Kodal Minerals Share News (KOD)

(Sharecast News) - West Africa-focussed Kodal Minerals updated the market on the project feasibility study and the development status of its Bougouni Lithium Project in southern Mali on Wednesday.

The AIM-traded firm said the update was based on a review of the engineering, process recovery and capital cost for the proposed operation, and improved financial metrics based on an improved market outlook for the sale of lithium spodumene concentrates.

It said the current buoyant market conditions for lithium spodumene concentrate reflected current high and future demand for battery minerals, and recognised a supply deficit.

The company described Bougoni as a "robust" development project, with key metrics including a 7% discounted net present value (NPV7) of $760m, compared to $293m in the original feasibility study.

Life-of-mine revenue was set to exceed $2.145bn, based on an average sell price of $1,060 per tonne on a free-on-board basis.

C1 cash costs were pencilled in at $362 per tonne of 6% lithium oxide spodumene concentrate (SC6), and costs of $474 per tonne including transportation and other selling costs.

Total SC6 production would be 2,024,000 tonnes, with an annual average production of 238,000 tonnes.

Kodal said the development was based on unchanged operating assumptions of an open-cut truck-and-shovel contractor mining operation, feeding two million tonnes of lithium ore per annum to the flotation processing plant, using a conventional flotation circuit to maximise spodumene recovery.

Capital cost of the project had increased by about 20% to $154m, reflecting increased raw material and fuel costs.

A separate study to assess the capital development cost, including a review of the process plant, was undertaken by Yantai Jinpeng Mining Machinery Company, which indicated an estimated 20% capital cost saving for the process plant and associated facilities compared to the feasibility study update figures.

"We are very happy to release this feasibility study update to our shareholders and our ongoing review highlights the robust development opportunity our Bougouni Lithium Project presents," said chief executive officer Bernard Aylward.

"The current buoyant market conditions for lithium spodumene concentrate reflects the increasing demand for battery minerals and recognises an expected supply deficit that provides further incentive for the immediate development of the Bougouni Lithium Project.

"This feasibility study update continues to utilise conservative pricing for the sale price of spodumene concentrate when compared with current prices achieved by producers, including Pilbara Minerals reporting an average spodumene price reference for sales in the first quarter of this year of $2,650 per tonne of concentrate."

Aylward said the lithium market continued to be "very strong", with the Bougouni Project continuing to attract "significant" interest.

"The company is continuing to review and discuss potential opportunities for collaboration with third parties, including major mining groups, to support the development of the project and more updates will be provided in due course."

At 1603 BST, shares in Kodal Minerals were down 4.72% at 0.25p.

Reporting by Josh White at Sharecast.com.