REG - Kodal Minerals PLC - Bougouni Lithium Project Mining Licence transfer

Kodal MineralsAnnouncement

01/11/2024 07:00

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RNS Number : 5758K  Kodal Minerals PLC  01 November 2024

The information contained within this announcement is deemed by the Company to
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 inside information as stipulated under the UK Market Abuse Regulation

 

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

 

1 November 2024

Kodal Minerals plc

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

 

Government of Mali and Kodal Mining UK Limited agree terms of Bougouni Lithium
Project Mining Licence transfer

 

Kodal Minerals, the mineral exploration and development company, is pleased to
provide an update on the transfer of the Bougouni Lithium Project mining
licence from Future Minerals SARL to the Mali registered mining company Les
Mines de Lithium de Bougouni SA ("LMLB"). The Bougouni Lithium Project located
in Southern Mali ("Bougouni" or the "Project") is fully funded through the
US$117.5m Hainan funding transaction (as announced by the Company on 15
November 2023) (the "Hainan Transaction"). The Hainan Transaction included a
US$100m investment into Kodal Mining UK Limited ("KMUK"), a company owned 51%
by the Hainan Group and 49% by Kodal, which is the developer of the Project
and parent company of Future Minerals SARL and LMLB.

 

Highlights:

·    KMUK and the State of Mali (the "State") have entered into a binding
memorandum of understanding (the "MoU") to finalise the transfer of the
Project mining licence to the established mining company LMLB.

·    The MoU confirms that the mining licence will migrate to the 2023
Mining Code of Mali with the following key terms:

o  The participation of the State and national private investor interest will
be a total of 35% of the equity in the mining company LMLB, with the balance
of 65% held by KMUK.

o  The mining licence will transfer with an initial 10 year term and the
State undertakes to renew the licence as required with the conditions laid
down in the mining code in force on the date of such renewal.

o  The MoU confirms the continuation of the customs and duties exemptions
during the construction phase as well as confirming that the State will grant
all necessary permits for operation including export permits for the spodumene
product.

o  The parties have agreed to a US$15 million cash payment to the State
relating to the Hainan Transaction, payable in two equal instalments by KMUK,
with the first following signing of the MoU and the final prior to 31 March
2025.

o  Upon completion of transfer of the mining licence the MoU confirms that
the Bougouni mining licence will be in full compliance with all legal
requirements and in good standing.

 

Bernard Aylward, CEO of Kodal Minerals, remarked: "The MoU with the State for
the transfer of the Bougouni mining licence is the final legal step required
as we rapidly progress the construction of the Project, with production on
track for the first quarter of 2025. The transfer of the mining licence to the
mining company LMLB confirms the good standing of the Project and provides
certainty of State support and ongoing stability of Bougouni. The strong
partnership built between Kodal and the State has allowed discussions to be
accelerated, culminating with this landmark MoU."

 

FURTHER INFORMATION

 

In 2022, the State initiated an audit of the mining sector, including a review
of existing mining conventions for existing mines. In August 2023, the State
issued a new Mining Code (the "2023 Mining Code") and later in 2023
established a commission comprised of Malian Government advisors and
representatives (the "Commission") which was tasked with negotiating certain
aspects of existing mining conventions and clarifying the application of the
2023 Mining Code to both existing and new mining projects. In July 2024, the
State finalised and issued the Implementation Decree for the 2023 Mining Code,
which included certain details relating to economic parameters not previously
included in the 2023 Mining Code.

The KMUK team has completed meetings with the Commission to finalise the
transfer of the Bougouni mining licence and confirm the Hainan Transaction
that is supporting the development of the Bougouni Lithium Project.  The MoU
agreed between the parties confirms the migration of the Project to the 2023
Mining Code whilst confirming rights relating to various customs and tax
exemptions for the development.

 

The material terms of the MoU are:

·    Migration of the mining licence to the 2023 Mining Code, with the
State confirming the transfer of the licence to LMLB (a subsidiary of KMUK)
with an initial validity period of 10 years, and upon expiry the State
undertakes to renew the licence according to the conditions of the mining code
in force on the date of renewal.

·    The State has confirmed the customs exemptions for the construction
of the operation:

a)    Temporary admission, on a pro rata temporis basis, free of charge, of
vehicles, machinery and machinery, heavy machinery, user vehicles and other
property placed under this regime and included in the mining list;

b)    Exemption from all import duties and taxes payable on tools, oils and
greases for machines necessary for their activities, petroleum products, spare
parts (except those intended for passenger vehicles and all vehicles for
private use), materials and equipment, machinery and appliances intended to be
permanently incorporated into works and included in the mining list, covering
only the needs of the construction phase; and

c)    The goods and products referred to in points (a) and (b) of Article 3
shall be valued, by common agreement by the parties, to determine the
remaining needs.

·    The State and national investors will have an equity interest in LMLB
of 35% through the issue of new shares, the acquisition of which has been
calculated in accordance with the provisions of the 2023 Mining Code. The
State always had an initial 10% free participation right in the Project and
the agreed acquisition price for the additional 25% of new equity is
approximately US$4.3 million. The 35% equity interest holds priority rights,
including preventing the State and national investors' interest from being
diluted below 35% in the event of any capital increases in LMLB.  It is noted
that the KMUK partners retain the right to recover all capital investment and
intercompany loans from the operation as a priority.

·    Implementation of a shareholder's agreement to ensure that the board
of LMLB will have at least four directors on behalf of the State, including
two independent directors.

·    The MoU confirms the approval of all agreements relating to the
Hainan Transaction and an associated payment by KMUK to the State of US$15
million payable in cash as follows:

§ US$7.5 million within five days of the signing of the MoU; and

§ US$7.5 million by 31 March 2025.

 

**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/Charlie Hammond                                         Tel: 0207 523 4680

 Burson Buchanan, Financial PR

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

                                                                       kodal@buchanancomms.co.uk

 

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