Kodal Minerals Regulatory News (KOD)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

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

28 September 2017

Kodal Minerals plc ("Kodal Minerals", the "Company" or the "Group")

Final Results and Notice of AGM

Kodal Minerals plc, the mineral exploration and development company focussed on West Africa, is pleased to announce its audited final results for the year ended 31 March 2017.

The Company's Annual Report and Accounts is being posted to shareholders later this week and will be made available on the Company's website www.kodalminerals.com. It will contain notice of the Annual General Meeting of the Company to be held at Fieldfisher LLP, 9th Floor, Riverbank House, 2 Swan Lane, EC4R 3TT at 12.00 p.m. on Tuesday 31 October 2017.

Chairman's Statement

Kodal Minerals began a year of significant change and development with the acquisition of a suite of ten West African gold licences (together the "Gold Projects") which was announced in April 2016 and completed in May 2016. This was followed by the subsequent acquisitions of six exciting lithium exploration licences (together the "Lithium Projects") in southern Mali by way of three separate transactions announced in August, September and November 2016.

The Lithium Projects are referred to as the Bougouni Project and the Diendio Project. These acquisitions strengthened our focus in West Africa and further expanded the range of minerals in which the Group is interested. In particular, the Bougouni Project, acquired in September 2016, has been particularly successful for the Company with our exploration programme continuing to demonstrate high-grade lithium mineralisation. We have completed two drilling programmes at the Bougouni Project, with a total of six prospects tested. Drilling has consisted of reverse circulation ("RC") drilling and diamond drilling, with a total of 76 RC drill holes for 10,260 metres completed and 5 diamond drill holes for 362 metres completed. In particular, the Ngoualana prospect within the Bougouni Project looks extremely exciting with the strike length of the mineralised zone currently confirmed at 650 metres. This zone remains open along strike and has yielded multiple high-grade intersections including 28 metres at 1.96% lithium oxide ("Li2O").

The Company has been very successful in securing its financial position through a series of equity fundraisings during the year. In May 2016, we raised £0.7 million in connection with the acquisition of the Gold Projects. Subsequently, we completed a capital raising in October 2016 of £0.75 million to support the initial acquisition of the Lithium Projects, then a further placement of £1.0 million in January 2017 to expand the lithium exploration programme and continue to delineate the high-grade lithium mineralisation. Most significantly in March 2017, the Company announced an initial investment of £0.5 million by Singapore based investment company Suay Chin International Pte Limited ("Suay Chin"), followed in May 2017 with the conclusion of a formal subscription agreement with Suay Chin for a further £4.3 million investment in the Company together with a binding off-take term sheet covering the Group's lithium production from the Bougouni Project. This subscription agreement is continuing, with Suay Chin having completed staged investments since the year end for a total of £4.0 million, bringing its total investment to £4.5 million out of its overall committed investment of £4.8 million. Suay Chin is now the largest shareholder in the Company, with a holding of 18.92%.

While our focus is currently on the rapid definition of the extent of lithium mineralisation at our projects in southern Mali, the Company has maintained the suite of West African gold assets acquired in May 2016. In Côte d'Ivoire, the joint venture projects with Resolute Mining Limited ("Resolute") and Newcrest Mining Limited ("Newcrest") are continuing. Resolute has been very active in the Nielle licence, located in the north of Côte d'Ivoire, where a new surface gold anomaly has been defined. It is anticipated that Resolute will continue to explore this area in the coming year, and is expected to complete first pass reconnaissance drilling. Newcrest has continued with the auger drilling programme on the Dabakala licence, located in central Côte d'Ivoire, and continues to assess the area.

For those Gold Projects held outside the joint ventures, Kodal has maintained its licences in Mali and Côte d'Ivoire, and during the coming year will continue to review the exploration data and explore ways for the Company to advance these prospective areas most effectively.

Outside West Africa, the Group has maintained its Norwegian phosphate and titano-magnetite project ("Kodal Project") during the year and continues to evaluate opportunities for it. Following an impairment review at the other Norwegian project, the Grimeli copper project, the Company has fully impaired this asset and expects to relinquish these licence areas.

During the year, the Company also completed changes to the Board of directors, with the resignation of former Chairman David Jones and my stepping up from non-executive director to Chairman. The Company is looking to strengthen the Board, and when the Suay Chin placement is completed, Suay Chin will have the right to appoint a director who will assist the Company in its growth plans.

We are looking forward to the year ahead as we have a very busy exploration programme planned, which is concentrated on our lithium Bougouni and Diendio Projects. We will continue drilling at Bougouni with the aim of targeting extensions and providing definition to the known mineralised zones and looking to identify new prospects. With the support of our major shareholder, we will continue with the metallurgical testing of our lithium mineralised zones and review the plant and processing requirements to allow the production of a spodumene concentrate suitable for marketing to China-based end users. This will be a very exciting year for development at Bougouni and we anticipate being able to continue to add significantly to the value of the Lithium Projects.

We look forward to being able to report back to you during the year on developments.

Robert Wooldridge

Non-Executive Chairman

27 September 2017

OPERATIONAL REVIEW

I am delighted to present this operational review following a very busy and transformational year for our Company. Following a review of opportunities, the Board of Kodal identified lithium as a high-value strategic mineral having recently seen strong demand for batteries (deployed in electric cars and for static storage) and tight supply apply upward pressure on prices. The Company was able to leverage the strong operational history and understanding of Mali of its senior executives to acquire two exciting lithium exploration projects that significantly expanded our footprint in West Africa and which complement our existing gold exploration licences.

The two Lithium Projects are located in southern Mali - the Bougouni Project and the Diendio Project. Our field exploration activities for the year focused on these lithium projects, and in particular on the rapid advancement of the Bougouni Project where our exploration activities include geological mapping and geochemical sampling, trenching, geophysical review and drilling. The exploration completed to date has continued to return very encouraging results and the Company is planning a major exploration programme at Bougouni during the 2017/2018 financial year.

Kodal Minerals has also maintained the suite of gold exploration licences in Côte d'Ivoire and Mali following the acquisition of International Goldfields (Bermuda) Limited ("IG Bermuda") and its subsidiaries in May 2016. These gold licences are all located in highly mineralised regions of the Birimian sequence of West Africa and early stage exploration work has returned encouraging results.

The Group has maintained the Kodal Project in Norway during the year and continues to evaluate opportunities for it. Following an impairment review at the other Norwegian project, the Grimeli copper project, the Company has fully impaired this asset and expects to relinquish these licence areas.

Lithium Projects

The new lithium projects, located in southern Mali, are held by subsidiary company Future Minerals SARL ("Future Minerals"), a Malian registered company owned 100% by the Group. Future Minerals holds the rights to the projects via three separate option to purchase agreements that grant Kodal exclusive rights to explore and exploit all minerals in the respective licence areas, and upon completion of agreed staged payments allow Future Minerals to become the registered holder and owner of a 90% economic interest in each of the licences.

The lithium project licences are tabled below:

Table of Concessions - Mali Lithium projects

All licences remain valid and in good standing pending receipt of formal documents for renewals or arrêtésin respect of which the Company has received letters from the Directorate Nationale de la Géologie et des Mines ("DNGM", Malian National Directorate of Geology and Mines) confirming all such applications are complete and in process.

Bougouni Lithium Project Exploration Highlights

Exploration Drilling and Geological Exploration

Since acquiring the Bougouni Lithium project in August and September of 2016, Kodal has been actively exploring this highly prospective area. The Company has completed two stages of exploration drilling that total 76 reverse circulation drill holes for 10,260m drilled and 5 diamond drill holes for 362m drilled. The exploration drilling has targeted six prospects within the Bougouni Lithium project, with approximately 60% of the drilling metres targeting the Ngoualana prospect where high-grade lithium mineralisation has been encountered in a spodumene rich pegmatite vein. Exploration drilling and geological mapping has now identified a high-grade pegmatite vein that extends for over 650m strike length, has been drill tested to approximately 200m vertically and remains open along strike and at depth. This is a key target for further drilling for Kodal in the new field season.

In addition, exploration drilling has targeted new prospect areas where high-grade lithium mineralisation has been identified in early stage geological mapping and rock-chip sampling and areas where surface mineralisation has been identified that has potential to host shallow, high-grade mineralisation.

The drilling programmes commenced with a reconnaissance Stage 1 programme completed in December 2016, and a major Stage 2 programme running from April 2017 to June 2017. The Company has received very encouraging results from the drilling programmes, particularly at the Ngoualana and Sogola-Baoule prospects where highlights include:

· 21m at 1.70% Li2O from 62m in drill KLRC001, Ngoualana

· 22m at 1.64% Li2O from 45m in drill KLRC004, Ngoualana

· 21m at 1.72% Li2O from 11m in drill KLRC024, Ngoualana

· 18m at 2.06% Li2O from 140m in drill KLRC027, Ngoualana

· 47m at 1.51% Li2O from 32m in drill KLRC028, Ngoualana

· 41.5m at 1.71% Li2O from 45.39m in drill KLDH001, Ngoualana

· 27.25m at 1.61% Li2O from 28.65m in drill KLDH005, Ngoualana

· 12m at 1.68% Li2O from 216m in drill MDRC015, Sogola-Baoule

· 12m at 1.59% Li2O from 241m in drill MDRC015, Sogola-Baoule

· 17m at 1.79% Li2O from 277m in drill MDRC015, Sogola-Baoule

· 11m at 1.65% Li2O from 131m in drill MDRC008, Sogola-Baoule

It is noted that the drilling is still at an exploration stage and the Company continues to review the drilling with the focus being on extension and definition drilling of the Ngoualana prospect, extension of the Sogola-Baoule prospect and identification of additional exploration targets. The Company has continued to focus on the Bougouni Project with the objective of defining a future "mining hub" where multiple pegmatite veins provide source for a central processing plant.

The Company is currently planning the new drilling programme to commence following the cessation of the annual rains, and will immediately follow-up the high-grade intersections at Sogola-Baoule, Ngoualana and Boumou. In addition, the Company has been undertaking preparation work at other prospects, including ground magnetics, and this will be used to prioritise other prospects for initial drill testing.

A summary of the completed drilling across the Stage 1 and Stage 2 programmes is provided below:

Bougouni Lithium Project - Summary of Completed Drilling

In addition to the drill testing, the Company has completed geological mapping, a total of 121 rock chip samples and a total of 14 trench excavations for 862m. This reconnaissance geological work continues to define targets for drill testing and demonstrate the prospectivity of the Bougouni Project.

Metallurgical Test work

In June 2017, the Company announced the results of initial metallurgical test work on a sample of core from the RC drilling at the Ngoualana prospect. This indicated that the ore could produce high grade spodumene concentrate with good levels of recovery.

The metallurgical recoveries ranged from 80% to 87% using only a flotation process and produced high grade spodumene concentrate with grades ranging between 5.5% and 6.7% Li2O. The level of mineralisation is of suitable grade and quality for the production of lithium carbonate which is used in the manufacture of lithium batteries and other industrial applications.

The metallurgical testing was completed at the Shandong Ruifu Lithium Co Ltd ("Shandong Ruifu") which operates a lithium carbonate and lithium hydroxide production plant in China. Shandong Ruifu has a close relationship with Kodal's major shareholder Suay Chin International Pte Ltd and is looking to secure supply of quality lithium bearing minerals following a recently completed upgrade to its processing plant.

This initial test work used flotation tests only, as the samples comprised reverse circulation drill chips which contain a significant portion of very fine material not suitable for other techniques.

Further metallurgical test work is planned utilising diamond drill core to seek to further enhance overall recoveries through a comprehensive process utilising gravity separation as well as flotation.

Gold Projects

The Group's Gold Projects are located in Côte d'Ivoire and Mali and consist of licences either directly 100% owned by the Group, or held via option agreements granting the Group exclusive rights to explore and exploit minerals over the area and containing a right to purchase the licences. In Mali, the licences are held through subsidiary company IGS Mali SARL ("IGS Mali"), a Malian registered company, and in Côte d'Ivoire by IGS CIV SARL ("IGS CIV") and Corvette SARL ("Corvette"), Côte d'Ivoire registered companies.

In Mali, the Group has two projects, the Nangalasso Project (including the Nangalasso and Sotian licence areas) and the SLAM Project (including the Djelibani Sud and Kambali licences). The Nangalasso Project licences are held through option to purchase agreements that grant the Company exclusive rights to explore and operate over the licences and allow the Company to acquire the licence outright. For the SLAM Project, the Djelibani Sud licence is held outright following the completion of the final option payment during the year, while the Kambali licence is subject to the DNGM granting an extension, and this licence remains subject to an Option to purchase agreement.

In Côte d'Ivoire, the Group is the 100% owner of the Korhogo licence having secured the licence via direct Government application and is applying for the Boundiali licence. The Group is also continuing with two active joint ventures in Côte d'Ivoire, with joint venture partners, Resolute and Newcrest, each responsible for the maintenance and good standing of the licences.

The gold exploration licences are tabled below:

Table of Licences - Gold Exploration projects

All licences remain valid and in good standing pending receipt of formal documents for renewals or arrêtés. The Company is continuing to pursue the Boundiali and M'Bahaikro applications with the DGMG Direction General des Mines et de la Géologie in Côte d'Ivoire and is looking to advance the process this year.

Norway Projects

Kodal retains full rights to the two projects located in Norway, namely the Kodal Project, a phosphate and titano-magnetite project located in southern Norway and the Grimeli copper-zinc project located in western Norway.

Kodal Project

The Kodal Project is a phosphate and titano-magnetite project located in southern Norway. Previous exploration and development activity completed by the Company has defined a JORC compliant total Indicated Resource of 14.6 million tonnes (Mt) at 2.26% P (5.18% P2O5) and 24.12% Fe with an Inferred Resource of 34.3 million tonnes at 2% P (4.59% P2O5) and 20.38% Fe.

The Group is maintaining the Kodal Project and has continued discussions with local municipalities and stakeholders in the area. The Group will continue to review options for development or other opportunities in the region to realise value for this project.

Grimeli Project

The Grimeli Project is a copper-zinc exploration project around the site of former copper mines in western Norway. Kodal has completed exploration consisting of channel sampling, geophysical survey and drilling. Following an impairment review, the Group has determined not to invest further in this project or maintain its licences and has fully impaired the carrying value as at 31 March 2017.

Work programme for 2017/18

The Group has an extensive work programme for 2017/18 which is principally focussed on its lithium exploration projects in West Africa, as well as a process of review and prioritisation of exploration opportunities for the Gold exploration projects.

The primary target of the exploration programme is the continued exploration and definition of lithium mineralisation at the Bougouni Project. Kodal has completed two phases of drilling to date that have returned very encouraging results and we plan to continue to define and extend these mineralised zones as well as continue exploration for new targets.

A significant portion of the planned exploration programme is based on direct drilling of targets, however, additional work planned also includes surface geochemical sampling, ground geophysical programmes targeting extensions of identified structural zones and geological mapping of the project area. In addition, the Company will continue with the metallurgical testing and process review that will be of great importance in demonstrating the development potential of the project.

In addition to the proposed exploration on existing projects, the Group will continue the process of review, and potential acquisition, of additional high-value projects that may be complementary to the existing portfolio and identification of joint venture partners or realisation of value for the existing projects.

Future Strategy

The focus of the Company is on the immediate exploration and definition of the lithium mineralisation at the Bougouni Project in southern Mali. The Company is currently well-funded to undertake an aggressive exploration programme of prospect definition and continued exploration drilling. The Company will continue to review and assess the potential for future development of the Bougouni Project.

The Company holds a highly prospective suite of gold assets in West Africa. The active joint ventures in Côte d'Ivoire are ensuring that funds are spent advancing exploration on our projects with the potential for new discovery. The Company is continuing to assess and rank the projects it holds directly to determine priorities for further exploration or for ways to deliver value for our shareholders.

I look forward to being able to report back with positive news.

Bernard Aylward

Chief Executive Officer

27 September 2017

Finance Review

Results of operations

For the year ended 31 March 2017, the Group reported a loss for the year of £1,178,000 compared to a loss of £466,000 in the previous year. Excluding the impairment charges, outlined further below, the loss for the year was £503,000 compared to £415,000 in 2016, reflecting the higher administrative charges of £488,000 compared to £375,000 in 2016 as operational activity has expanded, including the running of an office in Mali, following the acquisition of the gold and lithium exploration assets in West Africa.

In June 2017, in connection with the preparation of the financial statements for the year ended 31 March 2017, the directors undertook an impairment review of the carrying value of the Grimeli Project in Norway. This has resulted in an impairment charge in the year to 31 March 2017 of £669,000 (2016: £nil), being the full carrying value of the Grimeli Project. In the year to 31 March 2017, the Group has recognised a further impairment charge on the Kodal Project of £6,000 (2016: £50,000), representing exploration and evaluation costs in the year associated with the Kodal Project. 

During the year, the Group invested £1,392,000 in exploration and evaluation expenditure on its various projects, the large majority of which related to its West African Gold Projects acquired in May 2016 and its Mali lithium projects acquired in August and September 2016. As a result, the carrying value of the Group's capitalised exploration and evaluation expenditure, net of the impairment charge relating to the Kodal Project and Grimeli Project, increased from £597,000 to £1,323,000. At 31 March 2017, the carrying value of the Gold Projects was £714,000 (2016: £nil) and of the lithium projects was £609,000 (2016: nil).

Cash balances as at 31 March 2017 were £1,723,000, an increase of £1,588,000 on the previous year's level of £135,000, with further funds of £3,994,000 having been raised subsequent to the year-end. Net assets of the Group at the year-end were £2,737,000 (2016: £704,000).

Financing

During the year, the Group has successfully completed a number of equity fundraisings. In May 2016, it raised £680,000 in connection with the acquisition of the Gold Projects. Subsequently, it completed a capital raising in October 2016 of £750,000 to support the initial acquisition of the Lithium Projects, then a further share placing of £1,000,000 in January 2017 to expand the lithium exploration programme. Most significantly, in March 2017, Kodal Minerals announced an initial investment of £500,000 by Singapore-based investment company Suay Chin International Pte Limited, followed after the end of the financial year in May 2017 with the conclusion of a formal subscription agreement with Suay Chin for a further £4,325,000 investment in the Company together with a binding off-take term sheet covering the Group's lithium production. This subscription agreement is continuing, with Suay Chin having completed staged investments since the year end for a total of £3,994,000, bringing its total investment to date to £4,494,000 million out of its overall committed investment of £4,825,000. Suay Chin is now the largest shareholder in the Company, with a holding of 18.92%. The net proceeds of the subscriptions from Suay Chin will be used to continue exploration work on the lithium projects and for general corporate purposes.

Going concern and funding

The Group has not earned revenue during the year to 31 March 2017 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.

As at 31 March 2017, the Group held cash balances of £1,723,000 and since the end of the financial year the Company raised £3,994,000 by way of a subscription of new shares by Suay Chin. The Group's cash balances at 31 August 2017 were £4,121,000. 

The Directors have prepared cash flow forecasts for the period ending 30 September 2018. The forecasts include the costs of progressing the Lithium Projects and the corporate and operational overheads of the Group. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising. Accordingly, the financial statements have been prepared on a going concern basis.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2017

The loss for the current and prior years and the total comprehensive income for the current and the prior years are wholly attributable to owners of the parent company.

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2017

The Company's loss for the year ended 31 March 2017 was £1,087,958 (2016: £537,084).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2017

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2017

Cash and cash equivalents comprise cash on hand and bank balances.

Financial Information

The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 March 2017 or 2016 but is derived from those accounts. Statutory accounts for 2016 have been delivered to the registrar of companies, and those for 2017 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Annual Report and Accounts and Annual General Meeting

The 2017 Annual Report and Accounts and Notice of the General Meeting will be posted to shareholders and published on the Group's website at www.KodalMinerals.com shortly. The Annual General Meeting is to be held on 31 October 2017.

Basis of preparation

The consolidated financial statements of Kodal Minerals plc are prepared in accordance with the historical cost convention and in accordance with International Financial Reporting Standards ("IFRSs"), as adopted by the European Union ("EU") and in accordance with the provisions of the Companies Act 2006. The Company's ordinary shares are quoted on AIM, a market operated by the London Stock Exchange.

Critical accounting judgements and estimates

The preparation of these consolidated financial statements in accordance with International Financial Reporting Standards requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the process of applying the Group's accounting policies.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year are addressed below.

Licence renewals

The Group's exploration activities and future development opportunities are dependent upon maintaining the necessary licences and permits to operate, which typically require periodic renewal or extension. In Mali and Côte d'Ivoire, the process of renewal or extension of a licence can only be initiated on expiry of the previous term and takes time to be processed by the relevant government authority. Until formal notification is received there is a risk that renewal or extension will not be granted.

At the date of these financial statements, the majority of the Group's exploration licences in Mali and Côte d'Ivoire are due for renewal or extension. The Group complies with the prevailing laws and regulations relating to these licences and ensures that the regulatory reporting and government compliance requirements for each licence are met. In all cases, applications for renewal or extension of these licences have been submitted, and associated fees paid, as they became due. Accordingly, the directors have no reason to believe that the applications for these renewals and extensions will not be successful.

Exploration and evaluation expenditure

In accordance with the Group's accounting policy for exploration and evaluation expenditure, after obtaining licences giving legal rights to explore in the project area, all exploration and evaluation costs for each project are capitalised as exploration and evaluation assets.

The exploration and evaluation assets for each project are assessed for impairment when such facts and circumstances suggest that the carrying value of the assets may exceed the recoverable amount.

In connection with the preparation of the financial statements for the year ended 31 March 2017, the directors undertook an impairment review of the carrying value of the Grimeli Project in Norway. The impairment review was conducted following an assessment by the directors of the exploration data on the Grimeli Project which led to a decision not to commit any further expenditure to the project. The Company expects to relinquish these licence areas at the next renewal date. The impairment review has resulted in an impairment charge in the year to 31 March 2017 of £669,000 (2016: £nil), being the full carrying value of the Grimeli Project.

The directors have assessed the Group's Gold Projects in Mali and Côte d'Ivoire that are not part of the joint venture agreements and determined that they remain prospective. Accordingly, the directors have determined to continue to maintain these licences and explore ways for the Company to advance these prospective areas most effectively. Accordingly, no impairment review has been conducted on these assets.

In connection with the preparation of the financial statements for the year ended 31 March 2015, the directors undertook an impairment review of the carrying value of the Kodal Project in Norway in response to the significant fall in the price of iron ore, by performing a value in use calculation. As a result of this review, the Kodal Project was fully impaired and its value in the financial statements written down to nil. In the year to 31 March 2017, the Group has recognised a further impairment charge on the Kodal Project of £6,000 (2016: £50,000), representing exploration and evaluation costs in the year associated with the project. At 31 March 2017 the carrying value of the Kodal Project was £nil compared to £nil in 2016. No further expenditure is being incurred on the Kodal Project other than the costs of maintaining the extraction and exploration licences and limited consulting work to advance the Norwegian planning application.

Acquisition of International Goldfields (Bermuda) Limited ("IG Bermuda")

On 20 May 2016, Kodal Minerals plc completed the acquisition of IG Bermuda which through its four subsidiaries has interests in a number of gold exploration projects in Mali and Cȏte d'Ivoire in Western Africa. Including fees and expenses, the total cost of the acquisition was £512,373. Due to the lack of processes and outputs relating to IG Bermuda at the time of purchase, the Board does not consider the entities acquired to meet the definition of a business. As such, the Group has accounted for the acquisition of IG Bermuda as an asset purchase.

Going concern

The Group has not earned revenue during the year to 31 March 2017 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.

As at 31 March 2017, the Group held cash balances of £1,723,000 and following the end of the financial year the Company raised £3,994,000 by way of a subscription of new shares. The Group's cash balances at 31 August 2017 were £4,121,000.

The Directors have prepared cash flow forecasts for the period ending 30 September 2018. The forecasts include the costs of progressing the Lithium Projects and the corporate and operational overheads of the Group. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these financial statements without the need for a further fund raising. Accordingly, the financial statements have been prepared on a going concern basis. 

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2017

1. SEGMENTAL REPORTING

The operations and assets of the Group in the year ended 31 March 2017 are focused in the United Kingdom, West Africa and Norway and comprise one class of business: the exploration and evaluation of mineral resources. Management have determined that the Group had four operating segments being the West African Gold Projects, the West African Lithium Projects, the Norway Projects and the UK administration operations. The Parent Company acts as a holding company. At 31 March 2017, the Group had not commenced commercial production from its exploration sites and therefore had no revenue for the year.

2. LOSS BEFORE TAX

The loss before tax from continuing activities is stated after charging:

Amounts payable to RSM UK Audit LLP and its associates in respect of both audit and non-audit services are as follows;

3. EMPLOYEES' AND DIRECTORS' REMUNERATION

The average number of people employed in the Group is as follows:

The remuneration expense for directors of the Company is as follows:

1 In addition to the amounts included above, Novoco Mine Engineering Limited, a company wholly owned by Luke Bryan, provided consultancy services to the Group during the year and received fees of £24,300 (2016: £46,750).

2 In addition to the amounts included above, Matlock Geological Services Pty Ltd, a company wholly owned by Bernard Aylward, provided consultancy services to the Group during the year and received fees of £91,106 (2016: £nil).

4. LOSS PER SHARE

Basic loss per share is calculated by dividing the loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

The following reflects the result and share data used in the computations:

Diluted loss per share is calculated by dividing the loss attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Options in issue are not considered diluting to the loss per share as the Group is currently loss making. Diluted loss per share is therefore the same as the basic loss per share.

5. SHARE BASED PAYMENTS

The share-based payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management personnel, as part of their remuneration.

Options issued in the year to 31 March 2014

In respect of services provided in connection with the Company's admission to AIM, the Company entered into option agreements dated 20 December 2013 between the Company and Novoco Mine Engineering Limited ("Novoco"), a company wholly owned by Luke Bryan, and between the Company and David Hakes (a consultant to the Group at the time). Under these agreements, the Company granted to Novoco and David Hakes respectively options over 25,000,000 shares and 15,000,000 shares ("Option Shares") at an exercise price of 0.7 pence per share. The options become exercisable in respect of one third of the total number of Option Shares on each of the first, second and third anniversaries of 30 December 2013. The options are exercisable for a period of ten years from the date on which they vest and become exercisable.

Details of share options outstanding at 31 March 2017:

Date of grant Number of options Option price Exercisable between

30 December 2013 13,333,333 0.7 pence 30 Dec 2014 - 30 Dec 2024

30 December 2013 13,333,333 0.7 pence 30 Dec 2015 - 30 Dec 2025

30 December 2013 13,333,333 0.7 pence 30 Dec 2016 - 30 Dec 2026

Included within operating losses is a charge for issuing share options and making share based payments of £14,667 (2016: £40,556) which was recognised in accordance with the Group's accounting policies.

Additional disclosure information:

Weighted average exercise price of share options:

• outstanding at the beginning of the period 0.7 pence

• granted during the period N/A

• outstanding at the end of the period 0.7 pence

• exercisable at the end of the period 0.7 pence

Weighted average remaining contractual life of

share options outstanding at the end of the period 8.76 years

Tetra Option Agreement

In December 2013, the Group entered into an option agreement (the "Agreement") with Tetra Minerals Oy ("Tetra") a company registered in Finland, under which it granted to Tetra an option (the "Option") to subscribe for new shares in the Company. Under the terms of the Agreement, which is governed by English law, Tetra could not assign its right to the Option to another party. In March 2017, Kodal was informed that on 1 February 2017, under a demerger plan in accordance with Finnish law, Tetra's assets had been transferred equally to two new Finnish companies and Tetra had been dissolved. The Company believes, based on legal advice, that as a result of the restriction in the Agreement on assigning the Option and the dissolution of Tetra, the Option is no longer capable of being exercised.

The maximum number of shares that are subject to the Option is 714,285,714, corresponding to the number of shares that would be issued for a total amount of £5 million at 0.7 pence per share. Once vested, each tranche of the Option may be exercised by Tetra at a subscription price of 10p per share for a period of three years after the date on which each tranche vests. The Option vests and becomes exercisable in tranches only once the JORC indicated resource for phosphate minerals at the Kodal Project meets certain thresholds from 90m tonnes to 170m tonnes. These thresholds are well beyond the size of the current targeted ore body, which has a JORC mineral resource of 48.9m tonnes. Unless and until further exploration of the Kodal Project identifies a further potential ore body the likelihood of the thresholds being met is considered to be remote.

The Board has reviewed the Tetra option arrangements and determined that the fair value of the Tetra Option is £nil on the grounds that Tetra has been dissolved and is no longer capable of exercising the Option and that the likelihood of the options vesting is remote.

6. TAXATION

The Group has tax losses and other potential deferred tax assets totalling £790,000 (2016: £582,000) which will be able to be offset against future income. No deferred tax asset has been recognised in respect of these losses as the timing of their utilisation is uncertain at this stage.

7. INTANGIBLE ASSETS