Member Info for Mirabeau23

"Maybe I’m just being Uber cynical"

Well, I don't think anyone will mistake you for being optimistic 😂

How will Kodal fund stage 2?

They won't. Stage 2 will be funded by LMLB, using the proceeds of stage 1. So all revenue generated from stage 1 goes towards funding stage 2.

Kodal's function in the JV is to provide the resource, not the funding.

Quote from RNS 01/11/24:

"It is noted that the KMUK partners retain the right to recover all capital investment and intercompany loans from the operation as a priority."

I interpret that as the MG don't get anything until the project is making a net profit.

Hainan are bullish on the long-term future lithium, hence them building a processing plant, and see Bougouni as the first of many lithium mines. They may not have profitability as a major objective for Bougouni, they may be quite happy to break-even, while learning as much as possible.

Kodal Minerals PLC is an exploration company.

Hainan is a mining company.

In business, it's usually best to stick to doing what you're good at.

The Bougouni project is about to move from being an exploration project to a mining project, so it makes logical sense for Kodal to hand over the reins to Hainan.

Now that the mining licence is (to all intents and purposes) sorted, we move one step closer to Hainan buying Kodal PLC's 49% of KMUK, giving them 100% ownership of KMUK and consequently 65% of LMLB and the Bougouni project. (I'm pretty sure Hainan will find a way to reduce the MG's percentage with a 'you scratch our back' type deal in the future)

To determine the price tag of Kodal PLC's 49% share, the last piece of the puzzle is the confirmation of the current resource upgrade exploration.

I feel that Bernard's strategy is to push the current resource upgrade exploration as far as he can to deliver the highest possible tonnage. Remember he initially said this would be published in June of this year - that's probably because he thought the licence would have been sorted by then, but when it wasn't, he made the decision to keep exploring.

So, the big questions are:

1. What will the resource upgrade be?

2. What will be the perceived value of 49% of KMUK?

3. What will Bernard do with the proceeds of the sale of the 49%?

I'm interested to hear other's thoughts on these questions.

My thoughts:

1. Bernard mentioned 50MT, but that was the target for an upgrade in June and they have kept going, so could turn out to be 60-70MT.

2. I think based on future returns through a projected increase in lithium / spod price during the next decade, 50MT could suggest £400-500 million as an optimal value, with £50 million added for every 5MT on top of that. So if we get confirmation of 60-70MT, price agreed could be £500-700 million.

3. Well I asked this as a hypothetical question at the AGM and he gave a response to 'some questions about a buyout' by saying they were fully focused on the job at hand and not thinking about buyouts at the moment (but what else is he going to say).

I would like to see Kodal retain around £50 million from the sale for investment in the gold projects and future exploration and distribute the remainder as a one-off special dividend.

If Kodal PLC were to distribute £500 million as a special dividend, that would be approximately 2.5p per share (please correct me if I'm wrong). As a shareholder of 330 million shares, Bernard would receive £8.25 million without having to sell a single share. That is quite an incentive!

And let's not forget that if the above does come to pass, trading will likely be suspended immediately before the special dividend payment is announced, so you'll have to be in it to win it. ;)

Thanks Laverda.

That's how I see it too.

I feel it is worth clarifying this, so that when we get the RNS telling us the licence has transferred to LMLB, we should also expect to see clear communication regarding an update to the ownership structure of LMLB, i.e. how much of a stake Mali will have.

Thank you George.

I tried your link, but computer said no.

"· Through the KMUK Funding Transaction, Kodal's new subsidiary, KMUK, will become the indirect owner of Bougouni and the Hainan Group will acquire a 51% shareholding in KMUK"

My view is the word "indirect" alludes to KMUK being a parent company of LMLB, which will be the direct owner of Bougouni and the mining licence (when it's transferred).

So:

LMLB currently 100% owned by KMUK, but this will change to joint ownership between KMUK and Mali entities (Government, community, etc.) when the licence is transferred to LMLB.

KMUK currently 49% Kodal Minerals and 51% Hainan, and that will stay that way unless either entity enters, at their own discretion, into an agreement to sell their shares to either the other or another entity.

Thank you Accion.

I thought that was the case.

Here's my two cents on yesterday's AGM.

Good to see things are progressing well at Ngoulana. I really appreciated the drone tour of the site - it's nice to able to visualise where things are and how it all looks on the ground. I would say that the work done so far is in line with expectations, so nothing that causes any sort of concern, but also nothing to necessarily celebrate at this stage.

Well done to Steve for 'getting things done' and for mitigating the impact of a difficult wet season, which will hopefully subside in the coming months.

Bernard is spot on when it comes to the share price. Yes, we all remember how great it was to be in the 0.75-0.9p range, but considering the lithium price has dropped by around 80% since the heady days of Q2 2023, our share price has held up better than most. Take into account we are a relatively small player operating in a challenging location, we shouldn't be too downbeat with the current situation.

It's clear that moving to the 2023 mining code will not have a positive impact on our bottom line profitability, but not necessarily a negative impact either. Let's hope that Hainan can utilise a bit of good old Chinese negotiation tactics to make sure we don't get messed around.

Operating in a district such as Mali has its benefits and drawbacks. Yes, they've not helped us with our fast track strategy, which could have resulted in us already being a producer had they not stood in our way of meeting the initial April 30th 2023 deadline for Hainan transferring funds, but we've also not had to deal with any sort of environmental pressure groups and our costs will be lower than if we were in a 'more developed' district.

It was quite interesting how this AGM seemed to be much more of a KMUK AGM than a Kodal AGM. I understand that Bougouni is the main focus at the moment, but I hope Bernard doesn't lose sight on what is best for Kodal Minerals and its shareholders as it may not always be in line with what is best for KMUK.

I had pre-submitted a question asking for his thoughts on a potential sale of our 49% of KMUK and what value he would place on it, but he only gave it some vague lip service. A penny for your thoughts David Teng!

Quick question:

I was under the impression that the Mali government will have a share in LMLB, the Malian entity, rather than KMUK, the UK entity. Is anyone able to clarify this?

I was expecting to see a picture of some sort of curtain in front of a large DMS plant sized object.

Bfd, I didn't state any sp expectations in my post.

If you're referring to Paul2566's expectations of 1p and 2p in the next 2 Aprils, I also believe these are on the low side, but maybe he is bearish on how well production will go.

I believe that my ROI will come from a special dividend payment following the sale of Kodal's 49% of KMUK, so I'm not overly interested in what the share price does.

I agree with Compo that it is much more likely that Hainan will want to purchase Kodal PLC's 49% stake in KMUK, rather than takeover Kodal PLC. However, they won't want to do that until the licence transfers, which will probably happen quite soon now that the Mali mining office is back in business.

I'd be interested to know what Bernard would do with the money from this. A great scenario would be that he rewards himself and us with a special dividend payment, whilst also retaining some to be used for the gold fields and purchase of other projects.

Let's say Kodal PLC and Hainan make a deal of £500 million for Kodal's 49% stake in KMUK.

Kodal PLC uses £450 million to pay a special dividend of approximately 2.2p per share and retains £50 million for working capital.

Hi George,

I think you're on the right lines with September being when the share price starts to reflect the move from explorer to producer, although it's possible we don't see any significant movement until October or November.

I also agree that although the resource upgrade will have positive consequences for us in the long term, i.e. greater revenue/profit/dividends, it won't have much of an impact on the share price in the short term.

I believe that the main contributing factor to this is that people want to have their money at risk for as short a time as possible, so will wait as late as they possible can before buying. This is one of the reasons why you commonly see sudden explosions in share prices, especially with miners and other high-risk stocks, as when something triggers the buying, everyone who was waiting in the wings starts piling in.

Congratulations Andii.

Kodal issued a great RNS yesterday, further de-risking the investment prospect and adding value to the company.

However, anyone who heard about it and came here to find out more was greeted by a bunch of b**l**k* about some another share you're shilling.

I'm sure you'll be back in a few weeks on the day we get our resource upgrade to post links and information to move the attention to your own share and you'll no doubt get a whole bunch of responses again.

Yes Mannhole, I think there is definitely the potential for Kodal and Hainan to build a strong and long-term relationship with each other. Hainan parting with their $100 million plus before the licence transfer shows that they trust Kodal. They will be impressed by the progress currently being made with the mine and that they are still on track for production before the end of the year.

A potential strategy for Hainan could be to wait for the licence to transfer to KMUK, then make a generous offer for Kodal's 51% of KMUK. The generosity of the offer strengthens the relationship between the 2 companies, so that Hainan get 'first dibs' on Kodal's gold or other African projects.

No rush and no need to shout from the rooftops when any little thing you think might pump the share price happens.

The benefits of being fully funded and not needing to worry about when to issue the next placing.

If everything is still on track by then, I reckon the second half of September is when people will start piling in with anticipation of production less than 3 months away at that point.

Hi Sheffy,

Please don't view me as any sort of expert, or lend any meaningful weight to what I have to say.

I'm very much a novice when it comes to investing, and have absolutely zero knowledge of shipping logistics.

I would also love to be able to track the ship, but can understand why there why there's no benefit for Kodal to make the information public.

Kodal's job is to find valuable stuff in the ground and try and make some money from it. There is no requirement for them to entertain us.

"Privacy is crucial in warehouse logistics because of the value of the goods, data, practices, and hazards of misuse. Having an information breach on any level can cost your business its reputation as well as monetary damages. Having a clear, concise logistics flow enables you to put into place levels of security access to goods, materials, areas, data, and personnel to keep your business from suffering a catastrophic loss. It is vital that these considerations are at the forefront of your company’s logistical planning in the warehouse."

https://airseacontainers.com/blog/why-privacy-crucial-warehouse-logistics/#:~:text=Privacy%20is%20crucial%20in%20warehouse%20logistics%20because%20of,business%20its%20reputation%20as%20well%20as%20monetary%20damages.

RNS 23 May 2024

"Manufacture of the DMS processing plant and crushing circuit is progressing as scheduled with shipping of equipment from China to West Africa expected to take place on or around 5 June 2024"

"The charter vessel will transport all major equipment, steelwork, supplies and reagents required for the Project from China direct to the Port of Abidjan in Côte d'Ivoire, which has direct links to Bougouni via a secure road network. Securing a port-to-port direct cargo ship is a major benefit to delivering our flagship Project on time as it will significantly reduce the transport time to around 21 days."

I feel that anything causing a deviation to the information that has been published would need to be communicated to the market.

If everything is on schedule and going to plan, there is no need to issue any sort of communication.

So, no news is good news!

In regard to not publishing information which could be used to track the ship's location. Isn't that just being diligent with security?

Although it's unlikely to happen, you could argue that someone could open a big short on the company's stock, then try to sink the ship.

Cheers Daz - thought a billion dollars annum revenue was maybe a little too good to be true.

Still a big gap between current price and future value though.

Good week last week. Nice to see the share price go some way towards matching true value, although still a substantial gap between the two.

1,000,000 tonnes per annum x spod price of over $1,000 vs a market cap of 120,000,000 GBP. Those 0's just don't match up

It must be quite frustrating for Hainan at the moment. Surely their ideal scenario is to just buy Kodal's share of KMUK, but the problem with that at the moment is that the licence is still under Kodal Minerals PLC.

Although the share price has been subdued in recent months, this recent increase won't be good news for Hainan. If the share price continues to rise, the price of either Kodal's share of KMUK or the price of a takeover of Kodal Minerals PLC also rises.

Hainan must be discussing whether they'd be better off doing a full takeover of Kodal Minerals PLC now or waiting for the licence to transfer, then buying KMUK.

For me, the canary in the coal mine for a Hainan takeover will be the RNS stating that they have bought Suay Chin's shares, which will no doubt drop without even the slightest hint.

Act swiftly and they could possibly get us for 2p, wait 6 months and that will likely double. 12 months they could be looking at triple.

Over to you Hainan!