REG - Kodal Minerals PLC - Bougouni Lithium Project Update
03/04/2023 07:15
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RNS Number : 1032V Kodal Minerals PLC 03 April 2023
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
3 April 2023
Kodal Minerals plc
("Kodal Minerals", "Kodal" or the "Company")
Bougouni Lithium Project Update on Drilling, Engineering Development and
Financing
Kodal Minerals, the mineral exploration and development company, is pleased to
provide an update on the engineering development and drilling in progress at
its Bougouni Lithium Project in southern Mali ("Bougouni" or the "Project").
In addition, the Company provides a general update on the funding package with
Hainan Mining Co. Limited ("Hainan" or "Hainan Mining"), announced on 19
January 2023.
Highlights:
· A total of 41 reverse circulation ("RC") and 18 diamond drillholes
for 6,360m have been completed at the Bougouni Project.
· Drilling focussed on development and extension at the Ngoualana
prospect and exploration drilling at the Kola, Bougouni South and Boumou
prospects.
· A total of 3,406 samples have been dispatched for laboratory analysis
with initial high-grade assay results up to 2.78% Li(2)O returned for
individual samples and significant intersections including:
o 18m at 1.31% Li(2)O from 42m and 8m at 1.55% Li(2)O from 77m in drill hole
KODGW001 at the Ngoualana prospect;
o 8m at 1.50% Li(2)O from 29m in drill hole KLRC185 at the Kola prospect;
and
o 9m at 1.47% Li(2)O from 29m in drill hole KLRC186 at the Kola prospect.
· Analytical results from a further 2,606 samples remain pending.
· The Company has continued to progress detailed engineering works for
the DMS (dense media separation) plant option (see announcement of 29
September 2022).
· The Company has advanced environmental and social studies for the DMS
plant development route, including establishment of a community consultation
committee comprising local leaders and representatives from neighbouring
communities.
· The Mali Mining Code has provision for issuing a notification of
change to the DNGM which will be required to receive formal approval for the
DMS development route (the "Change Notification"). The Change Notification has
been drafted and is currently undergoing legal review prior to formal
submission.
· Hainan Mining has submitted application forms and supporting
information to the China National Development and Reform Commission (NDRC) and
the Department of Commerce for the China approvals needed to complete its
investment in Bougouni and Kodal. Hainan has confirmed that the applications
are progressing well and the approvals process is on schedule.
Bernard Aylward, CEO of Kodal Minerals, remarked: "Kodal has continued to
receive overwhelming support from shareholders and stakeholders alike for our
funding package of US$117.75 million from Hainan Mining.
"We maintain regular dialogue with the key Hainan executives regarding the
proposed Bougouni project development and plans to quickly move into a
construction phase once the transaction is complete and all funds received.
The Hainan team remain confident that all conditions precedent for the funding
package will be satisfied and have advised that all necessary applications to
the China NDRC and the Department of Commerce for the approval process are
progressing well and remain on schedule.
"In the interim, Kodal's engineering team have continued to make progress on
critical project development activities in readiness for receipt of project
funding. Detailed design of the DMS modules is nearing completion and
importantly, our Change Notification for the Ngoualana DMS plant and
infrastructure has been drafted and is undergoing legal review prior to formal
submission to the relevant Mali administrations.
"This latest drilling at the Bougouni project continues to highlight the
potential for expansion of the existing defined resource base as well as
additional prospects to be advanced, as the recent drilling has intersected
wide zones of pegmatite at all prospects and all remain open along strike and
at depth. This is a great opportunity for the long-term development of the
Project, and once the funds from the Hainan funding package are received,
further definition and extension drilling will be a priority to expand the
life of the Project."
FURTHER INFORMATION
Environmental and Social Governance
Supplemental environmental and social studies required to support the Change
Notification are complete. The Company has now established its ongoing
environmental monitoring programme at the Project.
The focus of the ESG team has moved to completing key community consultation
milestones in advance of commencing construction on site. At the request of
the Company, a committee has been established to identify and value properties
which fall within the right of way of the Bougouni mine operating permit. This
is a standard operating procedure in Mali when establishing the formal process
for identifying crops and land directly impacted by the mining operation, and
for assessing compensation in accordance with legislation, and associated
options for identifying replacement land for affected farmers.
The first meeting of the committee was held on 22 February 2023 and was
attended by 57 participants including representatives of the neighbouring
communities, local government officials and Kodal management. The Project
received overwhelming support from the Prefecture and community leaders,
evidenced by the following observations from the meeting:
· All participants thanked the Company for its participatory and
transparent approach.
· The committee confirmed commitment of all attending stakeholders to
support the Project.
· The participants showed their satisfaction with the sharing of the
Company's Project presentation and key dates - this was considered a sign of
transparency.
· Stakeholder satisfaction with the establishment of a DMS plant and
the future flotation plant installation giving the mine the opportunity to
continue beyond 10 years.
· Pleased to receive advice from the Company of its intention to
identify strategic community development projects in which it can actively
participate for the benefit of stakeholders, starting in 2023 and continuing
throughout the operating life of the Project.
Exploration and Development Drilling
The Company has completed a drilling campaign designed to provide key
information for the development of the DMS processing plant at the Ngoualana
prospect as well as continue exploration and extensions drilling at the Kola,
Bougouni South and Boumou prospects. The drilling is summarised below and a
brief discussion on each prospect is provided.
Prospect Hole Type No. Drill Holes No. Metres Target
Ngoualana Diamond 18 1,949 Infill and Confirmation
Metallurgical
Geotechnical
Ngoualana RC 16 1,669 Exploration
Groundwater
Kola RC 11 409 Exploration
Bougouni South RC 6 989 Exploration
Boumou RC 8 1,344 Extension and Exploration
Initial assay results have been received for 800 samples, with a further 2,606
samples pending analytical results from the laboratory. No results have been
received for the diamond drilling or infill drilling on the main Ngoualana
prospect pegmatite, with initial samples for the exploration drilling at
Ngoualana and part of Kola received.
The significant intersections received to date are tabled below:
Prospect Hole_ID Northing Easting RL Dip/Azi Depth From To Width Grade Li(2)O
Ngoualana KLRC174B 1254947 664515 330 -50/30 98 47 52 5 1.09
71 75 4 1.40
Ngoualana KLRC175 1254981 664414 330 -50/30 108 38 41 3 1.32
59 62 3 0.93
Ngoualana KLRC176 1254913 664612 330 -50/28 90 62 67 5 0.84
Incl. 63 66 3 1.33
79 82 3 0.98
Ngoualana KODGW001 1255470 664146 323 -90/000 170 42 60 18 1.31
76 87 11 1.21
Incl. 77 85 8 1.55
Ngoualana KLRC177 1255086 664473 330 -50/30 102 45 48 3 1.45
Ngoualana KLRC179 1255115 664381 330 -50/30 60 42 44 2 1.11
Kola KLRC185 1256827 667085 330 -50/30 40 29 37 8 1.50
Kola KLRC186 1256825 667069 330 -50/30 41 29 38 9 1.47
Kola KLRC192 1256697 666863 330 -50/30 54 25 28 3 1.15
Notes: Drill holes are RC drill holes. Drill holes have been sampled on a
1.0m basis with samples collected via a riffle split system. Drill hole
collars are surveyed using a differential GPS with sub 1-metre accuracy,
coordinate system WGS84 - Zone 29N, and all holes are surveyed down-hole for
dip and azimuth on approximately 30m intervals. All drill holes are
geologically logged, and sampling for analysis is based on geological
boundaries. Samples analysed by ALS Global. Assay results are reported as
Li% and converted to Li(2)O% by a factor of 2.153. Intersections are
reported using geological boundaries for logged pegmatite, with a nominal 0.5%
Li(2)O lower-cut-off and allowing for a maximum of 2m internal dilution.
Ngoualana:
The drilling programme at the Ngoualana prospect comprised diamond drilling to
provide geotechnical information and metallurgical samples for engineering
design and pit optimisation work. All analysis from this drilling is pending
as holes will be logged for geotechnical data for pit wall support, and the
metallurgical holes will be sub-sampled for additional metallurgical
confirmatory testwork with holes positioned along the strike of the orebody to
provide variability assessment.
The exploration and extension drilling has intersected pegmatite bodies
outside of the current optimised pit boundary. A groundwater test hole
located to the northwest of the proposed pit has intersected pegmatite veins
up to 18m in width and returned high grade assay results as set out in the
table above for drill hole KODGW001. The high grade, coarse mineralisation
has returned individual infill assay results up 2.78% Li(2)O and the results
confirm high grade pegmatite veins. Additional drilling is planned to define
this zone and continue to test extensions that will add to the mining
inventory.
Exploration drilling to the south and southeast of the main Ngoualana
mineralisation has continued to define additional mineralised pegmatite bodies
that require further assessment to determine the economic potential for
possible mining.
Figure 1: Ngoualana Prospect: All drill hole locations, with 2023 drilling
labelled and a red star denoting collar.
Kola:
Drilling at the Kola prospect targeted a coarse-grained outcropping pegmatite
vein with shallow RC drilling to determine possible down-dip extension and
continuity. The drill holes have confirmed the presence of high-grade
mineralisation 9m downhole width and a strike length of over 250m is
estimated. The drilling was undertaken as a reconnaissance programme and
follow-up drilling is required to define the dip of the ore bodies and further
extensions. Geological review indicates that some of these initial holes may
have missed the target due to structural complexity and further interpretation
is underway.
Figure 2: Kola Prospect: All drill hole locations, with 2023 drilling
labelled and a red star denoting collar. Outline of outcropping pegmatite
body in red colour.
Bougouni South and Boumou Prospects:
Exploration drilling at the Bougouni South and Boumou prospects targeted
extensions to previously mapped and drilled pegmatite veins. No assay
results have been received for the drilling to date, however the geological
logging of the drillholes indicates potential for extensions to the prospects
with the intersecting of wide pegmatite bodies.
At Bougouni South drilling has intersected consistent wide pegmatite veins
with individual veins up to 48m in downhole width and a cumulative thickness
of pegmatite in hole up to 91m in drill hole MDRC135. The geological logging
indicates fine to medium grained mineralisation possibly most suited to
flotation processing. The drilling programme has extended the known pegmatite
veins to over 500m in strike length and remains open along strike.
Full assessment of the prospect will be completed when assay results are
returned and further drilling can be planned.
The RC drilling at the Boumou prospect targeted extensions to the west of the
defined resource zone. The geological logging of the drilling indicates
multiple pegmatite bodies intersected with a maximum individual width of 49m
continuous pegmatite, and cumulative downhole pegmatite intersections up to
67m in drill hole KLRC198. The Boumou prospect has a current Inferred
Resource that remains open along strike, and this recent phase of drilling
indicates a potential strike length exceeding 750m and up to 1km, indicating
potential for significant growth in the Boumou prospect defined resource.
Full assessment of the prospect will be completed when assay results are
returned, and further drilling can be planned.
Confirmatory Metallurgical Testwork
In late 2022, metallurgical testwork samples newly obtained from the Ngoualana
deposit were shipped to Hainan's metallurgical testwork consultant laboratory,
the Institute of Resources Utilization and Rare Earth Development, Guangdong
Academy of Sciences ("GDAS"). GDAS undertook DMS and Flotation recovery
testwork on a 100kg sample of Ngoualana material of average head grade 1.6%
Li(2)O.
The testwork results confirmed DMS recovery of 71% to produce a spodumene
concentrate grade of 5.78%. GDAS crushed the sample to a 6mm topsize for the
DMS testwork, with the fine material below 0.5mm being screened out and
separately treated using flotation processing. GDAS stated that using standard
flotation processing and reagents, the testing produced "Li(2)O with grade of
5.50%" at an overall "recovery rate of 84.14% spodumene".
These results are comparable to the initial testwork programme of Ngoualana
material which estimated DMS recoveries averaging 70% for a 6.0% Li(2)O
spodumene product (refer RNS of 20 August 2019).
Testwork supervised by Kodal's process engineering consultants (DRA Global) at
the Nagrom Laboratories in Perth, Western Australia, has experienced delays
due to limited availability. As noted previously (see announcement of 16
December 2022) the Nagrom testwork programme will be used to provide
additional supportive data for crushing and plant design, and to confirm the
recoveries stipulated in the plant design criteria are achievable. The wider
lithium market remains very buoyant and many lithium testwork facilities are
overloaded.
However, this delay will not impact on the overall development timeline, given
the recent data received from the Hainan testwork coupled with the previous
metallurgical testwork conducted on Ngoualana material, which exceeds the
Company's DMS plant performance criteria of producing a 5.5% Li(2)O spodumene
product at a recovery up to 65%. Hence there remains potential upside to
spodumene production from higher recoveries.
DMS Plant Engineer
DRA Global South Africa ("DRA") have continued progressing with the detailed
design of the DMS modules and ancillary process infrastructure. The process
plant layout has been locked down and the design and specifications for key
mechanical equipment are complete.
In order to accommodate the 1Mtpa proposed throughput for the DMS operation,
the design employs dual stream modular crushing and dual stream DMS
facilities. This is expected to provide some redundancy across the plant,
minimise down time and simplify operational and maintenance activities. The
design criteria established by the engineering team includes a design factor
of safety in order to provide plant processing flexibility and increased
throughput potential with an upside of 1.2Mtpa.
DRA have made significant progress with the design aspects of the plant, and
the process of finalising quotations for long lead equipment has commenced, so
that procurement of the plant and crushing modules can proceed immediately
after project financing is received from Hainan.
Mine Design and Key Infrastructure for the DMS Option
The DMS Project at Bougouni is based on processing material from the Ngoualana
deposit, via an open cut, truck and shovel contractor mining operation. The
mining contractor tender process is progressing well, with eight experienced
mining contractors included on the tender list. Formal tenders are due in
early Q2 2023.
This will provide the Company with adequate time to review tenders and select
a preferred contractor after the Project funds drawdown occurs. In turn it
provides opportunity for the mining contractor to mobilise to site at an early
stage in the development programme, so that mining can commence well in
advance of processing.
The Company continues to work with Knight Piésold in Perth to provide
tailings storage facility (TSF) designs and general earthworks pads and roads
designs for the DMS development route. During March, Knight Piésold mobilised
a specialist civil engineer to site to conduct site investigation works to
assess the foundations characteristics at the TSF site, the plant site, the
mine services area and the main access road area.
The site investigation is expected to be complete before the end of April and
will provide critical design data for finalising detail design of the TSF and
other foundations around the site.
Forward Plan
Closure of the Funding Package is scheduled to be achieved before the end of
April 2023. Thereafter Kodal intends with support from Hainan to move quickly
into the next phase of development and construction of the Project, in order
to meet the 12-month development schedule.
Kodal will complete legal review of the Change Notification for submission to
the Mali DNGM in the coming weeks.
**ENDS**
For further information, please visit www.kodalminerals
(http://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 UK LLP, Joint Broker
James Asensio/Gordon Hamilton Tel: 0207 523 4680
St Brides Partners Ltd, Financial PR
Susie Geliher/Ana Ribeiro Tel: 020 7236 1177
Glossary
JORC - 'Australasian Code for Reporting of Mineral Resources and Ore Reserves'
of December 2012 ("JORC Code") as prepared by the Joint Ore Reserves Committee
of the Australasian Institute of Mining and Metallurgy. Terms including
Measured, Indicated and Inferred Resources as defined therein.
1Mtpa - One million tonnes per annum, pertaining to throughput of the proposed
plant.
C1 (Brook Hunt) - Under the Brook Hunt definition, C1 costs are direct costs,
which include costs incurred in mining and processing (labour, power,
reagents, materials) plus local general and administration costs, freight and
realisation and selling costs.
Incoterms: FOB - Incoterms are a set of internationally recognized rules which
define the responsibilities of sellers and buyers in the export transaction.
DNGM - Direction Nationale de la Geologies et des Mines; which in English
translates to "The National Directorate of Geology and Mines". This
Directorate reports to the Minister of Mines, being the administrative body in
charge of mining activities in Mali.
Background Information on the Bougouni Lithium Project and DMS Processing
development
The Company is proposing development of Bougouni based on the installation of
a modular DMS plant to process material from the Ngoualana deposit which, due
to its coarse grain properties, delivers high DMS recoveries. Merits of the
DMS option as presented in the announcement of 29 September 2022 include:
· Capital development cost for the DMS option at US$65 million,
generating an estimated NPV(7%) of approximately US$557 million (US$420
million post-tax) and, based on full equity funding, a short payback of 2
months from commencement of operations.
· The DMS option is based on:
o processing material from the Ngoualana deposit feeding 1Mtpa of lithium
ore to a DMS processing plant
o utilising a conventional circuit to maximise spodumene recovery of over
130,000 tonnes per annum of spodumene concentrate
o an initial 4 year mine life.
· DMS operation revenue forecast to exceed US$1.05 billion in less than
4 years, based on prevailing broker consensus pricing averaging US$2,080 per
tonne (FOB basis).
· A JORC Mineral Resource at Ngoualana of 5.1Mt at 1.2% Li(2)O with 61%
categorised as Indicated, with potential to add DMS tonnes from adjacent
prospects across the Project's Mining Licence area.
· DMS recoveries from Ngoualana are much higher than from other
deposits at Bougouni (details as announced on 11 May 2020) and recoveries of
71% were achieved from the bulk sample processed by Kodal in 2020 (details as
announced on 11 May 2020).
· The DMS proposal at Bougouni is based on an initial mine life of 4
years and processing material from the Ngoualana deposit, based on modified
operating assumptions whereby an open cut, truck and shovel contractor mining
operation at Ngoualana is retained, but feeding 1Mtpa of lithium ore to a DMS
processing plant utilising a conventional circuit to maximise spodumene
recovery.
· The DMS operation targets production of a 5.5% Li(2)O spodumene
concentrate product which is consistent with other producers currently active
in the market.
· Once financing and Mali Government update and approvals are received,
the Company estimates a Construction and commissioning time of 12 months,
compared to 22 months for a full flotation plant.
Permitting at Bougouni
The Company holds a mining licence over the Project which remains in force.
The Mining Licence is granted under the 2019 Mining Code and extends over
97.2km(2) covering the proposed open-pit mining and processing operation at
Bougouni (as announced on 8 November 2021). The Mining Code has provision for
a Change Notification which is required for obtaining approval for the DMS
option. Kodal has drafted the Change Notification which is currently
undergoing legal review prior to a formal submission to the Mali DNGM.
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. These studies also supported preparation of the Change
Notification.
Future Flotation Plant Development
The implementation of the DMS development option does not preclude the
development of a flotation plant facility, the original pre-feasibility study
base case. The Company is confident that the DMS operation will quickly
provide the necessary cash flow to expand the operation to install the
flotation plant in the future. See the announcement of 29 September 2022 for
further information.
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