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RNS disclosure "as a consequence of drilling issues in the Westphalian reservoir". What is the problem? RNS did not disclose specific details. It appears that the drilling of the SF-07 sidetrack well encountered intractable problems!
As to whether "Kodal has entered into a major financing plan with Hainan Group" is good news or bad news, if you carefully study the RNS on January 19th, you may conclude that this is a bad news. Why? Because kodal sold the most profitable buogouni lithium mine owned by kodal to Hainan company at a low price of 82 million pounds. The buogouni lithium mine is no longer Kodal's property.
Last Thursday, due to the sudden good news, Kod's stock price rose by 50%, with a trading volume of 2.5 billion shares, and then rose by 7% last Friday, with a trading volume of 1.5 billion shares. The share price was as high as 0.40p. The reason for the rise of Kod's stock price is not only the sudden good news of Hainan's capital injection into the Buogouni lithium mine, but also mm's boost to the stock price. Due to the sudden announcement of good news, investors did not have time to rationally analyze the news, so many investors chased the rise, and investors were over-excited, which pushed up the stock price of Kod irrationally. After calm thinking over the weekend, investors began to return to rational operations. Therefore, kod stock price should start to pull back.
Now let's compare the financing methods of prem.
The agreement signed between Premier and Suzhou TA&A is that Suzhou TA&A pays an advance payment of USD 34,644,385 to Premier (“the advance purchase amount”) for the construction and commissioning of a large-scale pilot plant in the Zulu project. Prem will repay suzhouTA&A’s advance payment with equivalent lithium concentrate .The financing of Suzhou TA&A will not have any impact on prem's equity. Prem still owns 100% of the zulu lithium mine and the pilot plant. The rights and interests of prem shareholders have not been affected .
Prem's pilot plant will start producing lithium concentrate next month and began to generate cash flow and income. All income and cash flow generated by the zulu project belong to all prem shareholders.
Investors in kodal should now change the concept of "equity" as soon as possible. The bougouni project is no longer a project and asset of kodal. The bougouni project is now the project and property of Les Mines de Lithium de Bougouni S.A, an independent non-listed company. Kodal only owns 39% (or 29%) of the company. Kodal company spent more than 10 years continuously financing from kodal shareholders, spent a huge amount of money, explored the resources of the bougouni project, and finally proved the existing lithium resource reserves. Before preparing to produce lithium, the bougouni lithium mine was Sold cheaply to Hainan Corporation. Isn't this a loss-making business? When an investor cheers for this transaction, it means that the investor himself has been sold, and he is helping the buyer to count the money!
How much intrinsic value does Kodal have left?
After completion of the Kodal Group Funding Transaction, what assets does Kodal have left?
1. Bougouni West project (the project may be sold at a price of 2 million US dollars),
2. GOLD PROJECTS (including FATOU GOLD PROJECT DABAKALA PROJECT
NANGALASSO GOLD PROJECT SLAM PROJECT
KORHOGO GOLD PROJECT
NIELLE GOLD PROJECT
NIELLE GOLD PROJECT).
These gold projects are still in the exploration stage and require continuous financing and burning of money.
3. Hold 39% (or 29%) of Les Mines de Lithium de Bougouni S.A.
It is worth noting that Les Mines de Lithium de Bougouni S.A will focus on the development and production of the bougouni project and will not invest in the development of the gold project.
Before completion of the Kodal Group Funding Transaction, KMUK is a subsidiary of Kodal.
After completion of the Kodal Group Funding Transaction, it is intended that a new subsidiary company of KMUK will be formed in Mali with the name Les Mines de Lithium de Bougouni S.A, to be the owner of the Bougouni Project, and the exploitation license pertaining to The Bougouni Project will also be transferred to this company. In this way, the kodal subsidiary KMUK established in the UK will become an independent non-listed company named "Les Mines de Lithium de Bougouni S.A" registered in Mali.
Les Mines de Lithium de Bougouni S.A owns the Bougouni project. And Kodal only holds 39% (or 38%) of Les Mines de Lithium de Bougouni S.A.
In your opinion, isn't this a detriment to the interests of kodal shareholders?
The Bougouni project is kodal's most profitable project. However, Kodal's management sold the bougouni project to Hainan for a price of 82 million pounds. Isn't this detrimental to the interests of Kodal's shareholders? For Hainan, the deal is similar to Hainan's hostile takeover of kodal.
Before kidal established the KMUK subsidiary, Kodal owned 100% of the interest in the Bougouni lithium project in Mali. recently, Kodal established the KMUK subsidiary. The KMUK subsidiary owns the Bougouni lithium project. The shareholding ratio of KMUK's subsidiaries is: Haiman company holds 51% of the shares, the Mali government holds 10% of the shares (it is possible to increase the shareholding to 20%), and Kodal holds 39%. Kodal originally owned 100% of the Bougouni lithium project Equity, and now Kodal only owns 39% interest in the Bougouni lithium project, Kodal shareholders' equity has shrunk by 61%. This seriously damages the interests of Kodal shareholders. Specifically, the shareholders of Kodal originally owned 100% of the Bougouni lithium resource, but now only own 39% of the Bougouni lithium resource.
In addition, the Hainan Group is conditionally subscribing for 2,937,801,971 ordinary shares in Kodal. This seriously dilutes the existing share capital, Harm the interests of Kodal's existing shareholders.
Why does the Mali government suspends the issuance of mining permits? Why did the Mali government set up a state-owned mining company? Does this mean that the Mali government does not welcome foreign investment in Mali's minerals?
1. The transitional government of Mali has suspended the issuance of exploration and mining licenses.
2. The transitional president of the country, Goita, signed a law last month, announcing the establishment of a new state-owned mining company, the Mali Mineral Exploration and Development Company (Sorem SA) .
3 . The Mali government has a right to a 10% shareholding in the entity that owns the Bougouni Project for nil cost (the "Mali Stake"), and the right to buy a further 10%. The Mali government will become kodal's largest shareholder.
1. In August 2020, a military coup took place in Mali, and former Minister of Defense Endo was appointed as the transitional president.
2. On May 24, 2021, a military coup took place in Mali. Mali's military has detained Transitional Government President Bar Ndo in the Kati military camp outside the capital Bamako. Endor then resigned. Mali announced that Goita took over as transitional president.
3. On May 16, 2022, the transitional government of Mali issued a press release stating that the Mali defense and security sector had recently foiled a military coup attempt. The communique stated that some soldiers attempted to launch a military coup on the night of the 11th to the 12th.
So far, the "Major funding package for development of the Bougouni Lithium Project" is just a plan that Kodal has reached with Hainan Group and has not yet been implemented. “Completion of the Kodal Group Funding Transaction, including receipt of funds, is conditional upon satisfying various conditions preceding on or before 30 April 2023, or such later date as the parties may agree (the "Long Stop Date") and whilst the parties have entered legally binding agreements, there is no guarantee that the transaction will ultimately proceed.”.
Kodal has not yet submitted the change notice to the Mali government, and, if the change notice is submitted to the Mali government, it is not known when the Mali government will approve the change notice. Therefore, kodal's production of lithium concentrate will be in the second half of 2024. During this period, another military coup and turmoil in Mali cannot be ruled out.