Kodal Minerals Regulatory News (KOD)

Certain information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 (Market Abuse Regulation) as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Kodal Minerals plc / Index: AIM / Epic: KOD / Sector: Mining

3 November 2021

Kodal Minerals plc ('Kodal' or the 'Company')

Kodal completes acquisition of minority interests to become the 100% holder of the

Bougouni Lithium Project

Kodal Minerals plc, the mineral exploration and development company focused on the Bougouni Lithium Project in Southern Mali ("Bougouni" or the "Project") and its gold assets in West Africa, is pleased to announce that it has acquired the minority shareholdings of the original vendor parties of the Project. These acquisitions result in Kodal having 100% interest in all concessions of the Bougouni Lithium Project with the concessions all held in the name of Kodal's Malian subsidiary companies.

Highlights

· Kodal has acquired the retained 10% interest in concessions from original owners Gorutumu Mining SARL ("Gorutumu") and Triumvirat Mining Company SARL ("Triumvirat")

· The terms of the acquisitions are for each vendor to receive:

o a cash payment of US$600,000 for a total payment by Kodal of US$1,200,000; and

o a net smelter return ("NSR") royalty for production attributed to each vendor's relevant concessions of 0.6% such that Kodal will pay a 0.6% NSR over all production.

· Kodal now has 100% ownership of the concessions within the Bougouni Project where initial Feasibility Studies announced in January 2020 indicate a minimum 8.5-year mine life producing on average 220,000 tonnes of 6% spodumene concentrate per annum, with a total life of mine production of 1.94Mt of concentrate and life of mine revenue exceeding USD$1.4bn

· The acquisition of the minority interests allows the Company to further explore development and financing opportunities as the 100% owner

Bernard Aylward, CEO of Kodal Minerals, commented: "The Bougouni Lithium Project has consistently demonstrated the potential for the development of a new long-life lithium mine in southern Mali. These acquisitions provide Kodal and its shareholders with 100% ownership of the Bougouni concessions and full exposure to development of the existing 21Mt at 1.1% Li2O that is defined at the Project, as well as continued expansion through ongoing exploration activity. These acquisitions further strengthen Kodal's ability to negotiate value accretive development opportunities and financing structures, which will be key as we move towards our construction phase.

"The timing of the potential development of the Bougouni project comes at a time where we continue to see an exponential increase in lithium demand and an associated positive pricing environment. The strongly rising prices for spodumene concentrate highlight the opportunity for Bougouni's development with recent pricing levels reported of over US$1,360 per tonne 5% Li2O spodumene concentrate, compared with the initial US$680 per tonne for 6% Li2O spodumene concentrate used in the 2020 Feasibility Study.

"Importantly, a major source of lithium demand continues to be from the growing use of new energy vehicles in Chinese industry. Recent reports that Beijing is eyeing a 40% share of new energy vehicles and clean energy-powered vehicles in the country's total vehicles by 2030, doubled from an earlier target of 20% by 2025, underpins both the quantum of lithium demand in this market, and also the critical window for increased production to support these objectives. Bougouni is an advanced project with a relatively short time horizon to first production, ensuring Kodal is ideally positioned to capitalise on these market dynamics. 

"Kodal looks forward to the approval of its Mining Licence application for Bougouni which is with the office of the Prime Minister awaiting final signature. Updates to shareholders will be provided as soon as further information is available."

Summary of the acquisition agreements

Kodal is the majority owner and operator of the Bougouni Lithium project located in southern Mali. Kodal first acquired rights in the Project on 30 August 2016 through an agreement with Gorutumu with respect to the Madina concession and later reached agreement with Triumvirat regarding new concessions applications of Foulaboula and Dogabola on 13December 2017 (further details can be found in the announcements made on those dates). The agreements with both parties resulted in a 10% interest being retained in the relevant concessions by each vendor. The agreements now reached between Kodal and Gorutumu and Triumvirat result in the minority partners renouncing all interests in the Project and the termination of existing agreements between the parties.

The Gorutumu project area is defined as the initial Madina concession boundary and subsequently renewed into two new concessions, Fariedele and Sogola Nord. Kodal has acquired the remaining 10% interest in these concessions from Gorutumu for a payment of US$600,000 and the grant of a 0.6% NSR for production sourced from the Gorutumu project area. Production attributed to the Gorutumu project area will be monitored by normal mining surveying and processing controls.

The Triumvirat project area is defined as the Foulaboula and Dogabola concessions. Kodal has acquired the remaining 10% interest in these concessions from Triumvirat for a payment of US$600,000 and the grant of a 0.6% NSR for production sourced from the Triumvirat project area. Production attributed to the Triumvirat project area will be monitored by normal mining surveying and processing controls.

NSR royalty summary

The NSR (net smelter return) royalty is set at 0.6% for each vendor. The NSR is payable by the Company for each quarter in which any product, being spodumene lithium concentrate derived from minerals or ore extracted and recovered, is produced and sold. The royalty payable will be calculated by multiplying the NSR by 0.6% after agreed allowable deductions have been taken into account.

The allowable deductions include, but are not limited to, all concentrating and refining costs, all transport costs, and all cost of sales. In addition, the allowable deductions include the 3% Mali Government royalty and any taxes, levies or charges imposed by an authority (as defined in the acquisition agreements).

It is noted that in the preparation of the Feasibility Study for the Bougouni project completed in January 2020, a NSR royalty of 0.5% payable to the minority shareholders was included in the calculations.

**ENDS**

For further information, please visit www.kodalminerals.com or contact the following:

The technical information reported in this announcement has been reviewed by Mr Bernard Aylward who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Aylward has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Qualified Person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr Aylward consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.