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 ("MAR"). 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

22 July 2020

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

Final Results and Notice of AGM

Kodal Minerals plc, the mineral exploration and development company, is pleased to announce its audited final results for the year ended 31 March 2020.

To view the press release with illustrative maps, images and diagrams, please use the following link:

http://www.rns-pdf.londonstockexchange.com/rns/6856T_1-2020-7-21.pdf

CHAIRMAN'S STATEMENT

I am pleased to present the Annual Report of Kodal Minerals plc ('Kodal' or the 'Company' and together with its subsidiaries, the 'Group') for the year ended 31 March 2020.

This year has again marked major developments for Kodal and our focus on the flagship Bougouni Lithium project (the 'Project'). We have received an Environmental Permit following approval of our Environmental and Social Impact assessment ('ESIA') and have completed a Feasibility Study on the project. This study demonstrates a robust Open Pit mining and processing operation with an initial 8.5-year mine life, and a production profile of 220,000 tonnes of 6% spodumene concentrate per annum. The capital costs for the development are estimated to be US$117m (plus contingencies) with a payback period of 1.7 years. This positive Feasibility Study underpinned the Company's Mining Licence application lodged with the Mali Government in January 2020.

The outbreak of the Covid-19 pandemic at the beginning of 2020 caused significant disruption to global equity markets and impacted on our ability to readily raise funding for our ongoing development and exploration programmes at a crucial juncture. In April 2020 during these uncertain market conditions, the Company was able to secure funding through a Financing Facility, comprising a share subscription for £0.5 million and linked equity sharing agreement, such that the funding will be received over the next 12 months, but the net amount received will vary according to our share price performance. As a result, we have sought to minimise the Group's overheads and outgoings in order to preserve working capital, by reducing operational activity, agreeing salary and fee reductions for directors, management and staff, and reaching agreements with key suppliers on reduced charges and extending payment timings.

On 14 July 2020 the Company entered into a Convertible Loan Note Agreement for a total commitment of $1.5 million, with a first tranche of $750,000 advanced at closing and a second tranche at a date of mutual agreement, bearing interest at 9.85% per annum. These additional funds will enable us to finance our plans to further develop our Bougouni Lithium project , pay for the mining licence, fund additional exploration activity of our gold assets and explore new investment opportunities identified by the Company in the gold space.

The Company is maintaining close contact with the Mali Government with respect to its Mining Licence application, and while timing remains unclear, we understand it continues to progress well through the government agencies and is awaiting only final documentary sign off.

The year ahead promises to be a challenging and exciting one for Kodal as we expect to achieve full permitting of the Bougouni Lithium project and embark on the next stage of development, including final engineering design and financing negotiations for construction.

We thank all our shareholders for their continued support and hope that you keep safe and well.

Robert Wooldridge

Non-executive Chairman

21 July 2020

OPERATIONAL REVIEW

Summary

Kodal continued with the fast tracking of the flagship Bougouni Lithium project (the 'Project') during this reporting year. Following the approval of the Company's ESIA in November 2019 and receipt of an Environmental Permit for the Project, the Company completed a feasibility study and lodged a Mining Licence application in January 2020. Following receipt of approval of the Mining licence application the Company will have a fully permitted project ready to move to development.

The Feasibility Study for the Project proposes a contract mining operation and conventional "Milling and Flotation" processing facility, capable of treating 2 Mtpa of ore, complete with associated infrastructure, to mine and process approximately 16Mt of pegmatite ore over an initial 8.5 year Life of Mine ('LOM').

Kodal Minerals, and its Mali subsidiary Future Minerals SARL ('Future Minerals'), coordinated and managed the Study with various industry expert consulting firms engaged to contribute in the areas of geology, resources, geo-technical, mining, metallurgy, engineering, tailings, cost estimating, project implementation, operational readiness, risk identification, and health, safety, environmental and social aspects. The Project will consist of open-pit mines, a lithium concentrate processing plant, a tailings dam, waste rock dumps, a water storage dam, stores, a camp including administrative and living quarters and associated infrastructure.

In May 2020, Kodal received results of the processing of its bulk sample, with over 800 tons of pegmatite hosted lithium mineralisation collected from the Ngoualana prospect within the Bougouni Lithium project. The testwork has returned very encouraging results confirming a high-grade, low impurity spodumene concentrate from the mineralised sample. The results of the testwork demonstrate a metallurgical recovery of up to 83% for a 5.5 % to 6.0% Li2O spodumene product. This recovery is significantly higher than the 71% recovery used in the initial Feasibility Study and indicates upside on the Project's economics.

The Group carried out further exploratory work on its gold assets in Cote d'Ivoire during the year. It also maintained good title to its lithium and gold assets in Mali and Cote d'Ivoire.

Tenure Review

Lithium Projects

Kodal's Bougouni and Bougouni West lithium 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.

During the year, for the Bougouni Lithium project the Fariedele and Sogola-Nord concessions replaced the previous Madina concession that had reached its legal time limit. The new licences are held in the name of Kodal subsidiary companies Future Minerals (Fariedele) and International Goldfields Mali SARL ('IGS Mali') (Sogola-Nord) with Kodal holding a 90% economic interest in the concessions as per the Madina agreement. All concessions in the Project are now registered in the names of Kodal subsidiary companies with a granted area of 350km2.

All licences remain valid and in good standing. All fees have been paid and reports lodged with the Directorate Nationale de la Géologie et des Mines ('DNGM', the Malian National Directorate of Geology and Mines).

The Diendio licences have passed their legal time limit; Kodal does not intend to renew them nor to undertake exploration on these areas in the future. Although they remain registered in the Company's name, they have been removed from the table of concessions below.

Table of Concessions - Mali Lithium projects

Figure 1: Location of Kodal Bougouni and Bougouni West Lithium projects and prospect, Mali - See PDF

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 minerals over the area and containing a right to purchase the licences. In Mali, the licences are held through subsidiary company IGS Mali, a Malian registered company, and in Côte d'Ivoire by subsidiary companies International Goldfields Côte d'Ivoire SARL ("IGS CIV") and Corvette SARL ("Corvette"), Côte d'Ivoire registered companies.

In Côte d'Ivoire, the Group is the 100% owner of the Korhogo and Dabakala licences; during the year confirmation was received that the exploration licences for these concessions were each renewed for a further three-year term, expiring in April 2023.The Group is also applying for the Boundiali licence. The Group continued its joint venture with Resolute Mining Limited ("Resolute") in Côte d'Ivoire, with Resolute responsible for the maintenance and good standing of the licences held in the name of Corevtte CIV SARL, namely the Nielle, Tiebissou and M'Bahaikro (application) concessions.

In Côte d'Ivoire, the Group continues to pursue the Boundiali and M'Bahaikro applications with the DGMG and is looking to advance the process this year and also to finalise the renewal of the Tiebissou concession.

In Mali, the Group has two projects, the Nangalasso Project (including the Nangalasso, Sotian and Tiedougoubougou licence areas) and the SLAM Project (the Djelibani Sud licence). No change to the Mali gold exploration concessions occurred during the year.

All licences remain valid and in good standing pending receipt of formal documents for renewals or arrêtés.

The gold exploration licences are tabled below:

Table of Licences - Gold Exploration projects

Figure 2: Location of Kodal Gold Exploration projects, West Africa - see pdf

Norway Projects

The Company has reviewed the Norway projects and has formed the view that the potential for future development is low and the Company does not intend to undertake any work on the projects in the near future. The Company has taken the decision to not renew the Norway licences and consequently they are removed from the Tenure review.

BOUGOUNI LITHIUM PROJECT REVIEW

Geology and Resources

The Bougouni pegmatites are hosted within an intercalated sequence of Palaeoproterozoic (Birimian-age) pelitic metasediments and amphibolites of the Leo-Man Shield, which are variably intruded by syn- and post-orogenic granitoids. Mineral Resources were modelled for three separate prospects, Ngoualana, Boumou and Sogola-Baoulé, on the basis of defining continuity of the pegmatite occurrence utilising a nominal 0.3% Li2O lower cut-off to define the boundary and continuity of the potential mineralised bodies. The mineral resource estimate ("MRE") has a cut-off date for data of 19 December 2018, with the MRE completed and announced on 28 February 2019.

The geological interpretation has demonstrated strong continuity of mineralisation in the major pegmatite veins as well as the smaller subsidiary veins that have been identified in each prospect.

The Mineral Resources have been classified as Indicated and Inferred based on the guidelines specified in the JORC Code. The classification applied is based upon an assessment of geological understanding of the deposit, geological and mineralisation continuity, drill hole spacing, quality control results, search and interpolation parameters and an analysis of available density information. Areas which were coherently considered to meet the requirements to be classified as Indicated or Inferred were then defined on a per-object basis, and long section strings were digitised to provide constraining boundaries which were then applied on the per-object basis.

The Mineral Resource estimate for the Sogola-Baoule, Ngoualana and Boumou prospects are tabulated below. These mineral resources are reported in accordance with the JORC Code.

Notes: Mineral resources are reported using a 0.5%Li2O cut-off applied to the block model for each prospect. The Block model for each prospect is based on the geological model of pegmatite bodies based on a 0.3%Li2O cut-off. Figures may not sum due to rounding. The contained metal is determined by the estimated tonnage and grade.

Bougouni Lithium Project Feasibility Study and Mining Licence Application

Kodal completed a Feasibility Study for the Bougouni Lithium project in January 2020 and lodged a Mining Licence application for the future development of an open pit mining and spodumene concentration processing operation. The Feasibility Study is based on the Mineral Resource defined for the three prospects detailed above.

The highlights of the Feasibility Study are:

· It presents a very robust mining operation:

o Minimum 8.5-year mine life;

o Producing on average 220,000 tonnes of 6% spodumene concentrate per annum, at life of mine ('LOM') lithium average metallurgical recovery of 71%, based on laboratory metallurgical recoveries of 75%;

o Total LOM will produce 1.94Mt of concentrate; and

o LOM revenue exceeding US$1.4bn, with an initial concentrate sale price of US$680/t based on operations commencing H2 2021, thereafter, increasing 2% year-on-year.

· Proposed 2Mtpa processing plant utilising a conventional flotation circuit to maximise spodumene recovery:

o Estimated C1 cash costs of US$431 per tonne concentrate (US$466 including royalties and sustaining capital).

· Capital requirement for development estimated to be US$117M plus contingency:

o Forecast payback period of 1.7 years (pre tax);

o IRR of 58% (51% post tax).

· Pre-tax Project NPV7% of approximately US$300M (NPV7% US$200M post-tax).

· Opportunities to improve Project design through:

o Continued process plant reviews;

o Mine scheduling and infrastructure planning;

o Reducing initial capital expenditure.

· Opportunities for expansion of resource base through immediate extensions of defined mineralisation and continued exploration of key target areas.

A summary of the key findings of the Study including the financial parameters, capital and operating cost estimates, open-pit design and schedule, processing plant design, proposed operation and transport of product (note all costs referred to are in US dollars) are presented below:

Project Capital Costs and Operating Costs

The Study incorporated extensive review and communication with various West African and industry-wide operation and supply groups to determine expected capital and operating costs of the proposed operation. This Study has identified key operators who have been able to provide confidence in a low-cost, high quality contract mining operation and these costs have been used to inform the optimisation for the open-pit mining, planning and the expected Project development. The estimated operating costs for the operation are summarised below:

These costs, when utilised in the optimisation studies, highlight a C1 (Brook Hunt) operating cost of US$431 per tonne of concentrate produced and benchmarks the Project as a low-cost producer. A summary of the operating cash costs is tabled below:

As outlined above, the proposed development of the Project is based on open-pit mining and processing through a 2Mtpa processing plant. The capital costs to develop this Project have been estimated utilising key consultants with relevant West African project experience, and represent all costs required to bring the Project into operation. A summary of the proposed capital costs is tabled below:

These operating and capital costs were then assembled into the proposed mining and processing operation based on Indicated and Inferred Resources to develop a financial model in order to evaluate the economics of the operation. The estimate for revenue is based on a year-on-year estimated sliding scale lithium selling price for a 6% concentrate, Free on Board at the Port of San Pedro in Côte d'Ivoire. Concentrate selling price is based on a start price of $680/t for the first year of production (second half of 2021), which is considered reasonable under current market conditions, then increasing 2% year-on-year for the LOM. Summaries of the cash flow model inputs and the resulting cash flow model are tabled below:

Model Inputs

Cash flow model results - based on sliding scale lithium price

Mining

Conventional open-pit mining is considered as the preferred mining method for the operation at Bougouni given:

· the ore presents at or near surface;

· there is space to construct waste dumps;

· it is expected, with a high chance of success, to generate the best value; and

· the operation is planned to be a mine contractor run operation.

Three mining areas including four individual ultimate pits will be developed. Vegetation will be cleared and grubbed prior to topsoil stripping and later used to cover the topsoil stockpiles. Topsoil will be stockpiled around the open pits.

It is proposed that mining activities will be undertaken by an experienced contractor. There are a number of mining contractors operating in the region. Engaging an experienced mining contractor will have benefits, including reduced capital costs, reduced operational risk and reduced recruitment burden for the Company.

Future Minerals will retain responsibility for technical services comprising of mine planning, production scheduling, grade control, surveying and supervision and management of contract mining operations.

Pit optimisations were carried out using industry standard methods and WHITTLE™ 4x Software. The results of the open-pit optimisations were put in context of sensitivities, risks, contained ounces, mine life and total project size.

A proposed project layout is provided below:

Figure 3: Metallurgy and Process Plant - see pdf

The processing facility has been designed in accordance with accepted industry practice and the flowsheet incorporates unit operations that are well proven in the industry and commensurate with the testwork conducted and results achieved to date.

The plant layout provides ease of access to all equipment for operating and maintenance requirements while maintaining a compact footprint to minimise construction costs. The key Project and ore specific design criteria for the processing facility design are as follows:

• 2,000,000 t/y of Run-of-Mine ("ROM") ore through the crushing plant operating at 65% utilisation (5,694 h/y).

• Surface plant utilisation of 85% (7,446 h/y) supported by crushed ore storage and standby equipment in critical areas.

• Sufficient automated plant control to minimise the need for continuous operator interface and allow manual override and control if and when required.

The testwork supports a flowsheet that utilises flotation to recover spodumene to a saleable concentrate. The laboratory flowsheet can recover 75% of Li2O to a concentrate grade of 6%. It is noted that the open-pit optimisations and mine scheduling were based on a more conservative recovery of 68%. Due to the timing of Study deliverables, this value had to be predicted in advance of finalising laboratory testwork. The laboratory scale recovery of 75% provided a more encouraging result but for the purposes of the financial modelling, a reduced metallurgical recovery of 71% was selected to reflect the likelihood of circuit losses when scaling up from the laboratory to a commercial production facility. This does therefore reflect a degree of conservatism in the Company's financial modelling.

As a result of the relatively conservative recovery value selected for the mine design process, the Project has an effective additional contingency margin within the pit inventories.

A flowsheet of the proposed processing plant and a 3-D representation are provided below:

Figure 4: 3D representation of the Project - See PDF

Project Implementation, Operations and Transport

It is proposed that an experienced Engineering firm (the "Engineer") will be engaged to provide Engineering, Procurement and Construction Management ("EPCM") services associated with the development of the process plant and associated infrastructure and services. Specialist consultants will be engaged to address specific elements of the Project not within the core competency of the Engineer.

Responsibility for the execution and delivery of the various Project scope elements will be divided between the Engineer and the Company. The implementation approach requires close integration with and collaboration between Company and Engineer to ensure all aspects of the Project development are executed efficiently.

Given the remote location of the Project in Mali, it will need to be self-sufficient in as many areas as possible. It is expected that the local Malian workforce will not have any previous mining and plant operation experience and that a core group of experienced Malian management and supervision, supplemented by expatriates, will be required for initial ramp-up, management and training of the operation.

As a result, an expatriate team has been included for start-up and establishment of procedures. It is anticipated that following two to three years of operation and training these expatriate roles will transfer to Malians.

The entire operations workforce will be under the control of a General Manager who will be supported by five main departments each with a manager heading the department; namely mining, exploration, processing, administration and health, safety, environment and community relations ("HSEC").

Transport and logistics are a significant component of the Project given the remote nature of the site. Internationally sourced goods, reagents and consumables will be containerised and transported by liner services to Abidjan or San Pedro ports in Côte d'Ivoire for forwarding on to the site. A freight forwarder will be engaged to clear port customs and organise transport to site. These services will be provided by a specialist West African transport and logistic firm with extensive experience in containerised and bulk commodity transport.

The Study determined costs for export of lithium concentrate product, which included consideration of ports in Côte d'Ivoire, Senegal and other regional facilities. Following consideration of transport routes, reliability and distance, it was concluded that the San Pedro Port provides the most cost-effective product export destination for the Project. A visit was conducted to the San Pedro Port Authority where Future Minerals was well received through a commitment to continue to work together in providing port access for product export.

Bulk Sample

In May 2020, Kodal received results for the testwork on the bulk sample that highlight opportunity for improvement of the feasibility study as the metallurgical recovery of up to 83% returned from the testwork is significantly higher than the 71% recovery used on the study. The test work was completed by Shandong Shengli Environment Protection Technology Co Ltd ('Shengli') a company associated with Shandong Ruifu Lithium Co Ltd ('Ruifu') at its Yishu plant in Shandong province, People's Republic of China. The Yishui processing plant is a 2 million tonne per annum (Mtpa) DMS (dense media separation) and flotation plant, purpose built for the concentration of spodumene mineralisation from pegmatite ore.

The bulk sample was assayed in the plant laboratory with lithium grades from 10 samples varying from 1.24% to 1.47% and is representative of the Ngoualana prospect. The bulk sample was processed via up-front crushing to reduce feed stock size to below 10mm for effective DMS extraction. The crushed ore is fed over a primary sizing screen whereby finer material reports to a flotation circuit, with the coarser material treated in the DMS circuit.

Figure 5: Primary sizing screen separating coarse DMS feed material from the finer Flotation feed material - see pdf

The dual processing streams achieved improved recovery over the standalone flotation circuit used for the feasibility study. As a result, the overall recovery achieved by Shengli in testing the bulk sample reached 83% compared with 71% for the flotation only test work that supports the feasibility study assumptions. The quality of saleable spodumene product produced retained a 5.5% to 6% Li2O grade in both instances.

It is noted that DMS recoveries have always proven to be higher for the Ngoualana deposit compared with the recoveries from the Sogola Baoule and Boumou prospects in laboratory testing. It was the reduced DMS recoveries from these two deposits that substantiated the decision to revert to whole of ore processing via flotation only that was assessed in the recent optimisation and Feasibility Study.

With the marked improvement in recovery experienced at the Shengli processing facility, it is possible that improved project economics could be achieved by adopting a similar DMS-flotation plant for Bougouni. Furthermore, the testing confirms that the Shengli facility is suitable for processing Bougouni ores and further synergies may be able to be gained through the adoption of the same plant configuration.

Figure 6: Flotation product undergoing filtration for reduction of moisture content to

In order to investigate these potential benefits, Kodal will undertake a study optimisation process using the Feasibility Study as a basis. The optimisations will need to consider the benefit of improved overall recovery, against any additional capital and operating costs of a combined DMS-flotation circuit. The optimisation studies will be completed internally and the results of this work are expected to be finalised by the end of 2020.

This bulk sample test work confirms that the spodumene concentrate from Bougouni is low in impurities and aligns with previous test work completed by Ruifu that has demonstrated the suitability of the Bougouni spodumene concentrate to achieve downstream processing of high quality, low impurity battery grade lithium carbonate.

Gold Projects - Exploration Review

Kodal has continued to hold gold exploration projects in Mali and Cote d'Ivoire. For the projects in Côte d'Ivoire, Kodal has maintained the concessions in good standing with exploration review and geochemical surveys continuing on the Korhogo and Dabakala projects. In addition, the Côte d'Ivoire Joint Venture with Resolute is continuing with a focus on the Nielle concession where a drilling programme is planned to commence following the cessation of the annual wet season.

In Cote d'Ivoire the geochemical sampling by Kodal consisted of conventional surface samples and termite mound sampling (where available) on a nominal 2km x 200m sample spacing at Dabakala (225 samples) infilling an area of previously defined gold anomalism, and a nominal 1km x 200m spacing at Korhogo (190 samples) targeting infill at several gold anomalous zones and structural targets within the project.

The Dabakala project is a single concession in central Cote d'Ivoire where previous work completed by the Company highlighted an extensive surface geochemical anomaly and field geological mapping indicated the association of sheared and altered geology associated with the anomaly. This is a large surface anomaly, extending for over 10km of strike and up to 800m in width and exploration is at an early stage. The follow-up work completed by the Company infilled the anomaly to a nominal 1km x 200m spacing over the key anomaly (and notes that still is very wide and reconnaissance level) and assay results received confirm the anomaly with results up to 97ppb returned and confirming the extent of the anomaly. Further work is required to define this prospect prior to initial drill testing.

The Korhogo project is a single concession in north central Cote d'Ivoire and several phases of geochemical sampling has defined surface geochemical anomalies. The recent sampling by the company has confirmed gold anomalous zones extending for over 2kms in strike and up to 600m in width. Further exploration is required to review these targets and prioritise further work.

The Company is continuing to review opportunities for the prospective suite of gold projects.

Future Strategy and Work programme for 2020/21

The next important milestone for Kodal will be the granting of a Mining licence for the Bougouni Lithium project. The licence application process is very well advanced with recent confirmation in May 2020 that the Feasibility Study has been accepted, that no further technical and financial meetings are required and that the Mining Licence area and new permit boundaries have been agreed. The Company maintains its expectation of the licence being granted as all due processes are now complete although the Covid-19 restrictions have impacted on the Mali Government's process and the timing of the issuance of the Mining Licence documents remains uncertain. Once the licence is issued, the Company will have achieved a fully permitted project for mining operations.

The Feasibility Study, and recent results for the bulk sample testing, have highlighted areas for further review and assessment that may have significant impact on the project. These include:

· Resource growth and increase of head grade from further exploration in the highly prospective areas contained within existing exploration licences;

· Reduction in capital cost through further optimisation of the flowsheet and consideration of packaged or modular plant supplies;

· Investigation of more favourable power supply solutions to reduce operating costs;

· Optimisation of mine scheduling and drill and blast strategy; and

· Cost savings relating to the construction of the tailings storage facility. Currently the design of Stage 1 is based on 24 months of capacity to combat potential for adverse climatic conditions. Potentially this could be reduced to about 18 months' capacity if the sequencing of construction is favourable with respect to maximising construction in the dry season

In addition to the focus on our flagship Bougouni Lithium project, the Company will continue to explore and improve its high priority gold projects in Mali and Côte d'Ivoire in this strong gold market. An exploration programme has been prepared for further work at the Nangalasso project in Mali and the Dabakala project in Côte d'Ivoire and we hope to commence work after the end of the rainy season in the last quarter of this year.

I look forward to being able to report back on our development strategy during the coming year.

Bernard Aylward

Chief Executive Officer

21 July 2020

Finance Review

Results of operations

For the year ended 31 March 2020, the Group reported a loss for the year of £630,000 before Other Comprehensive Income compared to a loss of £713,000 in the previous year. Operational activity has remained broadly in line with last year as the Group has completed the Feasibility Study work at Bougouni and has continued the running of offices in Mali and Côte d'Ivoire. Further information is provided in the Operational Review above.

During the year, the Group invested £1,602,000 (2019: £3,463,000) in exploration and evaluation expenditure on its various projects, the large majority of which related to its Bougouni Lithium project. As a result, the carrying value of the Group's capitalised exploration and evaluation expenditure increased from £6,951,000 to £8,643,000. At 31 March 2020, the carrying value of the gold projects in Mali and Cote d'Ivoire was £1,179,000 (2019: £1,070,000) and of the lithium projects in Mali was £7,464,000 (2019: £5,881,000).

Cash balances as at 31 March 2020 were £33,000, a decrease of £1,375,000 on the previous year's level of £1,408,000. Net assets of the Group at the year-end were £8,052,000 (2019: £7,803,000).

Financing

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

In July 2019, the Company announced a fundraising of £575,000 before expenses through the issue of 718,750,000 ordinary shares including 250,000,000 shares for £200,000 placed with SVS Securities plc ("SVS"), a London based broking firm regulated by the Financial Conduct Authority ("FCA"). The shares were issued and admitted to trading on AIM on 2 August 2019 and the fundraising became unconditional at this time. On 5 August 2019, the FCA announced that SVS had entered special administration and subsequently SVS defaulted on its contractual commitment to pay for its shares. Under legal advice, the Company terminated the contract with SVS. 250,000,000 shares relating to SVS were not delivered to SVS and the shares remained under the control of the Company.

In October 2019, Kodal announced that it had completed a fundraising of £250,000 before expenses, for the purpose of further developing the Bougouni Lithium project, through the issue of 250,000,000 new ordinary shares as well as the placing out of the 250,000,000 ordinary shares allotted to SVS Securities plc in the fundraising announced in July 2019.

Subsequent to the year-end, in April 2020 the Company entered into a Financing Facility with Riverfort Global Opportunities PCC and YA II PN Ltd (the 'Investors'), who subscribed for 1,428,571,429 Ordinary Shares at a price of 0.035 pence per share, raising £0.5 million before expenses. These subscription proceeds were used immediately to satisfy the Company's obligation to pay £0.5 million to the Investors to enter into an Equity Sharing Agreement, under which the Investors will make monthly cash payments to the Company for a period of 12 months (which period can be shortened or extended up to 24 months at the Investors' discretion) based on the performance of Kodal's share price. 

On 14 July 2020 the Company entered into a Convertible Loan Note Agreement with the Investors for a total commitment of $1.5 million before expenses with a first tranche of $750,000 advanced at closing, and a second tranche at a date of mutual agreement. Advances under the Loan Agreement have a 15-month term and carry interest at a rate of 9.85% per annum payable monthly. Investors have the option to convert outstanding principal and interest into new ordinary shares in the Company; conversion in shares is deferred for the first 90 days, and thereafter is at the lower of 130% of the share price at closing and 93% of the average of 3 daily VWAPs in the 10 days prior to conversion. The Company can repay the loan at any time in cash.

Impact of the Covid-19 pandemic

During the year to 31 March 2020, the Group's primary focus has been to complete the feasibility study and to submit its licence application for the Bougouni Lithium project to the Malian authorities, which it did in January 2020. Thereafter, in the first few months of 2020, there has been relatively limited activity on the ground in Mali and Cote d'Ivoire.

Accordingly, the lockdown and travel ban imposed in many countries, including in West Africa, has had limited impact on the Group's planned operations, but all field operations have ceased. Due to the disruption caused to normal working patterns, there is less clarity over the process for, and timing of, the decision on the granting of a mining licence by the Malian authorities.

The most significant impact on the Company has been the ability to raise funding at an important time in the Group's development caused by the substantial disruption to global equity markets a result of the economic impact of the pandemic. Responding to these events, the directors have sought to minimise the Group's overheads and outgoings in order to preserve working capital, by reducing operational activity, with commensurate salary reductions of local staff; fee and salary cuts for management and directors, with back pay taken in shares; and reaching agreements with key suppliers on reduced charges and extending payment timings. The Company was able to raise some funds at the height of the market uncertainty in early April 2020, and these will be received over a 12 month period. Although major markets have recovered somewhat, the environment for financing smaller resource companies remains challenging; however, the Company has recently been able to agree a $1.5 million loan note funding commitment, with $750,000 drawn down in July 2020.

The Convertible Loan Note Agreement entered into in July 2020 will now enable the Company to finance its plans to further develop the Bougouni Lithium project, pay for the mining licence, fund additional exploration activity and cover ongoing administrative overheads. These additional funds will enable us to finance our plans to further develop our Bougouni Lithium project , pay for the mining licence, fund additional exploration activity of our gold assets and explore new investment opportunities identified by the Company in the gold space.

Going concern and funding

The Group has not earned revenue during the year to 31 March 2020 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 and other equity linked facilities.

As at 31 March 2020, the Group held cash balances of £33,000 (2019: £1,408,000). As noted above, in April 2020 the Company entered into Financing Facility which will provide further funds on a monthly basis over approximately the next 12 months; however, the size of each month's receipts is dependent on the Company's share price during that month and hence the exact quantum of receipts cannot be known with any certainty. The Company also entered into a Convertible Loan Note Agreement for $1.5 million in July 2020, drawing down $750,000 on closing, with a second tranche of $750,000 to be drawn at a mutually agreed date. As a result, the Group's cash balances at 20 July 2020 were £598,433.

The Directors have prepared cash flow forecasts for the period ending 30 September 2021. The forecasts include payment for the mining licence, further development of the Feasibility Study, additional exploration activity for both gold and lithium as well as covering ongoing overheads; the drawdown of the second tranche of $750,000 is also included based on the directors' reasonable expectation of receipt. Further funding will be required in due course, but the forecasts show 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.

The financial statements are set out further below.

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

About Kodal Minerals

Kodal Minerals' primary focus is on the rapid advancement towards production of its flagship Bougouni Lithium project in Southern Mali. The JORC Resource Estimate places the Project in the top 15 hard rock lithium projects globally and was calculated using only three of the eight currently recognised prospects demonstrating the significant exploration upside potential remaining across the 450km2 project area. The Mineral Resource estimate for the Ngoualana, Sogola-Baoule and Boumou prospects are tabulated below. These mineral resources are reported in accordance with the JORC Code:

Notes: Mineral resources are reported using a 0.5%Li2O cut-off. Figures may not sum due to rounding. The contained metal is determined by the estimated tonnage and grade.

The Bougouni Lithium project and recently acquired 200km2 Bougouni West project are located in an emerging lithium province that is already attracting the attention of investors and off-take partners interested in securing a long-term supply of lithium. With the support of its strategic investor and off-take partner Suay Chin International Pte, a Singapore-based lithium and chemical trader, Kodal Minerals is well positioned to continue its ambitious development programme at Bougouni.

Further to this, Kodal Minerals is the manager of additional lithium and gold projects that are undergoing low cost exploration programmes in addition to JV funded gold properties in Cote d'Ivoire that offer potentially significant long-term value.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2020

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 2020

The Company's loss for the year ended 31 March 2020 was £1,454,166 (2019: £632,780).

The financial statements were approved and authorised for issue by the board of directors on 21 July 2020 and signed on its behalf by

Robert Wooldridge

Director

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2020

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2020

CONSOLIDATED AND PARENT COMPANY STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2020

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

PRINCIPAL ACCOUNTING POLICIES

FOR THE YEAR ENDED 31 MARCH 2020

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.

The financial information set out in this preliminary announcement does not constitute the company's statutory financial statements for the years ended 31 March 2020 or 2019 but is derived from those financial statements. Statutory financial statements for 2019 have been delivered to the registrar of companies and those for 2020 will be delivered in due course. The auditors have reported on those financial statements; 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 2006.768125

Going concern

The Group has not earned revenue during the year to 31 March 2020 as it is still in the exploration and evaluation phase 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 and other equity linked facilities.

As at 31 March 2020, the Group held cash balances of £33,000 (2019: £1,408,000). The outbreak of the Covid-19 pandemic at the beginning of 2020 cause significant disruption to global equity markets and impacted on our ability to readily raise funding for our ongoing development and exploration programmes at a crucial juncture. As noted on page 19, in April 2020, during these uncertain market conditions, the Company entered into a Financing Facility which will provide further funds on a monthly basis over approximately the next 12 months; however, the size of each month's receipts is dependent on the Company's share price during that month and hence the exact quantum of receipts cannot be known with any certainty. The Company also entered into a Convertible Loan Note Agreement for $1.5 million in July 2020, drawing down $750,000 on closing, with a second tranche of $750,000 to be drawn at a mutually agreed date. As a result the Group's cash balances at 20 July 2020 were £598,433.

The Directors have prepared cash flow forecasts for the period ending 30 September 2021. The forecasts include payment for the mining licence, further development of the Feasibility Study, additional exploration activity for both gold and lithium as well as covering ongoing overheads; the drawdown of the second tranche of $750,000 is also included based on the directors' reasonable expectation of receipt. Further funding will be required in due course, but the forecasts show 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.

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.

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 Bougouni Lithium project in Mali, taking into account the Preliminary Feasibility Study published during the year. This project continues to be evaluated and has not yet entered into development; 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 2020 was £8.6 million (2019: £7.0 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.

Recoverability of Intercompany Balances to Subsidiary Undertakings

The Company has outstanding intercompany balances from its directly held subsidiaries resulting from the primary method of financing the activity of those subsidiaries. The balances are shown in the Company balance sheet. However, there is a risk that the subsidiaries will not commence sufficient revenue generating activities and that the carrying amount of the intercompany balances will, therefore, exceed the recoverable amount. Under the requirements of IFRS 9 management has run various scenarios on the expected credit loss of the Company's intercompany balances, including entering production, project/asset sales, and insolvency. Given the current global financial disruption and expected future economic impact caused by the pandemic, management believes the risk of potential credit loss has increased and so has recognised a provision of £877,000 against those balances.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2020

1. SEGMENTAL REPORTING

The operations and assets of the Group in the year ended 31 March 2020 are focused in the United Kingdom and West Africa and comprise one class of business: the exploration and evaluation of mineral resources. Management have determined that the Group had three operating segments being the West African Gold Projects, the West African Lithium Projects and the UK administration operations. The Parent Company acts as a holding company. At 31 March 2020, the Group had not commenced commercial production from its exploration sites and therefore had no revenue for the year.

The Group has ceased all activities in Norway and the Norwegian subsidiaries were liquidated during 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 Company and the Group is as follows:

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

In addition to the amounts included above, £67,300 (2019: £69,650) 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:

The total value of options and warrants granted in the year was £39,226 (2019: £109,241). Included within operating losses is a charge for issuing share options and making share-based payments of £39,226 (2019: £109,241).

Details of share options and warrants outstanding at 31 March 2020:

Date of grant Number of options Option price Exercisable between

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

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

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

8 May 2017 72,500,000 0.38 pence 8 May 2017 - 8 May 2022

8 May 2017 36,250,000 0.38 pence 8 May 2018 - 8 May 2023

8 May 2017 36,250,000 0.38 pence 8 May 2019 - 8 May 2024

22 May 2017 12,500,000 0.38 pence 22 May 2017 - 22 May 2022

22 May 2017 6,250,000 0.38 pence 22 May 2018 - 22 May 2023

22 May 2017 6,250,000 0.38 pence 22 May 2019 - 22 May 2024

20 November 2017 5,000,000 0.38 pence 20 Nov 2017 - 20 Nov 2022

20 November 2017 2,500,000 0.38 pence 20 Nov 2018 - 20 Nov 2023

20 November 2017 2,500,000 0.38 pence 20 Nov 2019 - 20 Nov 2024

23 November 2018 39,999,999 0.14-0.38 pence 1 March 2019 - 1 March 2024

23 November 2018 50,000,001 0.14-0.38 pence To be determined at a future date

23 November 2018 90,000,000 0.14-0.38 pence To be determined at a future date

18 April 2019 3,333,334 0.14-0.25 pence 18 April 2020 - 18 April 2025

18 April 2019 3,333,333 0.14-0.25 pence 18 April 2021 - 18 April 2026

18 April 2019 3,333,333 0.14-0.25 pence 18 April 2022 - 18 April 2027

8 May 2019 3,333,334 0.14-0.25 pence 8 May 2020 - 8 May 2025

8 May 2019 3,333,333 0.14-0.25 pence 8 May 2021 - 8 May 2026

8 May 2019 3,333,333 0.14-0.25 pence 8 May 2022 - 8 May 2027

Additional disclosure information:

Weighted average exercise price of share options and warrants:

· outstanding at the beginning of the period 0.44 pence

· granted during the period 0.20 pence

· outstanding at the end of the period 0.35 pence

· exercisable at the end of the period 0.41 pence

Weighted average remaining contractual life of

share options outstanding at the end of the period 4.8 years

Share options issued in the year to 31 March 2020

The Company entered into option agreements dated 18 April 2019 with Charles Joseland and dated 8 May 2019 with Mark Pensabene under which up to 10 million share options may be issued to each of Mr Joseland and Mr Pensabene in three tranches as follows:

All the options have a life of 5 years from vesting. 34 per cent. of the options vest in one year, with a further 33 per cent. vesting in two years and the remaining 33 per cent. vesting in three years' time. The options issued to Mr Pensabene lapsed on 31 October 2019 when Mr Pensabene resigned before the options had vested.

The fair values of the options and warrants granted were calculated using the Black-Scholes valuation model. The inputs into the model were: