Kodal Minerals Plc (LON:KOD) Trading update, financing facility and TVR

Kodal Minerals, the mineral exploration and development company focused on its Bougouni Lithium Project (the ‘Project’ or the ‘Bougouni Project’) in southern Mali

Provides an update on current trading. In addition, the Company announces that it has entered into a financing facility comprising a subscription for new ordinary shares of 0.03125p each in the Company (“Ordinary Shares”) and linked equity sharing agreement (together, the “Financing Facility”) with Riverfort Global Opportunities PCC Limited and YA II PN Ltd (the “Investors”), together with the issue of warrants over Ordinary Shares to the Investors.

Trading Update

Kodal Minerals continues to pursue its mining licence application and the Company has maintained communication with the Mali Government to determine when the next meeting will be called to complete the Financial and Ministerial review (“COMINE Meeting”). Kodal has completed all information to be submitted for the COMINE.

The Government of Mali has restricted international travel and closed its borders to people travelling from countries with Covid-19 infection. As the travel restrictions impact on the Company’s ability to attend the COMMIN meeting, the Company cannot at this stage provide guidance for the timing of the meeting or the overall mining licence application process.

The Covid-19 outbreak has affected Mali, however, current infection rates are low and the Company confirms all employees are well and report no infection. The Company has ceased fieldwork and all employees are off site. Given the reduced workload, the Company has been able to lower its salaries in agreement with the employees to one third of base salary.

The Company expects field work in 2020 will be limited due to the Covid-19 restrictions. A budget has been prepared for work to re-commence at the Bougouni Project, however, this will not be before the end of the wet season expected in late September.

The planned engineering review and studies focused on improving the proposed mining operation at the Bougouni Project are continuing using internal and external consultants. Again, as the workload is restricted currently, the Company has budgeted for reduced outgoings and has reduced payments to consultants.

The Company has further reviewed the corporate overheads and Board fees and has taken action to reduce these costs. The Board and executive fees have been reduced by approximately 60% of previous levels which is in line with the reductions in Mali.

As noted in the interim results announced on 6 December 2019, the Company needed to raise further funds in order to continue its development work and to be able to continue as a going concern for the foreseeable future. Market conditions have impacted potential fundraising opportunities and have worsened with the Covid-19 pandemic. The Company has limited working capital and therefore, the Board has determined that the Financing Facility is in the best interests of the Company and shareholders. Although the monthly payments to the Company under the facility are variable, it is expected to provide sufficient monthly funding for the Company to operate at the limited capacity and reduced budgeted costs as outlined above.

The Financing Facility

In connection with the Financing Facility, the Investors have subscribed for 1,428,571,429 Ordinary Shares (the “Subscription Shares”)at a price of 0.035 pence per share, raising £0.5 million before expenses (the “Subscription”). The Subscription proceeds will be used immediately to satisfy the Company’s obligation to pay £0.5 million to the Investors to enter into an equity sharing agreement (the “ESA”), under which the Investors shall make monthly cash payments to the Company for a period of 12 months (which period can be shortened or extended up to 24 months at the Investors’ discretion) based on the performance of Kodal’s share price.

The Subscription and the ESA are linked but the terms of these transactions are contained in separate legal agreements which are entered into concurrently and result in the Company’s immediate cash position being unchanged as the proceeds from the Subscription nets off against the Company’s immediate contractual payment under the ESA.

The principal elements of the Financing Facility are outlined below.

Full Update www.share-talk.co.uk/announcements/rns


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