REG - Kodal Minerals PLC - Bougouni Project Update & Appointment of Broker

Kodal MineralsAnnouncement

16/12/2022 07:00

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RNS Number : 9140J  Kodal Minerals PLC  16 December 2022

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

 

16 December 2022

Kodal Minerals plc

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

 

Bougouni Project and DMS Development Update

Appointment of Joint Broker

 

Kodal Minerals ("Kodal" or the "Company"), the mineral exploration and
development company focused on lithium and gold assets in West Africa, is
pleased to provide an update on project development progress at its Bougouni
Lithium Project in southern Mali ("Bougouni" or the "Project").  The Company
is committed to accelerating the development of the Project through the lower
capital cost dense media separation ("DMS") processing plant option, which
will also allow the Company to take advantage of a near-term buoyant lithium
market.  In addition, the Company is pleased to announce the appointment of
Canaccord Genuity Limited ("Canaccord") as joint broker to the Company with
immediate effect.

 

Highlights:

·    The Company is progressing with plant engineering and environmental
studies required for the DMS plant option (see announcement of 29 September
2022).

·    The Company is finalising engineering and environmental work to
support formal approval for the DMS option from the Mali Government, for which
application is currently expected to be submitted in early 2023 (the "Change
Notification").

·    Activities and status of work is:

o DMS plant concept designs - complete.

o Tailings storage layout and concept design - complete.

o Environmental studies required for the Change Notification - progressing.

·    Exploration Manager appointed to lead all exploration and
pre-development activities from site, with a focus on expanding DMS ore
sources within the existing mining licence permit area.

·    Canaccord appointed as joint broker.

 

 

Bernard Aylward, CEO of Kodal Minerals, remarked: "Our engineering team has
made great progress with the various design concepts and environmental updates
required to finalise the requirements to commence the fast-track DMS
development.  We anticipate that the formalised Change Notification will be
issued to the Malian authorities in early 2023.

 

"The recent decision by the Mali Ministry of Mines to suspend the issuance of
new mining permits does not impact the Company's development progress.
Engineering activities have therefore continued to progress in parallel with
the Company's ongoing negotiations with potential financing partners.

 

"To support the Company's fast track development timeline, Kodal has
re-appointed experienced Exploration Manager George Michaelides.  George was
responsible for the Company's initial exploration and drilling programmes at
Bougouni, from which our 21.3Mt Resource was defined. George will be tasked
with expanding our resource base with the objective of extending the life of
mine.

 

"We are also pleased to announce the appointment of Canaccord as the Company's
joint broker, enhancing our corporate coverage in partnership with our
long-term broker SP Angel. We look forward to the contribution Canaccord can
make as we progress with our financing solution for the development of the
Bougouni lithium mine."

 

Canaccord Engaged as Joint Broker

The Company has appointed Canaccord to act as joint broker, effective
immediately.  Canaccord is the global capital markets division of Canaccord
Genuity Group Inc., offering institutional and corporate clients investment
banking, merger and acquisition, research, sales and trading services from
offices in North America, UK & Europe, Asia, Australia and the Middle
East.

 

Bougouni Tenure

The Company is the 100% owner of the Bougouni project in Mali consisting of
granted concessions.  The concessions include the Mining Licence granted
under the 2019 Mining Code and extending over 97.2 sq. km covering the
proposed open-pit mining and processing operation at Bougouni (as announced on
8 November 2021). The Mining Code has provision for a notification of change
which will be required for obtaining approval for the DMS option ("Change
Notification"). Kodal has conducted initial discussions with the DNGM to seek
their endorsement for the change and has commenced formulating the
notification.

 

On 28 November 2022, the Mali Ministry of Mines announced that it has
suspended the allocation of new mining titles.  This does not impact the
Company as all mining licences are granted and in good standing.  The Company
is free to continue with its development activities unencumbered.

 

DMS Development Highlights

The Company has commenced the engineering and environmental work to support
the development of the Bougouni lithium project (refer to announcement of 29
September 2022).  The Company recognises the opportunity to commence
operations with the construction of a modular DMS processing plant to treat
the spodumene bearing ore from the Ngoualana deposit which, due to its coarse
grain properties, delivers high DMS recoveries.   Key benefits of a DMS
operation include:

 

·    Capital development cost estimated 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.

o utilising a conventional circuit to maximise spodumene recovery of over
130,000 tonnes per annum of spodumene concentrate; and

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).

·    Once financing and Mali Government update and approvals are received,
the Company estimates a construction and commissioning time of 12 months for a
DMS plant, compared to 22 months for the alternative of a full flotation
plant.

 

The Company maintains its overall plan to fully develop the project by the
development of the proposed flotation plant and will work to a development
opportunity whereby the two developed processing plants (a DMS and a flotation
plant) operate concurrently, allowing the Company to maximise spodumene
production and target an annualised production in excess of 330,000 tpa of
concentrate.  The economics and timing of the flotation plant development
will continue to be reviewed.

 

Kodal is progressing discussions with various parties to secure funding for
construction of the DMS plant and mining operation.

 

DMS Plant Engineer

Kodal has entered into a formal contract with DRA Global South Africa ("DRA")
for the design and supply of the DMS plant. The scope of the contract
includes:

 

·    supervision of confirmatory metallurgical testwork;

·    detail design of the crushing modules;

·    detail design of the DMS plant and associated services; and

·    procurement services for the purchase of all plant equipment and
crushing modules, post finalisation of project funding.

 

Embarking on this early start to plant engineering will provide a fast-track
progression to procurement of the plant and crushing modules, once project
financing is secured.

 

Confirmatory Metallurgical Testwork

Metallurgical testwork samples newly obtained from the Ngoualana deposit have
been received at the Nagrom testwork laboratory in Perth, Western Australia.
Testwork is underway and will comprise a programme of confirmatory testwork to
provide additional data related to the ore characteristics and DMS recovery.

 

The initial testwork programme of Ngoualana material estimated DMS recoveries
averaging 70% for a 6.0% Li(2)O spodumene product (refer to announcement of 20
August 2019). Therefore, the current 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.

 

As announced in the Company's announcement of 11 May 2020, the initial
laboratory recovery result was validated via the 600 tonne of Ngoualana bulk
sample that was shipped to the Shengli Yishui plant, located approximately
160km from the port of Qingdao in the Shandong province of China.  The
processing of Ngoualana ore at the Yishui plant achieved DMS recoveries in the
range of 65% to 71%, targeting a 6.0% Li(2)O spodumene. Downstream processing
in the flotation circuit, improved the yield to an overall recovery of up to
83%.

 

Therefore, the Company is confident that the upside capacity in the plant
design, coupled with historical abovementioned testwork results, will meet and
likely exceed the DMS study criteria of producing a 5.5% Li(2)O spodumene
product at a life of mine average recovery of 63.5%.

 

Mine Design

The DMS option at Bougouni is based on an initial mine life of four years and
processing material from the Ngoualana deposit, via an open cut, truck and
shovel contractor mining operation.

 

Kodal has engaged specialist mining consultants Orelogy in Perth to complete
the detailed mine design. The pit designs are progressing and the Company is
formulating a mining contract tender package which will be issued for
competitive tendering in the new year to experienced and capable contractors
active in the region.

 

The early mining engineering and tendering approach will provide a faster
track engagement of the mining contractor once project financing has been
secured.

 

Future Flotation Plant Development

The implementation of the DMS development option does not preclude the
development of a flotation plant facility, the original PFS base case. The
Company is confident that the DMS operation will quickly provide the necessary
cash flow to expand the operation to install a flotation plant in the future.
Please refer to the Company's announcement of 29 September 2022 for further
information.

 

Tailings Storage Facility for the DMS Option

The Company has engaged Knight Piésold in Perth to provide tailings storage
facility designs and main access haul road designs for the DMS option.
Tailings storage layout and concept design for the change notification are
complete, and Knight Piésold will send a representative to the Bougouni site
in January 2023 to update field investigations specific to the Ngoualana mine
development. Knight Piésold provided the study engineering services to
complete the original Feasibility Study over the Project.

 

Exploration Upside at Bougouni

The exploration upside at Bougouni is positive, with a number of drill ready
targets providing opportunity to expand on both the DMS material, and
flotation material. Kodal has re-signed Mr George Michaelides as Exploration
Manager in Mali, to lead the pre-development site activities, with a focus on
investigating opportunities for increasing the Company's global resources.
George led the exploration activities which discovered the lithium resources
at Bougouni, and after a three-year stint at Kinross, has returned to Kodal.

 

The Ngoualana, Sogola-Baoulé and Boumou pegmatite veins comprise the current
Mineral Resources at Bougouni but represent only three of the ten lithium
spodumene prospects identified to date and highlights the opportunity for the
Company to expand lithium resources across the Company's 350 sq. km project
area.

 

Environmental Studies for the DMS Option

Kodal was granted an Environmental Permit over the Project in November 2019.
Digby Wells Environmental supported the Company with the ESIA studies required
for the permit. Kodal has re-engaged Digby Wells to conduct supplemental
studies required to support the Change Notification application.

 

The supplemental studies include updates to various field data gathering and
specialist studies, including dust and noise monitoring, surface water and
hydrogeological assessments, and waste rock geochemistry analysis. Digby Wells
will also provide an update to the Company's Community Development Plan, in
incorporate the findings of all studies into the change notification.

 

Forward Plan

Kodal will progress the formulation of the Change Notification for submission
to the Mali authorities in the coming weeks. It is anticipated that the Change
Notification will be submitted for approval to the Direction Nationale de la
Geologies et des Mines (DNGM) early in the new year.

 

The Company is formulating its exploration programme which will include
in-fill drilling at Ngoualana, and plans for drilling at the other prospective
lithium deposits across the Company's 350 sq. km project area in the near
future.

 

 

**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 Limited, 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.

PFS - pre-feasibility study (refer to announcement of 15 June 2022.

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 recognised 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.

NPV(7%) - net present value at a cashflow discount rate of 7%.

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