750m strike length.
· Ngoualana resource is undergoing open pit optimisation and the mine design is being updated to capture the increased resources, and to support the final planning of the Ngoualana prospect’s DMS development.
The next drilling campaign will commence imminently, focussing on further resource definition, infill and exploration drilling at Boumou and Sogola-Baoulé prospects, as well as those not included in the MRE to date, including Kola and Bougouni South, all located within the current Bougouni mining licence.
Bougouni Lithium Project – Engineering Development
Bougouni Lithium project is an advanced lithium project which has a mining permit for an initial twelve-year period, renewable in ten-year blocks until all resources are mined, covering 97 km² of highly prospective lithium deposits, which to date has a JORC Mineral Resource Estimate of 31.9Mt of Li2O at 1.06%.
The Stage 1 development, for the DMS plant, is progressing well, with the access road upgrade and construction nearing completion and clearance of site for the proposed processing plant development commencing.
The Engineering design of the DMS modular units is complete and engineering representatives from Hainan and Kodal recently visited the Johannesburg offices of our engineering consultant DRA Global to review the proposed units.
Engineering works are continuing with the commencement of the procurement of long lead items and in Mali, our development team is building our internal capacity for the construction phase and future operations of the Bougouni Lithium project.
Environmental and Social Governance
Kodal was granted an Environmental Permit over the Project in November 2019. Supplemental studies have been ongoing in 2023, including dust and noise monitoring, surface water and hydrogeological assessments, and waste rock geochemistry analysis.
The Company has finalised the upgrade of local access roads following the end of the rainy season (October 2023), utilising Malian contractors. This upgrade of existing roads in the project area has improved conditions for the local community as they approach the harvest season as well as benefiting the Company in upgrading access to the Ngoualana deposit for the site development activities.
The Company is continuing to work with the local community to prioritise a community development programme, which involves direct consultation with the local communities, in order to document a programme that will jointly establish priority community development projects and identify how the Company can provide support for these initiatives.
Bernard Aylward, CEO of Kodal Minerals, said: “This year has been transformational for Kodal as we move towards the development and commencement of production from the Bougouni Lithium mine with our new partner, the Hainan Group. During this year we have completed the major Funding package that ensures the development of the Bougouni Lithium mine as well as supplies additional funding for further exploration and development. We have increased our JORC compliant Mineral Resource estimate by over 40% and have identified advance targets to continue that resource growth and have fast tracked our project development with continued detailed engineering and commencement of site works.”
“Kodal ends the year 2023 in a strong financial position with a cash balance exceeding £11,236,000 that will allow us to continue to explore our 100% owned projects in Mali and Côte d’Ivoire as well as review opportunities that offer further growth and expansion opportunities for the Company. Kodal has demonstrated an expertise in the acquisition, exploration and development of Lithium and Battery Mineral Projects and the Company will continue to explore these opportunities that will utilise our successful team.”
“The Bougouni Lithium project remains a focus for the Company as we work with our development partner to complete construction and commence production during 2024. Kodal will continue the exploration and mineral resource development of the Bougouni Lithium project with an extensive drilling programme commencing at the Boumou prospect and continuing to test additional high priority pegmatite targets to support the future development of a Flotation Processing plant to significantly expand the production of spodumene concentrate from the project.”
Chairman’s Statement
I am very pleased to report on the status of our Company following a remarkable 2023 year. The Company enters the 2024 calendar year in a very strong financial position, having secured full funding for the development of our flagship Bougouni Lithium project through the partnership with the Hainan Group.
The development of the Bougouni Lithium project will ensure Kodal plays a role in the future energy transition away from fossil fuels as our lithium spodumene concentrate product provides the key base material for battery production. This year has seen the lithium price retreat from the recent highs noted in 2022 that marked, at that time, a 10-fold increase in price over a two year timeframe. The current price for lithium spodumene concentrate is in line with the Company’s prices used in its feasibility studies and underlines the robustness of our project.
Kodal continues to review the lithium sector and notes that the decarbonisation and the energy transition are expected to fuel sustained commodity demand growth and notes that a report published by the International Energy Agency has estimated that global battery and minerals supply chains need to expand ten-fold to meet projected critical minerals needs by 2030.
The demand for lithium is supported by the increasing primary markets for lithium that include electric vehicle (“EV”) batteries, other batteries, ceramics and glass. EV batteries are the fastest growing segment and the key driver of demand growth. The take-up of electric vehicles is predicted to continue to strongly grow over the next decade as Government policies, population demand and increased vehicle choice drive the market.
In addition to the Bougouni Project, Kodal is now also well-funded to undertake further work on its range of 100% owned exploration projects in Mali and Côte d’Ivoire. The Company has advanced gold exploration projects with potential for near term resource definition and we are working on a strategy to maximise the value of these assets.
In the 6-month period ended 30 September 2023, the Group has recorded a loss of £509,000 compared to losses of £491,000 for the 6 months to 30 September 2022 and £1,461,000 for the year to 31 March 2023.
Cash balances as at 30 September 2023 were £1,706,000 compared to £2,628,000 at 30 September 2022 and £545,000 at 31 March 2023. Cash as at 21 December 2023 was £11,236,000.
We have a very exciting period ahead of us as we move into the construction and production phase at the Bougouni Lithium project in partnership with the Hainan Group. We look forward to reporting on our progress during 2024.
Robert Wooldridge
Non-Executive Chairman
