REG - Kodal Minerals PLC - Update on Project Development Preparations

Kodal MineralsAnnouncement

22/09/2023 07:00

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RNS Number : 2800N  Kodal Minerals PLC  22 September 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

 

22 September 2023

Kodal Minerals plc

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

 

Bougouni Lithium Project Update on Project Development Preparations

 

Kodal Minerals, the mineral exploration and development company focused on
lithium and gold assets in West Africa, 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").

 

The Company has continued to make good progress with its detailed engineering
works for the DMS (dense media separation) plant utilising in part the
conditional prepayment received from Hainan Mining Co. Limited ("Hainan") of
US$3,500,000 (see announcement of 3 August 2023), and confirms that the phased
development (change) notification has now been formally submitted to the
Direction Nationale de la Geologies et des Mines ("DNGM") in accordance with
the 2019 Mali Mining Code ("Mali Mining Code") (the "Notification").

 

Highlights:

·    Kodal executives were in Mali to welcome Hainan's key representatives
who will be working closely with the Company during the finalisation of the
design, construction, commissioning and future operations.

·    Kodal and Hainan representatives met with the Director General of the
DNGM to discuss the progress of the Bougouni Lithium Project and commencement
of site development.

·    Following completion of the registration of the Company's new
subsidiary mining company in Mali, Le Mines de Lithium de Bougouni SA
("LMLB"), the Company has now submitted the requisite formal Notification
which outlines the change to a phased development approach. The Notification
details the "Phase 1" DMS development plan at Ngoualana, followed by the
future flotation operation ("Phase 2").

·    The DMS plant design is close to completion, with procurement
specifications finalised in readiness for the drawdown of the US$100 million
funding package from Hainan, which remains subject to final regulatory
approvals in Mali (as announced on 31 August 2023).

 

Bernard Aylward, CEO of Kodal Minerals, remarked: "Kodal and Hainan continue
to work closely together to finalise the major funding package as announced 19
January 2023 and significant progress is being made towards completion.
Kodal and key Hainan representatives have met in Mali to meet with government
officials and undertake site visits in preparation for the commencement of
development.

 

"Our engineering team, with assistance from key consultants and support from
Hainan, have submitted our Notification to the DNGM, which outlines the
Company's phased development approach. The Phase 1 DMS development plan
provides a fast-track pathway to lithium concentrate production, at
comparatively low capital costs and an expected construction timeline of
around 12 months, exploiting the coarse grained spodumene prevalent at the
Ngoualana deposit.

 

"Phase 2 will see the construction and commissioning of a down-stream
flotation plant which is expected to be supported by utilising Phase 1 cash
flows in order to exploit the finer-grained spodumene resources at
Sogola-Baoulé and Boumou, as well as longer term exploration prospects.

 

"The development of Bougouni continues to receive strong support from Mali
Government officials and within the local community, and the Company will be
commencing the upgrade of local access roads in the coming weeks in
preparation for major development activities to commence on site at Bougouni.

 

"We also take this opportunity to remind our shareholders of our upcoming
Annual General Meeting on Friday, 29 September, and look forward to seeing you
there."

 

FURTHER INFORMATION

 

As announced on 19 January 2023, the funding package agreed between the
Company and Hainan comprises a US$100 million investment to acquire 51% of the
Bougouni project company, Kodal Mining UK Limited, and a further US$17.75
million subscription for new ordinary shares in Kodal Minerals PLC at 0.5p per
ordinary share.

 

This week in Mali, Kodal welcomed key Hainan representatives that will form
part of the LMLB management team for the development and operation of
Bougouni. A meeting was held with the DNGM on 19 September 2023 and during
that meeting, the DNGM confirmed that the Bougouni Mining Licence having been
awarded under the 2019 Mali Mining Code, remains valid and administered in
accordance with the 2019 Mali Mining Code.

 

The Company has completed the full registration of the new mining company, Le
Mines de Lithium de Bougouni SA, that is held by Kodal Mining UK Limited
("KMUK" - the Company's UK registered subsidiary formed to be the holder of
the Mali lithium assets) and further to the announcement on 16 December 2022,
has formally submitted to the DNGM the Notification of the proposed mining
phases to commence at Bougouni.  Summary details of the Notification are:

 

·    The Company has now formalised and submitted its Notification to the
DNGM, explaining its proposed two-phase development plan, with Phase 1 being
the fast-track low cost DMS installation and Phase 2 being the larger
downstream flotation plant operation.

·    DMS plant design is close to completion, with procurement
specifications finalised in readiness for drawdown of the Hainan US$100
million funding package. Once the funding is received and a final investment
decision formalised, the Company will promptly proceed to procure long lead
equipment items as defined in those specifications.

·    Phase 2 development of the large-scale flotation plant is continuing,
with design review and metallurgical testing. Immediate focus is on expanding
the Boumou deposit and the potential impact of a larger scale operation that
may be developed earlier following recent exploration drilling results,
further bolstered by the already significant resource at Sogola-Baoulé which
alone totals 12.2Mt @ 1.10% Li(2)O.

 

Environmental and Social Governance

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
Notification.

 

The Company intends to commence the upgrade of local access roads following
the end of the rainy season (October 2023), utilising Malian contractors. The
upgrade of existing roads in the project area will improve conditions for the
local community as they approach the harvest season and will be of benefit to
the Company in upgrading access to the Ngoualana deposit for the commencement
of the site development activities.

 

The Company is continuing to work with the local community to prioritise a
community development programme, which involves direct consultation with the
local communities, in order to document a programme that will jointly
establish priority community development projects and identify how the Company
can provide support for these initiatives.

 

**ENDS**

 

For further information, please visit www.kodalminerals.com
(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 Ltd, 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; 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).

·    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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