Member Info for whitebuffalo

I make it $825 per tonne we've received (after accounting for payment being 95% and converting wet tonnes shipped to dry tonnes received). That's still a wide margin below the $930 in the RNS, "almost $1000" mentioned by Bernard in the interview (though he may have been referring to CIF, which itself, with reasonable shipping deduction assumptions was north of $1000 when loaded).

We just don't know the detail. We don't know how the price us calculated (on leaving the mine, on reaching the port, on loading, when the ship sails, or some average; weighted or otherwise).

Hainan don't have $100m owed to them. The same way KOD don't have 51% of a licence owed to them. Both were "payment" for their part of the JV. I believe the value of that type of investment is usually reflected as depreciation on the balance (though I only learned that recently, as it seems counter-intuitive - I mean, how can you spend $100m on something and be owed nothing back? But in mining, you can, apparently).

I acknowledge that's not what Bernard seemed to imply in the latest interview. I took away that he expects the Capital Expenditure to be returned into KMUK, and they will then decide whether to reinvest it into Stage 2.

SB, your message brought to mind my assumption that there had been some kind of statement from the company to the effect of "Kodal are Hainan's preferred partner for future projects in Mali." But, with the help of AI, I've found no evidence to back that up. Does anyone know what I'm referring to? Did I mis-remember?

I expect the difference is made as follows:

$930dmt × 28950 = $26,923,500

Circa $24,000,000 is 95% of what we expect to receive for 28950WMT (at 5.39%). Therefore $25,263,158 is 100% of what we expect to receive.

$25,263,158 is 93.83% of $26,923,500.

Therefore 6.17% of the 28,950 tonnes on that ship is water. 1,786 tonnes of the product we shipped is water. Hainan aren't going to pay for water.

I think they missed a comma out.

30,000t of lithium product trucked to port of San Pedro, ready for maiden shipment to China, before end of Nov-25.

The lithium will be trucked to the port by the end of November, ready for maiden shipment to China.

Joe - I don't believe foreign nationals are being evacuation; I believe they're being advised to leave under their own steam. I don't think the security situation is Fake News, but I do think it's hard to quantify the magnitude or implications of it.

If you focus solely on Kodal, then yes - things are going surprisingly well for a junior explorer. If you look at the environment in which they're operating, it's definitely not ideal, but that's been true from day 1.

You can dress it up however you like, but people here are only interested in KOD to make money from their activity. People get unhappy when this isn't happening immediately, but also, more-so, when it's uncertain if it will ever happen. I certainly don't relish the idea of another 11th-hour trainwreck like EUA, but I have to accept that the only control I have is my choice to Buy, Hold, or Sell.

Chef,

The sticking point doesn't seem to be that the MG are waiting for global spod prices to increase, but that the sale will not be discounted in Hainan's favour (my interpretation of the quote).

"In Kodal's case, Aylward said officials have been scrutinising a pricing mechanism to ensure the spodumene concentrate produced at the firm's Bougouni project is sold at prevailing market rates."

Acores,

I don't know how Stage 2 will be financed. But here are a few things to consider:

Firstly:

As part of the MoU, KMUK can recover the capital costs of Stage 1 "as a priority." My working assumption is that $200 of the $647 AISC is to cover this. Therefore, the funds available to KMUK from the sale of Stage 1 produce is much higher than the figure you quoted.

It may also be the case that 100% of the revenue - costs of LMLB could be returned to KMUK until that CAPEX balance is repaid. Put more simply - Stage 1 will make zero profit to share amongst the LMLB shareholders until debts are repaid.

Secondly:

Why would KMUK cover 100% of the Stage 2 liability and costs for only 65% of the revenue/profit? Put another way, are you assuming the Malian shareholders have a free carry for their entire holding for Stage 2? If so, why are you assuming that?

In summary - more than $11m will be "available to KOD" from Stage 1 whilst "KOD" will also have less than $12.9m liability for Stage 2 financing.

Also, how much is it you think KMUK pay Bernard in wages?

Seems to me there are people who are confused between the lines of responsibility betwern Hainan, Kodal Minerals, KMUK and LMLB.

Who said the "$40m" is gone? Using a loan facility doesn't mean the bank is empty.

Perhaps this arrangement was a way of everyone getting something from the KMUK tax disagreement? KMUK pay it and Hainan get a little interest to stop them losing face?

Because that would be KODAL taking responsibility for the tax, not KMUK.

They get to buy it for the percentage cost of exploration. It's a really good deal for them.

But you have to remember - it's their lithium they're allowing us to exploit.

A quick look at highstreet personal loan rates to borrow £50k ranges between 8% and 30%...so is 15% for upto $15m unreasonable? I don't know.

Regarding repaying the loan, it's my assumption that $200 of the $647 AISC is for capital repayment to KMUK. It then follows that the value to KMUK of the current 20kt stockpile is about $5.6m

Is funding of stage 2 not a KMUK problem?

If we assume that KMUK will look to its shareholders to supply capital for the build, what do you presume that would look like: Malian Government 20%, Local Shareholders 5%, Hainan and KOD 51% and 49% respectively of the remaining 75%?

My understanding is that it has been stated that KMUK can recover the capital costs of stage 1 "as a priority" - which I assume means that KMUK can use the income from the exports to finance funding for stage 2, should they wish.

Stock,

It is my interpretation that $200 of the $647 AISC is the CAPEX return to KMUK over the initial 4 years LOM. So, 500k tonnes x $200 is $100m returned to KMUK without their 65% share of profit over that period (which might be around 500k x $300 x 65% = $98m if spod averages $950 over that 4 year period). So, KMUK could have nearly $200m in 4 years time...which is enough for stage 2. However, Hainan might be willing to front load that to get stage 2 started straight after stage 1 is bedded in - that's just my speculation.

It's great they have a few weeks if feed ore stockpiled. I hope they'll have the extraction-to-feed process up to speed to match the commissioning, so that a lack of input isn't a reason to maximise output as soon as possible.

George,

I agree, KOD Plc, through KMUK, should pay for 49% of the $15m payment.

As you mention ring-fencing, I don't feel the $14m payment to Suay Chin falls into either category: it isn't part of the mine development $65m and it isn't for the development of other projects. But no-one complained about KMUK paying that, even though the most direct beneficiary of that expense is Hainan. Obviously, we all hope KMUK will indirectly benefit through a fair off-take agreement - given that KOD have "already paid" $7m to be able to sell the concentrate to Hainan. Should KOD reserve the right to have Hainan repay KMUK for that expense?

George,

That's not the same scenario, as you describe your understanding of the KMUK situation.

You didn't lend the company money so they could pay off a tax bill on behalf of another part-owner of the company - and you wouldn't - you'd either point out that the other part-owner was solely liable (and nothing to do with the company) or you'd accept that the company was liable and the payment was nothing to do with the other part-owner (you might then lend the company money to keep them on their feet, but that would be between you and the company).

The idea that Hainan always thought the gain was KOD plc's, and they then knowingly and obviously agreed that KMUK would pay it upfront and they would put in enough funds for KMUK to do so - with the express understanding they were being kind-hearted in loaning the money to KMUK so KMUK could loan it to KOD - just seems long-winded. Surely, if that was the understanding from the outset, Hainan would have just loaned the money to KOD plc from the outset as part of the financing deal?

That the liability sits with KMUK and its subsidiaries just makes more sense to me. Why else would MG be looking to KMUK to pay it? Why would KMUK (who has its own board and responsibilities to shareholders) agree to and actually pay it?

Onlyking,

Honestly, I don't know. There are so many variables (and different methods how to value a working mine - none of which I completely understand). Plus, given the amount of work going on (effectively leaping from DMS to Floatation), there's not really a steady state period to set a baseline.

But my musings are like this:

At a minimum, once the DMS is running, KOD must be worth $49m due to the debt/capital/assets it holds through in KMUK.

Above that, how much is the income from the DMS worth in Mcap? (I've seen 5-6 times used as a figure) - so, at $800, that's probably $20m (at $1000 it would be $50m).

But what about the value of the stuff in the ground? How do you value that in the present? I don't really know, but maybe 3% of the gross value? So, assuming the resource is upgraded to 50mt (which makes it easier to value because 50mt in would be 10mt out, give or take). So 10,000,000 x $800 x 1% (because split 3 ways) = $80m

So...at $800pt, with the DMS only I would guess a Mcap of $150m or £120m wouldn't be unreasonable.

At $1000pt, perhaps £150m?

A few years down the line, with Floatation and DMS running and all debt repaid into KMUK, with spod still at $800, perhaps $270m or £210m?

If spod is $1000, perhaps £300m?

Just my thoughts.

George,

At $800 $100m would be the revenue of LMLB, not the gross profit. Corporation tax is not paid on revenues.

The gross profit would be $150 x 125,000 = $18,750,000. But even that depends on what LMLB debt repayment terms are (remember they owe all the CAPEX costs to KMUK - and whilst the AISC (I presume) includes $200 per tonne to cover this - that's not necessarily how it's applied in practise.

So, one view could be that LMLB may make no profit for 2.5 years, have no corporation tax to pay, and have nothing to share with LMLB shareholders as all the gross profit is used to repay debt (this is the only way I can see stage 2 being funded in the timescales given). [$43.75m returned to KMUK per annum]

Another view would be that, at $800, $150 per tonne of profit is generated. $200 per tonne of AISC is returned to repay CAPEX debt to KMUK [$25m per year], then if we assume taxes, etc also need to be paid (@30%), that leaves $13,125,000 net profit to be distributed among LMLB shareholders - so, $4.6m to MG and $8.5m to KMUK. [$33.5m returned to KMUK per annum].