Kodal Minerals Regulatory News (KOD)

Certain information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. 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

15 July 2020

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

Convertible Loan Agreement for US$1.5 million

Kodal Minerals, the mineral exploration and development company focused on its Bougouni Lithium Project (the 'Project' or the 'Bougouni Project') in southern Mali, announces that it has secured sufficient funding resources to accelerate completion of the next phases of its development projects and to evaluate exciting new opportunities via a US$1.5 million unsecured convertible loan agreement (the 'Loan Agreement') with Riverfort Global Opportunities PCC and YA II PN Ltd (the 'Investors').

Highlights

· Unsecured Loan Agreement for US$1.5 million with an initial advance of US$750,000.

· The funding will enable the Company to accelerate its planned activities across a range of projects:

o Continued development of its flagship Bougouni Lithium Project in Mali including:

§ Licence payments for the expected award of the Mining Licence; and

§ Continued engineering development studies and further work in connection with offtake and financing arrangements.

o Exploration work to further develop the potential at the Company's gold projects including:

§ Aircore drilling at the Nangalasso project in Mali; and

§ Geochemical sampling and geological mapping at the Dabakala project in Cote d'Ivoire.

o Exploring new investment opportunities identified by the Company in the gold space.

· Key terms of the Loan Agreement include:

o Advances under the Loan Agreement have a 15-month term and carry interest at a rate of 9.85% per annum payable monthly;

o Investors have the option to convert outstanding principal and interest into new ordinary shares in the Company in accordance with detailed terms set out below;

o The Company can repay the loan at any time in cash; and

o Investors to be issued with warrants exercisable into ordinary shares in the Company at a premium to the current share price.

Funding

As previously announced on 6 April 2020, the Company entered into a £500,000 Subscription Agreement and associated Equity Sharing Agreement ('ESA') with the Investors under which it is receiving monthly payments based on the Company's share price during that month. To date, the facility has performed ahead of management expectations with over £194,000 received by the end of June 2020. Payments to the Company under the ESA will continue on a monthly basis (subject to the Investors having the right to retain 50 per cent. of the amounts due to satisfy interest and principal owed under the Loan Agreement).

To further accelerate progress and deliver value to shareholders, the Company has entered into a new Loan Agreement which will provide the Company with US$750,000 immediately and the option to drawdown an additional US$750,000. In conjunction with monthly ESA payments, this funding ensures that the Company has sufficient capital resources to progress development work on the Bougouni Project, satisfy the fee for the mining licence once formally awarded and also fund the exploration work at the Company's gold projects. In addition, this funding will enable the Company to look at new opportunities in the gold space. Kodal Minerals provided an update on the Company's Mining Licence application and gold exploration programme on 28 May 2020 and the position remains the same.

Terms of the Loan Agreement

Funds will be advanced pursuant to the Loan Agreement in two tranches ('Advances') of US$750,000, the first of which has been drawn down upon entering into the Loan Agreement (the 'First Advance'). The second tranche may be drawn down at any time subject to the Company and the Investors agreeing in writing and subject to certain conditions precedent, including the provision of warranties by the Company and no event of default having occurred pursuant to the Loan Agreement ('Second Advance'). The Company is under no obligation to draw down the Second Advance.

Advances under the Loan Agreement are unsecured and carry interest at a rate of 9.85 per cent. per annum. Interest is to be paid on the last business day of each calendar month. In addition, the Company shall pay a fee of 5% on the value of each Advance, which will be deducted from the gross proceeds of the Advance.

Repayment

Each Advance is repayable on the date that is 15 months from date of the relevant drawdown and cannot be redrawn. Accordingly, the First Advance is due for repayment on 15 October 2021. The Company can make earlier payment of any Advance for a fee of 10 per cent. of the amount being repaid (the 'Repayment Fee') and provided that for the five trading days immediately prior to the Company serving a repayment notice, the daily volume weighted average price of the Company's Ordinary Shares on AIM ('VWAP') is less than the Fixed Conversion Price (as defined below). No Repayment Fee will be payable in connection with a repayment within the first 30 days following draw down of the First Advance.

Whilst there is principal outstanding under the Loan Agreement, the Investors can retain 50 per cent. of any monthly payment due to the Company under the terms of the ESA as repayment of any principal or interest owed by the Company under the Loan Agreement. No Repayment Fee is due from the Company in respect of early repayment of amounts owing from the Company under the Loan Agreement in these circumstances.

Convertibility

Each Advance and/or any interest due can be converted by the Investors into new ordinary shares of 0.03125p each in the Company ('Ordinary Shares') at any time at a price per Ordinary Share of the lower of:

i) a 30 per cent. premium to the 'Reference Price', being the five-day VWAP immediately prior to the drawdown of each Advance (the 'Fixed Conversion Price'), or 0.0634 pence for the First Advance; and

ii) 93 per cent. of the average of the three VWAPs (as chosen by the Investors) of Ordinary Shares during the 10 trading days immediately preceding the date of any conversion notice (the 'Variable Conversion Price').

The Investors may only convert at the Fixed Conversion Price for the first 90 days following drawdown of an Advance. Also, the Company has the sole right to suspend conversions at the Variable Conversion Price for one month by making a cash repayment equal to one tenth of the aggregate amount of the outstanding Advances.

If while any Advance remains outstanding, the Company issues Ordinary Shares at a price per share less than the Reference Price (save pursuant to arrangements in force at the date of this announcement), the Fixed Conversion Price for that Advance shall be amended to be a 10 per cent. premium to the price of that new share issue.

Issue of warrants over Ordinary Shares

The Investors will be issued warrants over new Ordinary Shares equal to 10 per cent. of each Advance ('Warrants'). The number of Warrants will be calculated as a quotient of the amount of the Advance divided by the applicable Reference Price. The exercise price of each tranche of such Warrants will be 125 per cent. of the applicable Reference Price.

The Warrants will be exercisable for a period of 36 months from the date of issue. The Warrants are transferrable but will not be admitted to trading on AIM or any other stock market.

Accordingly, Warrants to subscribe for a total of 97,580,016 Ordinary Shares (representing approximately 0.88 per cent. of the Company's current issued share capital) will be issued to the Investors in respect of the First Advance at an exercise price of 0.0610p per share.

Other terms

Each Investor agrees that for so long as any amount is outstanding under the Loan Agreement it will not, and it will not cause its affiliates to, hold any net short position with respect to Ordinary Shares. In addition, each of the Investors has undertaken that, during any calendar month, they will not trade any Ordinary Shares they hold (either following a conversion under the Loan Agreement, pursuant to the ESA or following an exercise of Warrants) which either individually, or taken together with the other Investor, would exceed 12 per cent. of the aggregate volume of Ordinary Shares traded during that calendar month, provided that the Investors will in aggregate at all times be able to trade at least 119,047,619 Ordinary Shares per month.

The Loan Agreement terms include certain undertakings, warranties and indemnities from the Company in favour of the Investors. Standard events of default provisions apply, including in the event that the Ordinary Shares cease to be admitted to trading on AIM or are suspended from trading for a period of five continuous trading days.

**ENDS**

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