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

25 July 2018

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 2018.

The Company's Annual Report and Accounts is being posted to shareholders shortly 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 1.00pm on Thursday 6 September 2018 at Fieldfisher LLP, 9th Floor, Riverbank House, 2 Swan Lane, London, EC4R 3TT.

Chairman's statement

Kodal's principal focus for this year has been the continued exploration and development of our exciting Bougouni Lithium Project located in southern Mali ("Bougouni" or "the Project"). The lithium market has remained strong throughout the year and we believe our focus on a rapid exploration and development of Bougouni places us in a very strong position to take advantage of this opportunity. The key drivers to the continued growth of the lithium market are the increasing demand for electric vehicles, battery storage and growth in use of personal electric products driven by social choice, government regulations and an improvement in the performance and affordability of high quality battery products.

We have had a very busy year of exploration with a total of 199 reverse circulation ("RC") drill holes for 24,426m completed. Our exploration efforts have been very successful in the delineation of high-grade mineralisation and we now have three advanced prospects at Ngoualana, Sogola-Baoule and Boumou which are likely to form the basis of our maiden mineral resource estimate expected in the autumn of 2018. In parallel with the drilling, we have also continued the development assessment work with further metallurgical test work highlighting the quality of the spodumene concentrate produced from our samples and the key ability to produce a battery grade lithium carbonate from the concentrate. We have also commenced extraction of a 5,000t bulk sample designed to provide us with key mining and processing data as well as the initiation of environmental review and monitoring to assist us in the future mining licence application. 

The Company has been well supported and funded to allow us to undertake this extensive work programme. The Suay Chin International Pte Limited ("Suay Chin") subscription agreement was completed on 3 November 2017 with a total of £4.3 million invested under the subscription agreement, bringing the total investment of Suay Chin to £4.825 million and giving it a 20% shareholding in the Company at the year end. Following the end of the financial year, the Company raised an additional £1.5 million in June 2018 at a price of 0.13 pence per share including a further subscription by Suay Chin of £1.2 million bringing its holding in the Company to 29%. This additional funding, driven by the continued support of Suay Chin, ensures the Company can maintain the rapid exploration and development programme at the Bougouni Lithium Project. This is further demonstrated by the agreement with Suay Chin to negotiate a binding off-take agreement as the Project advances to development.

In addition to the lithium assets, Kodal has also maintained its gold interests in Mali and Côte d'Ivoire. In Côte d'Ivoire the joint venture with Resolute Mining Limited ("Resolute") is continuing and we have been very pleased with the progress, particularly at the Nielle prospect where exploration activity has identified a new zone of gold mineralisation. The work completed by Resolute includes auger geochemistry and reconnaissance aircore drilling that returned promising results such as 16m at 1.16g/t gold from surface and 4m at 3.04g/t gold from 12m. This new zone is being tested with RC drilling and we are eagerly awaiting an update. Newcrest Mining Limited ("Newcrest") has withdrawn from the Dabakala joint venture and the licence remains 100% owned by Kodal. We are reviewing opportunities for our Côte d'Ivoire gold assets as well as assessing priorities for our Mali gold projects at Nangalasso and SLAM.

Kodal has also strengthened its Board of Directors during the year with the appointment of Dr Qingtao Zeng. Dr Zeng is the representative of Suay Chin and brings considerable geological experience as well as commercial skills and knowledge of the lithium market that will be of great assistance to the Board as we look to the development of our Project.

In this coming financial year, we are entering a very exciting phase for the Bougouni Lithium Project as we continue our exploration and development programme. We anticipate being able to announce a maiden mineral resource estimate for the Project and will be able to undertake a preliminary mining assessment that will further focus our expenditure to potential mining development. With the continued support of our major shareholder, Suay Chin, we will be reviewing potential processing plant and treatment designs and looking to finalise our off-take agreement for spodumene concentrate produced from our site. We anticipate significant progress over this coming financial year and we expect to be adding significantly to the value of our company as we transition from early stage explorer to developer.

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

Robert Wooldridge

Non-executive Chairman

24 July 2018

Operational Review

I am delighted to present this operational review following a very busy year of exploration and development activities. The focus of our fieldwork this year has been the Bougouni Lithium Project where we believe we have the strong potential to delineate high-grade lithium mineralisation that is amenable to open pit mining and production of a spodumene concentrate on site. 

We have been very encouraged by our exploration drilling results where we have been able to define three advanced targets at the Ngoualana, Sogola-Baoule and Boumou prospects and we expect to complete a maiden mineral resource estimate in the autumn of 2018. In addition to our advanced prospects, we have also been able to continue drilling at a range of exploration prospects as we continue to build a pipeline of prospects that will support future mining development.

The Company is always conscious of its rights and titles to exploration ground in its West African projects located in Mali and Côte d'Ivoire and maintains an active monitoring of its compliance and reporting. In December 2017, Kodal announced it had identified an irregularity with the Kolossakoro concession that is part of the Bougouni Lithium Project. Following subsequent discussions with the Directorate Nationale de la Géologie et des Mines ("DNGM", the Malian National Directorate of Geology and Mines) the Company established that the licence may be considered to have expired as a result of the registered holder not replying to correspondence sent to it by DNGM. Furthermore, a local company, Triumvirat Mining Company SARL ("Triumvirat"), had made an application to DNGM for two new licences within the Kolassokoro licence area. Kodal reached an agreement with Triumvirat under which Triumvirat withdrew its applications and Kodal filed new applications over two new 100 square kilometre licences covering the high priority areas within the former Kolassokoro area. Kodal subsequently received new arrêtés that are valid for an initial three-year term, with rights to two renewals for two years each giving a total life of seven years for the new licences. The new licences have been issued in the name of Future Minerals SARL ("Future Minerals"), a 100% owned subsidiary of Kodal, and pursuant to the agreement with Triumvirat, Kodal has a 90% interest in these new licences with Triumvirat having a 10% interest. Kodal has maintained full rights to the project area.

This Operational Review will summarise the status of our existing concessions and rights for both our lithium exploration projects and our gold projects and provide an update of the exploration and development activities undertaken across all projects. Finally, we will provide an outline of the proposed activities for the coming year.

Concession and Exploration Licence Review

Lithium Projects

Kodal's Bougouni and Diendio lithium exploration projects are located in southern Mali, with the rights and concessions held by subsidiary company Future Minerals, a Malian registered company owned 100% by the Group. 

Within the Bougouni Project, the Dogobola and Foulalaba concessions are held directly in the name of Future Minerals, with Kodal holding a 90% economic interest in the concessions. In addition, Future Minerals holds the rights to the Madina concession via an option to purchase agreement that grants Kodal exclusive rights to explore and exploit all minerals in the 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 the licence. 

For the Diendio project Kodal has completed the staged payments that were due under the original option to purchase agreements and is now the beneficial owner of 100% of the licences and is finalising the transfer of the licences to the name of Future Minerals. 

The lithium project licences are tabled below:

Table of Concessions - Mali Lithium projects

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 International Goldfields Mali SARL ("IGS Mali"), a Malian registered company, and in Côte d'Ivoire by International Goldfields Côte d'Ivoire 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, Sotian and Tiedougoubougou 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. Kodal is now the 100% beneficial owner of the Nangalasso concession following final option payments, and transfer of title to Kodal's Mali registered subsidiary company is in progress. For the SLAM Project, the Djelibani Sud licence is held outright following the completion of the final option payment. The licence area has been renewed as a new mining convention application and a new arrêté will be applied for when the paperwork confirming the grant of the convention is received. The Kambali licence remains subject to the DNGM granting an extension and our option partner is continuing discussions with the DNGM.

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

The gold exploration licences are tabled below:

Table of Licences - Gold Exploration projects

Exploration Activity Review

The focus of Kodal's exploration activity for the year has been the advancement of the Bougouni Lithium Project. The Company has completed a major drilling campaign totalling 199 RC drill holes for 24,426m completed. In addition, the Company has undertaken geophysical surveys (ground magnetics and HRIP surveys) in an attempt to delineate extensions and offset positions to the known mineralised bodies and continued geological mapping and rock chip sampling to identify and rank new prospect areas. These exploration activities have been very successful, and the Company now has three advanced prospects at Ngoualana, Sogola-Baoule and Boumou, and a pipeline of developing prospects including the new Bougouni South prospect where first pass reconnaissance drilling has intersected lithium mineralisation.

In parallel to the exploration work, the Company has also continued with the metallurgical testing and commenced extraction of a 5,000t bulk sample to allow testing of the mining and processing characteristics of the Bougouni mineralisation.

Exploration activity completed by Kodal targeting our gold projects was limited to an infill and extension geochemical sampling programme at Korhogo in central Côte d'Ivoire. This programme confirmed several anomalous areas that require further testing, and this will be reviewed and followed up in the coming field season.

The joint venture exploration completed by Resolute has been very positive with the identification of a new zone of gold mineralisation within the Nielle project, located in the north of Côte d'Ivoire. This work programme is continuing to determine the potential size and significance of this new zone.

Bougouni Lithium Project Exploration Highlights

The Bougouni Lithium Project consists of three concessions - the Madina, Dogobola and Foulalaba concessions covering a contiguous area of 450km2, located in southern Mali. Access to the Project area is excellent with bitumen roads from the capital city of Bamako direct to site, and good quality access roads within the Project area.

The Company has undertaken a major exploration drilling campaign during this field season, with the drilling focused mainly on our three advanced prospects to ensure we have sufficient data to support a JORC compliant mineral resource estimate. In addition, drilling has also targeted new exploration prospects as we continue to assess opportunities to expand the potential of the Project to host a long-term mining operation. 

The completed drilling for the 2017/2018 year is tabled below:

The total drilling completed at the Bougouni Lithium Project is tabled below. A total of eight prospects have now had initial drill testing, with more detailed drilling being completed at the three advanced prospects.

Exploration Drilling and Geological Exploration

Ngoualana Prospect

The Ngoualana prospect is located approximately 7km to the south of the town of Bougouni, and high-grade lithium mineralisation has been defined over a strike length of 850m and remains open along strike to the east and at depth. 

The prospect was a high priority for drill testing with the identified presence of a large outcropping pegmatite body returning high grade rock chip samples. Drilling has consisted dominantly of RC drilling targeting the strike extensions of the pegmatite as well as diamond drilling completed to provide further control on the geological model and continuity of mineralisation. The drilling completed during the 2017/2018 field season has consisted of RC drilling designed principally to complete infill and definition drilling to support a JORC compliant mineral resource estimate. It has also targeted strike extensions of the known mineralisation, target offset structures and attempted to define additional mineralisation to the south of the main Ngoualana vein. Significant mineralised intersections include:

· 31m at 1.61% Li2O from 65m in drill KLRC061

· 26m at 1.67% Li2O from 83m in drill KLRC086

· 20m at 1.71% Li2O from 25m in drill KLRC068

· 20m at 1.69% Li2O from 71m in drill KLRC060

· 19m at 1.68% Li2O from 123m in drill KLRC089

· 18m at 1.75% Li2O from 18m in drill KLRC069

· 16m at 1.65% Li2O from 59m in drill KLRC056

· 16m at 1.64% Li2O from 79m in drill KLRC057

The drilling results continue to return wide, high-grade intersections from shallow depths and confirm our geological model. The next phase of exploration work at Ngoualana is to complete the geological interpretation and validate all geological data. This model will then be used to undertake a JORC compliant minerals resource estimate.

Additional drilling is planned to continue targeting the strike extensions and offset structures that may host additional mineralised pegmatite veins.

Sogola-Baoule Prospect

The Sogola-Baoule prospect is located approximately 15km to the southwest of the town of Bougouni. This prospect was originally identified by outcropping pegmatite bodies returning high grade rock chip samples. Initial reconnaissance drilling and trench sampling confirmed the presence of lithium mineralisation.

Geological mapping and interpretation of a ground magnetic survey completed at the Sogola-Baoule prospect indicated potential fault offsets to the pegmatite bodies, and possible extensions of the mineralised zones that had not been tested in the initial reconnaissance drilling.

The focus of the 2017/2018 field season drilling was to complete infill and extension drilling and target the extensions of the identified mineralisation. This drilling programme has been very successful with the drilling defining an extensive pegmatite body intersected beneath shallow cover of between 6 and 10m depth. The current strike length exceeds 1,400m and remains open at depth and along strike. The interpretation of the Sogola-Baoule prospect is continuing to develop as we have identified a continuous main vein up to 26m in width with additional hanging wall and footwall pegmatite veins up to 10m in width that will add to the potential economic viability of a mining operation at this prospect.

Significant intersections from the drilling include:

· 22m at 1.58% Li2O from 110m in drill hole MDRC083

· 20m at 1.43% Li2O from 34m in drill hole MDRC084

· 15m at 1.19% Li2O from 70m and 13m at 1.76% Li2O from 117m in drill hole MDRC066;

· 13m at 1.76% Li2O from 123m in drill hole MDRC073;

· 21m at 1.60% Li2O from 87m in drill hole MDRC062

· 14m at 1.53% Li2O from 92m in drill hole MDRC064

The pegmatite bodies intersected by the drilling are typical of the Bougouni project and are spodumene rich with drill holes such as MDRC066, MDRC073 and MDRC083 demonstrating the consistent width and tenor of mineralisation. Geological logging of drillholes targeting the eastern extension of the prospect has revealed intersections up to 45m in down-hole width and this may indicate the convergence of hanging wall pegmatite veins with the main vein; however, assay results for this final drilling at Sogola-Baoule are pending at the time of this report.

It is expected that the results will support the Sogola-Baoule prospect contributing to the Company's JORC mineral resource estimate for Bougouni.

The next phase of exploration at Sogola-Baoule will incorporate diamond drilling to allow detailed geological logging, metallurgical testwork and geotechnical review of ground conditions to be incorporated in a mining assessment. Exploration drilling will also focus on infill and definition work as well as continue to test for extensions to the target zone. This drilling is expected to commence as soon as possible following the completion of the rainy season.

Boumou Prospect

The Boumou prospect is located 3.5km to the northeast of the Sogola-Baoule prospect. Exploration activity at the prospect prior to the RC drilling programme completed this year has consisted of geological mapping and rock chip sampling that returned high-grade assay results up to 2.52% Li2O trenching and reconnaissance RC drill testing that confirmed mineralised pegmatite veins.

The drilling programme completed during the 2017/2018 field season consisted of 41 drill holes for 4,597m completed. 

The geological logging of the drill holes indicated multiple lithium mineralised pegmatite veins had been intersected across the prospect area, and the receipt of all assay results has confirmed the presence of lithium mineralisation. It is noted that at this stage of exploration, drilling has targeted shallow depth mineralisation and these results confirm the continuity of the pegmatite bodies from surface outcrop and they currently remain open at depth and along strike.

Significant intersections from the drilling include:

· 19m at 1.40% Li2O from 69m in drill hole KLRC105;

· 11m at 1.58% Li2O from 39m in drill hole KLRC108;

· 11m at 1.55% Li2O from 41m in drill hole KLRC121;

· 15m at 1.46% Li2O from 45m in drill hole KLRC129

In the southern portion of the prospect, drilling has identified four closely spaced pegmatite veins with mineralised widths up to 19m (downhole) that confirm previous reconnaissance drill testing and surface mapping. This area requires further drill testing to target the strike extensions and the depth extensions of the veins, and geological review indicates a possible convergence of structures to the west.

In the northern portion of the prospect a consistent pegmatite vein extending for over 400m with downhole mineralisation up to 15m width has been confirmed by drilling. Follow-up drilling will target the western extension of the zone where the structure remains open along strike and also indicates a possible convergence of structures.

The Boumou prospect is the Company's third advanced prospect and we anticipate continuing to exploration drilling in the coming year. 

The Company is reviewing the Boumou prospect for the potential to define a mineral resource to contribute to the Company maiden JORC Mineral Resource estimate.

Bougouni South Prospect

The Bougouni South prospect was identified by geological mapping and reconnaissance sampling completed in January 2018. The prospect is located just 3km to the south of the Bougouni town, and reconnaissance drilling has targeted several zones of outcropping pegmatite veins. The geological reconnaissance indicates this is potentially a large prospect area, and the wide-spaced reconnaissance drill testing has returned mineralisation and confirmed that the zones of interest are up to 30m in width.

Follow-up drilling is planned to target along strike of the identified veins, to target extensions to the mineralised veins and to complete reconnaissance testing of the areas under shallow transported cover. This next phase of drilling is planned to determine the potential of the prospect to host significant mineralisation and allow prioritisation of our growing number of exploration prospects. 

Bougouni Lithium Project - Development Activities

The Company is continuing with the rapid exploration and development assessment of the Bougouni Lithium Project and in conjunction with the exploration drilling campaign, Kodal has a range of activities occurring in parallel as the Company attempts to fast track the development of the Bougouni project.

The extraction of the 5,000t bulk sample has commenced with the mobilisation of a mining fleet to site. Sampling will commence with the extraction of high grade mineralisation at Ngoualana. Progress at the project has not been as rapid as expected, due to the contractor experiencing operational difficulties. However, initial road repair and site clearing has been completed to allow truck access for loading of material to transport to the sea port at Dakar and approximately 1,200 tonnes of material has been extracted and crushed ready for transportation. Further updates will be provided as work progresses.

Environmental assessment has commenced with the Company contracting environmental consultants Digby Wells to undertake an initial review and commence site water sampling and preliminary community social consultations. This assessment work is an important starting point for future applications for mining licences and to inform community interaction as we look to develop the Bougouni Lithium Project.

Metallurgical Test work

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

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. 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 to be used in the manufacture of lithium batteries and other industrial applications.

In addition to the production of a spodumene concentrate, Kodal continued with additional metallurgical testing with the objective of demonstrating the suitability of the Bougouni spodumene concentrate to fit into a downstream processing plant and demonstrate the production of high quality, battery grade lithium carbonate.

This metallurgical testing was completed at the Shandong Ruifu Lithium Co Ltd ("Shandong Ruifu") lithium carbonate and lithium hydroxide plant in the Tai'An region of the Shandong province of China. Shandong Ruifu has a close relationship with Kodal's major shareholder Suay Chin. Shandong Ruifu recently completed an upgrade to the processing plant and is looking to secure supply of quality lithium bearing mineralisation.

The lithium carbonate produced by the process is reported as a high quality, low impurity product suitable for battery production. The final analysis of the grade of the lithium carbonate is tabled below:

Table 4: Comparison of Lithium Carbonate analysis to Industry standard

The Company is continuing metallurgical test work on samples of diamond drill core with analysis currently being completed at laboratories in Australia and China to provide validation and confirmation of the initial results. This test work will also focus on the potential gravity separation of the spodumene mineral and is expected to be the major component of the mineral processing on site at Bougouni.

All results for this work are pending at the time of this report.

Gold Projects - Exploration Review

Gold exploration activity on Kodal's projects for the year consisted of work completed by Resolute as part of it joint venture activities in Côte d'Ivoire, and by Newcrest Mining Limited ("Newcrest") on the Dabakala project prior to withdrawing from this joint venture.

Resolute is actively exploring the Nielle licence, located in the north of Côte d'Ivoire approximately 50km to the north of the Tongon Gold mine operated by Randgold Resources Limited ("Randgold"). Exploration activity completed by Resolute consists of surface geochemical sampling, auger geochemistry and a recently completed 7,000m aircore drilling campaign completed as a reconnaissance test of the surface geochemical anomalies.

Results have been received for the initial aircore drill sections and have provided encouragement for the potential for a new gold mineralised zone to be delineated. The drilling has tested the auger anomaly on a reconnaissance spacing of over 200m between drill sections and 40m between drill holes. The prospect remains open along strike to the north and south and further results are pending. Initial drill results include:

· 16m at 1.14g/t gold from surface;

· 4m at 3.40g/t gold from 12m;

· 8m at 1.53g/t gold from 16m;

· 12m at 2.39g/t gold from surface, including 4m at 6.62g/t gold from surface;

· 4m at 1.76g/t gold from 20m.

Final results are pending for the reconnaissance aircore drilling, however the combination of the auger geochemical anomaly and these initial results indicated further exploration work is warranted. A programme of reverse circulation drilling is proposed to further test this area of new gold anomalism.

The Nielle project consists of one licence of 400km2 that was granted in 2014 and has recently been renewed for a further 3-year period. Resolute is earning into the licence via the joint venture agreement, and at this stage the licence is still 100% owned by Kodal. The area is underexplored; however it is well located in the Tongon-Banfora greenstone belt that is host to multi-million ounce gold resources at the Tongon Gold mine (operated by Randgold) and the Banfora gold deposit (owned by Teranga Gold).

Kodal is maintaining its gold exploration projects in Mali and Côte d'Ivoire and is reviewing opportunities and strategies to realise value for these projects.

Work programme for 2018/19

The Group has an extensive work programme for 2018/19 which is principally focussed on the Bougouni Lithium Project and preliminary work at the Diendio Lithium Project in southern Mali. The focus of work at the Bougouni Project will be further exploration drilling aimed at the continued infill and definition of lithium mineralisation as well as targeting new prospects. A key component of the work programme will be the completion of additional diamond drilling that will provide key information on geological controls and ground conditions for planning of open pit mining operations at our advanced prospects. In addition, metallurgical testing of the Sogola-Baoule and Boumou prospects is also planned to ensure compatibility of all areas in a proposed mining hub development with a central plant treating ore from multiple sites.

The work programme is also planned to ensure that the environmental assessment and testing continues and that reporting of activities to the DNGM continues. The aim of this work is to allow Kodal to be in a position to apply for a Mining Licence as early as possible and continue the move towards development of the Bougouni Lithium Project.

Future Strategy

The focus of the Company is on the exploration and development of the Bougouni Lithium Project in southern Mali. The Company has completed an extensive drilling campaign and defined advanced prospects that are expected to form the basis of a JORC compliant maiden resource estimate. Following the resource estimate, the Company will be undertaking an assessment of the mining potential of the project and will focus additional drilling and development activity to maximise the potential for future mine development. The Company is currently well-funded to undertake this work and we are planning to continue with the approach of attempting to fast track the development of this exciting project.

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

Bernard Aylward

Chief Executive Officer

24 July 2018

Finance Review

Results of operations

For the year ended 31 March 2018, the Group reported a loss for the year of £857,000 compared to a loss of £1,178,000 in the previous year. The loss for the year of £857,000 compared to £503,000 (excluding impairment charges) in 2017, reflected the higher share-based payment charges of £341,000 compared to £15,000 in 2017 as a result of the grant of new share options in the year. Operational activity has remained broadly in line with last year as the Group has continued the running of an office in Mali.

During the year, the Group invested £2,190,000 (2017: £535,000) in exploration and evaluation expenditure on its various projects, the large majority of which related to its West African Lithium Projects. As a result, the carrying value of the Group's capitalised exploration and evaluation expenditure increased from £1,323,000 to £3,508,000. At 31 March 2018, the carrying value of the Gold Projects was £977,000 (2017: £714,000) and of the Lithium Projects was £2,531,000 (2017: 609,000).

Cash balances as at 31 March 2018 were £3,124,000, an increase of £1,401,000 on the previous year's level of £1,723,000. Net assets of the Group at the year-end were £6,313,000 (2017: £2,737,000).

Financing

During the year, the Group has successfully completed a number of equity fundraisings.

Most significantly, in May 2017, Kodal announced the conclusion of a formal subscription agreement with Singapore-based investment company Suay Chin International Pte Limited together with a binding off-take term sheet covering the Group's lithium production. Following an initial subscription in March 2017 for £0.5 million, the first stage of the investment by Suay Chin was completed in May 2017 for £3.3 million, followed in July by £1.03 million and in November 2017 by a final £0.3 million, bringing Suay Chin's total investment to £4,825,000. Suay Chin is now the largest shareholder in the Company, with a holding of 20% at the end of the financial year (and now at 29% following a further subscription for shares since the year end). 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.

Following the end of the financial year, the Company completed a fundraising of £1,500,000 through a subscription and placing of 1,153,846,149 ordinary shares.

Going concern and funding

The Group has not earned revenue during the year to 31 March 2018 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 2018, the Group held cash balances of £3,124,000 (2017: £1,723,000). The Group's cash balances at 20 July 2018 were £3,585,000.

The Directors have prepared cash flow forecasts for the period ending 30 September 2019. The forecasts include the costs of progressing the Lithium Projects, further limited work on the Gold Projects as well as the overheads of the Group. Further fund raising will be required at an appropriate time in order to undertake additional phases of the exploration and development work and the Group has historically been successful in raising additional funds in such circumstances. However, the forecasts demonstrate that by reducing the level of discretionary exploration and development activity 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.

Utilising key performance indicators ("KPIs")

The following KPIs are used by the Group to assist it in monitoring and assessing costs and exploration and development activities:

The directors consider these KPIs to be satisfactory and in line with the Group's strategy.

Financial risk management objectives and policies

The Group's principal financial instruments comprise cash and trade and other payables. It is, and has been throughout the year under review, the Group's policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group's financial instruments are liquidity risk, price risk and foreign exchange risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash reserves to fund the Group's exploration and operating activities. Management prepares and monitors forecasts of the Group's cash flows and cash balances monthly and ensures that the Group maintains sufficient liquid funds to meet its expected future liabilities. The Group intends to raise funds in discrete tranches to provide sufficient cash resources to manage the activities through to revenue generation.

Price risk

The Group is exposed to fluctuating prices of commodities, including gold and lithium, and the existence and quality of these commodities within the licence and project areas. The Directors will continue to review the prices of relevant commodities as development of the projects continues and will consider how this risk can be mitigated closer to the commencement of mining.

Foreign exchange risk

The Group operates in a number of overseas jurisdictions and carries out transactions in a number of currencies including Sterling, CFA Franc and US dollars. The Group does not have a policy of using hedging instruments but will continue to keep this under review. The Group operates foreign currency bank accounts to help mitigate the foreign currency risk.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2018

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF FINANCIAL POSITION

The Company's loss for the year ended 31 March 2018 was £822,439 (2017: £1,087,958).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2018

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2018

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2018

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 2018 or 2017 but is derived from those accounts. Statutory accounts for 2017 have been delivered to the registrar of companies, and those for 2018 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 2018 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 6 September 2018.

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.

Going concern

The Group has not earned revenue during the year to 31 March 2018 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 2018, the Group held cash balances of £3,123,549 (2017: £1,722,950). The Group's cash balances at 20 July 2018 were £3,585,000.

The Directors have prepared cash flow forecasts for the period ending 30 September 2019. The forecasts include the costs of progressing the Lithium Projects, further limited work on the Gold Projects as well as the overheads of the Group. Further fund raising will be required at an appropriate time in order to undertake additional phases of the exploration and development work and the Group has historically been successful in raising additional funds in such circumstances. However, the forecasts demonstrate that by reducing the level of discretionary exploration and development activity 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.

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.

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 Group has subsequently relinquished these licence areas.

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 Group to advance these prospective areas most effectively. Accordingly, no impairment review has been conducted on these assets.

The directors have assessed the Group's Lithium Projects in Mali. These projects are currently under development and there is no indication of impairment. Accordingly, no impairment review has been conducted on these assets.

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.

As detailed in the Operational Review, at the date of these financial statements, the Group's key exploration licences are current. As detailed in note 7, the total carrying value of the exploration and evaluation assets at 31 March 2018 was £3.5 million (2017: £1.3 million). 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.

Valuation of warrants and share options

In accordance with the Group's accounting policy for equity settled transactions, all equity settled share-based payments are measured at fair value at the date of issue. Fair value is determined by using the Black-Scholes option pricing model based on the terms of the options and warrants, the Company's share price at the time and assumptions for volatility and exercise date. The assumptions used to value the options and warrants are detailed in note 5.

For options awarded to the directors, the award has been considered to be in relation to their overall contribution to the Group and, accordingly, the charge has been included within operating costs in the Consolidated Statement of Comprehensive Income rather than treated as an exploration and evaluation cost and capitalised against specific projects. For the award of warrants associated with the raising of funds through the issue of new shares, the charge has been treated as a share issue expense and offset against the share premium account.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2018

1. SEGMENTAL REPORTING

The operations and assets of the Group in the year ended 31 March 2018 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 2018, 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:

In addition to the amounts included above, £20,250 (2017: £19,000) of the directors' remuneration cost has been treated as Exploration and Evaluation expenditure.

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 outstanding for each of the directors at the year end are outlined below: