REG - Kodal Minerals PLC - Bougouni Lithium Project Development Update

Kodal MineralsAnnouncement

26/03/2024 07:00

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RNS Number : 2298I  Kodal Minerals PLC  26 March 2024

                    The information contained within this
announcement is deemed by the Company to constitute inside information as
stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR")

 

Kodal Minerals Plc / Index: AIM / Epic: KOD / Sector: Mining

 

26 March 2024

Kodal Minerals plc

("Kodal Minerals", "Kodal" or the "Company")

 

Bougouni Lithium Project Development Update

 

Kodal Minerals, the mineral exploration and development company, is pleased to
provide an update on project development activities and general progress at
its Bougouni Lithium Project in southern Mali ("Bougouni" or the "Project").
As announced on 15 November 2023, Kodal has received all funds related to the
funding transaction for US$117.75 million agreed between the Company and
Hainan Mining Co. Limited ("Hainan"), comprising a US$100 million investment
from Hainan to acquire 51% of the Bougouni project company, Kodal Mining UK
Limited ("KMUK"), and a further US$17.75 million received for the subscription
for new ordinary shares in Kodal Minerals plc at 0.5p per share.

 

Highlights:

·    KMUK Management team established and completed review of project
development plan, confirming US$65 million capital expenditure estimate for
Bougouni Lithium Project Stage 1 (using a dense media separation ("DMS")
approach).

·    Long lead items of DMS units and dual stream crushing modules ordered
and work commenced on build of items.

·    Mining contract finalised with a consortium consisting of Malian
mining contractor EGTF Mining SARL ("EGTF") and Auxin Mining Services Mali
SARL ("Auxin"), with costs consistent with feasibility study.

·    The Mali Minister for Environment visited the Bougouni Lithium
Project and endorsed the Company's development programme and development of
the DMS processing site.

·    All weather access roads to the Ngoualana open pit and DMS processing
site are complete.

·    Mining contractor to mobilise to site in March to commence the
earthwork and civil engineering works.

·    Updated ESIA for Bougouni Project Phase 1 DMS approved by Mali's
Department of the Environment in February; negotiations with local community
groups on land compensation also progressing well.

·   Bougouni Project on track to commence production in Q4 '24 following
the achievement of key milestones in Q1 '24.

·    Bougouni Stage 1 (DMS) is fully financed with all permitting in
place, including environmental and social permits, with Kodal's Community
Development Plan also recently approved by Mali's Environment Ministry.

 

Bernard Aylward, CEO of Kodal Minerals, remarked: "The first quarter of 2024
has seen major progress as we push ahead with the development of our flagship
Bougouni Lithium Project. The integration of the Hainan and Kodal groups
within KMUK has been very pleasing; this positive collaboration is very
important to keep our development momentum moving forward.  The new
management team has worked together very effectively to review and improve the
development plan for Bougouni and, positively, confirmed the capital
expenditure estimate of US$65 million for Stage 1 of the project development.
 

 

"This month we also signed contracts for the supply of the crushing circuit
and DMS modules from experienced suppliers in China and expect these long lead
items will be available on site in time to maintain our expectation of first
production in Q4 2024.

 

"With the main access road fully complete, the Mali Minister for Environment,
Professor Tiémoko Sangaré, visited the site late last month. During the
visit our project team presented the features and plans for the Phase 1 DMS
Operation at Bougouni, with specific focus on the environment, the social
aspects and the draft of the Community Development Plan. I'm pleased to
confirm that the Minister has since followed up on his visit with a formal
letter, confirming his approval of the proposed plan for the Phase 1 DMS
project.

 

"Significantly, the team has finalised negotiations for the award of a mining
contract. The mining contractor will mobilise to site in the coming weeks and
will commence with site clearing works in early April along with other key
site establishment activities.

 

"These are all major milestones for the Company and underpins our target of
moving into production at Bougouni before the end of 2024. We look forward to
updating the market in the months ahead as we advance this exciting West
African Lithium asset."

 

FURTHER INFORMATION

 

Long Lead Equipment

Hainan's Vice President for the development phase, Jerry Gao, has spent a
number of weeks this year in China finalising competitive bids for the long
lead process equipment. Working with Steve Zaninovich, Kodal's Director of
Operations, the project team has now signed contracts for the purchase of the
two main long lead equipment packages: the crushing circuit and the DMS
processing equipment. Both packages are within budget forecasts and the team
remains on track to meet the overall project budget of US$65 million for
project stage 1.

 

Crushing Modules

The dual crushing circuit modules have been awarded to Beijing High Dynamic
Technology Co., Ltd. ("BHD") in China. BHD will provide a turnkey design and
supply package for the dual crushing equipment modules, including all
ancillary equipment, in accordance with the detailed design concept
established with DRA Projects in South Africa. The contract price is under
budget and includes one year of strategic maintenance spares. The delivery
time ex-works is just 3 months, which is around 2 months quicker than other
bidders.

 

In the past 10 years, BHD has supplied crushing equipment of similar and much
larger capacity to numerous projects in China and worldwide, including the
DRC, Namibia, Malaysia, Australia, the UK, the USA and South Africa.

 

DMS Processing Plant Equipment

The supply of DMS equipment has been awarded to Haiwang Technology Group
("Haiwang") in Shandong Province, China. Haiwang's scope of work includes the
provision of final detailed design services to provide a fully integrated DMS
processing plant, the supply of all processing equipment required for the DMS
operation, and the associated electrical, instrumentation and process
controls. The overall contract price is within budget, and includes plant
commissioning services, one year of strategic maintenance spares and ongoing
operational support.

 

Importantly, Haiwang have provided a superior performance guarantee for the
DMS plant based on exceeding the Company's throughput target and achieving
concentrate grade above the Company's 5.5% target for the production of
125,000 - 130,000 tonnes per annum of spodumene. The Haiwang DMS plant
throughput guarantee is based on achieving 4,848 tonnes per day of ore feed
over a continuous seven-day period. This translates to an annualised
throughput rate of 1.2 million tonnes per annum (after allowances for routine
maintenance and downtime), which provides the Company with major potential
production upside.

 

The delivery time ex-works is just 3 months, which means that all equipment
will be on site within 6 months (allowing for shipping time). This is around 2
months quicker than other bidders and provides sufficient time for the Company
to complete civil construction works on site in advance of receiving the
Haiwang package, to underpin our goal of becoming a producer before the end of
2024.

 

Haiwang is a leading provider of classifying equipment with a focus on cyclone
separation, a key factor in DMS processing. In the past 10 years, Haiwang has
supplied DMS equipment of similar capacity to numerous DMS projects worldwide,
including China, Namibia and Zimbabwe.

 

Mining Contract Award

The project team has finalised negotiations and awarded the Mining Contract
for Bougouni. The successful group is a consortium between Auxin Mining
Services Mali SARL ("Auxin") and Enterprise Générale Traoré et Fréres SARL
("EGTF"), together "the Mining Contractor".  The annualised mining cost is
within the Company's mine operating cost estimate of US$3.65 per tonne mined,
as outlined in the Company's announcement of 29 September 2022.

 

Auxin Mining Services Mali SARL is a subsidiary of Beijing Auxin Chemical
Technology Ltd, which is in turn, a subsidiary controlled by China North
Industries Corporation (NORINCO). Auxin is active in West Africa in the areas
of explosives manufacture and distribution, and contract mining services.
Auxin have existing contract mining operations at projects in Namibia, Nigeria
and Zimbabwe.

 

EGTF is a fully owned Malian company and is well established in the fields of
earthworks, civils and contract mining in West Africa. EGTF has worked with
numerous mining companies in West Africa, including Randgold/Barrick (Morila
and Loulo) and AngloGold Ashanti (Siguri).

 

The cooperation of EGTF and Auxin will provide the following advantages to the
Bougouni mine:

·    Auxin will enhance the technical proficiency of drilling, blasting
and explosives handling, which EGTF has less direct experience with;

·    EGTF will provide excavate, load and haul services associated with
the mining operation;

·    Leverage of the established presence of EGTF, their local labour
pool, and their social responsibility expertise having worked in many remote
areas in Mali over many years;

·    Facilitation of technical and cultural communication between the
Company and the Mining Contractor overall, with Chinese and French speaking
parties on both sides; and

·    As part of the Norinco Group, Auxin has access to capital that will
enable the mobilisation of new equipment to replace used equipment over the
course of the life of mine.

 

Environmental and Social

As part of the Phase 1 DMS environmental approval update process, the Company
submitted an update of the ESIA (environmental and social impact assessment)
report in early October 2023 to the Mali Environmental Department; Direction
National de l'Assainissement et du Controle des Pollutions et des Nuisance
("DNACPN").

 

Following negotiation with the DNACPN, this official submission was requested
in the form of a "Notice d'Impacts Environmental et Social" ("NEIS"). The NEIS
updated the ESIA to highlight the minor adjustments required for the Phase 1
DMS Project, separate from the original ESIA submission, which focussed on the
flotation pathway that will now be developed as a Phase 2 expansion, and is
currently expected to commence development within 2 years' time.

 

Part of the submission approval process included a visit to site from
representatives of the DNACPN, accompanied by the Minister of Environment. The
site meeting was very successful and following that site meeting the
department endorsed the NEIS, issuing a formal letter last month advising of
its approval of the NEIS for the implementation of the DMS project.

 

Construction Preparations

The main access road is fully functional and the payment of compensation to
all traditional landowners is complete. This provides full access to the
Ngoualana mine site for the project team to commence construction activities.

 

EGTF will undertake the site preparation earthworks commencing in early April.
In preparation for establishing the project team on site, modular site offices
have been purchased, including support services required to sustain the
project team at Bougouni.

 

Forward Plan

We look forward to updating shareholders in the coming months as construction
commences in earnest, as we strive to maintain our completion schedule
milestone of being in production before the end of the year.

 

With the signing of the mining contractor and the long lead equipment
purchases secured with speedy delivery times, we remain confident in achieving
our production timeline.

Investor presentation

The management of Kodal will hold an online presentation on Thursday, 28 March
2024 at 12:30pm GMT. The presentation will be hosted on the Investor Meet
Company platform. Those interested in joining the online presentation can do
so using the following link:

https://www.investormeetcompany.com/kodal-minerals-plc/register-investor

 

 

 

**ENDS**

 

For further information, please visit www.kodalminerals.com or contact the
following:

 

 Kodal Minerals plc

 Bernard Aylward, CEO                                                  Tel: +61 418 943 345

 Allenby Capital Limited, Nominated Adviser

 Jeremy Porter/Vivek Bhardwaj/Nick Harriss                             Tel: 020 3328 5656

 SP Angel Corporate Finance LLP, Financial Adviser & Joint Broker

 John Mackay/Adam Cowl                                                 Tel: 020 3470 0470

 Canaccord Genuity Limited, Joint Broker

 James Asensio/Ana Ercegovic                                           Tel: 0207 523 4680

 Buchanan, Financial PR

 Bobby Morse/Oonagh Reidy                                              Tel: +44 (0)20 7466 5000

                                                                       kodal@buchanancomms.co.uk

 

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