REG - Kodal Minerals PLC - Bougouni Lithium Project

Kodal MineralsAnnouncement

28/03/2024 09:30

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RNS Number : 6910I  Kodal Minerals PLC  28 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

 

28 March 2024

Kodal Minerals plc

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

 

Bougouni Lithium Project -

Termination of Suay Chin International Spodumene Offtake Right of First
Refusal

 

Kodal Minerals, the mineral exploration and development company, is pleased to
announce an agreement between Kodal Minerals, Kodal Mining UK Limited
("KMUK"), the Bougouni Lithium Project joint venture company 49% owned by
Kodal, Hainan Mining Co Ltd ("Hainan" and with its subsidiaries "Hainan Group"
which owns 51% of KMUK) and Suay Chin International Pte Limited ("Suay Chin")
to terminate the Right of First Refusal ("ROFR") granted to Suay Chin, as part
of its original investment in Kodal in 2017, over 80% of the spodumene product
produced at the Bougouni Lithium Project in Southern Mali.

 

As announced on the 15 November 2023, Kodal and the Hainan Mining Group
("Hainan") entered into a joint venture development agreement for the Bougouni
Lithium Project, with both parties consequently being shareholders of KMUK,
49% owned by Kodal and 51% by the Hainan Group.  KMUK was established as a UK
registered company as the development vehicle for the Bougouni Lithium
Project.  As part of the transaction, Kodal initially granted the right to
Hainan to finalise a spodumene off-take agreement at market price for the
available 20% of spodumene concentrate to be produced form the project and
agreed to work with Hainan to secure the release of Suay Chin's ROFR.  KMUK
has now finalised negotiations with Suay Chin to release the ROFR over the
spodumene concentrate for a two-stage termination payment totalling US$14
million to be paid by KMUK in two instalments, as set out in more detail
below.  This allows Kodal and KMUK to enter into negotiations with the Hainan
Group to finalise an offtake agreement with Hainan for 100% of the spodumene
product produced at the Bougouni Lithium Project.  It has been agreed between
Kodal and Hainan that any offtake agreement reached between KMUK and Hainan
Group will be based on market prices for spodumene and will require express
written approval from Kodal Minerals as shareholder of KMUK. The offtake
agreement with Hainan will initially relate to spodumene production from the
Stage 1 Dense Media Separation (DMS) processing plant.

 

Bernard Aylward, CEO of Kodal Minerals, remarked: "As KMUK pushes ahead with
development of at our flagship Bougouni Lithium Project aiming for first
production before the end of calendar year 2024, the team has also been
working to finalise the offtake agreements for the sale of our spodumene
product.   Our negotiations with our JV partner Hainan have thus ensured
that we will achieve the optimum market price for our spodumene with no
discount offered and we are now confident of achieving this positive result
for all our product from Bougouni, with Stage 1 (DMS) set to produce 125ktpa
Li(2)O and Stage 2 (Flotation) output to increase to c.230ktpa Li(2)O."

 

Summary of the Agreement

The agreement reached between Kodal, KMUK, Suay Chin and Hainan provides that
the original agreement between Suay Chin and Kodal relating to the proposed
offtake agreement and Right of First Refusal signed on 7 May 2017, will be
terminated for a total termination fee of US$14 million payable by KMUK in two
instalments:

·    US$7 million to be paid within 10 business days of the signing of an
offtake agreement between KMUK and Hainan (as approved by Kodal Minerals as
KMUK shareholder);

·    US$7 million to be paid within 10 days of the first shipment of
spodumene concentrate from the Bougouni Lithium Project, or on 31 October
2024, whichever date is earlier.

 

The original agreement for the offtake of spodumene from the Bougouni Lithium
Project signed between Suay Chin and Kodal in 2017, provided Suay Chin with
the Right of First Refusal over not less than 80% of the lithium concentrate
products from the project within three years following the Bougouni Lithium
Project commencing production.

 

 

**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/Gordon Hamilton                                         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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