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(Sharecast News) - Lithium and gold-focussed explorer and developer Kodal Minerals announced significant progress in its funding arrangement on Friday, reaching an agreement for a package with Hainan Mining and its UK-based subsidiary Xinmao Investment that was first announced on 19 January.
The AIM-traded firm said its newly registered subsidiary Kodal Minerals UK (KMUK) would hold 49% ownership of the Mali lithium assets, with the remaining 51% being held by the Hainan Group.
It said the development came after the waiver of specific conditions related to the reorganisation of Kodal's Mali lithium assets, which included the transfer of the Bougouni mining licence from Future Minerals to KMUK's Mali subsidiary, Le Mines de Lithium de Bougouni (LMLB).
The Sogola-Nord concession would also be transferred to Future Minerals - a 100% subsidiary of KMUK.
Notably, the Mali government was poised to become a shareholder in the subsidiary mining company after the transfer and finalisation of shareholder agreements.
LMLB would assume the role of the Bougouni mining licence holder and operator, with the transfers set to take place on formal approval from the Direction Nationale de la Geologie et des Mines (DNGM) in Mali.
In the interim, Kodal said the assets were being held in trust for the benefit of KMUK, enabling the company to advance the Bougouni lithium project with funding from Hainan.
Kodal Minerals said it had committed to warranties and indemnities of up to $100m concerning the conditions for transferring the Bougouni mining licence and the Sogola-Nord concession.
The warranties and indemnities would be in effect from completion until the actual transfer of the licence and concession, with two years for any claims.
Kodal said it would guarantee the licence and concession's good standing at transfer time.
The parties were said to be working to finalise all remaining compliance requirements, with $117.75m, including a pre-payment of $3.5m received on 3 August, expected to be transferred to complete the transaction in the first half of November.
As a result, the parties had agreed to extend the long stop date for transaction completion to 15 November, with a later date possible on an agreement in writing.
On receiving those funds, the parties expected an expedited development and mining effort for the Bougouni lithium project, focusing on achieving production as early as possible.
"Kodal and Hainan have maintained high levels of communication throughout this process of finalising the funding transaction," said chief executive officer Bernard Aylward.
"This has allowed the parties to agree to the waiver of the final conditions precedent in the interest of moving forward with the project.
"Kodal and Hainan are both very keen for the next important stage of mine development to commence as soon as possible."
Aylward said development activity was progressing on site, with the road upgrades to provide access for the start of infrastructure construction.
"Off-site, Kodal, Hainan and our consultants are continuing to finalise the engineering design of the processing plant as well as progressing mine design and site optimisation.
"The completion of the funding package transaction is a major milestone for the development of the Bougouni lithium project, and we are looking forward to working closely with our partners to achieve production as soon as possible from the Bougouni lithium mine."
At 1338 BST, shares in Kodal Minerals were up 30.85% at 0.615p.
Reporting by Josh White for Sharecast.com.
