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

18 December 2017

Kodal Minerals plc

('Kodal Minerals' or the 'Company')

Interim Results

Kodal Minerals, the AIM quoted mineral exploration and development company, is pleased to announce its unaudited interim results for the six months ended 30 September 2017.

Bernard Aylward, CEO of Kodal Minerals, said: "We are ending 2017 and embarking on 2018 in a very strong position; we are well funded with an influential strategic investor, have a very exciting lithium project located in one of the most prolific greenstone belts globally, and are continuing with a major exploration and delineation campaign designed to assist the Company in determining the potential scope of development at our Bougouni Lithium Project.

"We have had a very busy half-year with the completion of the £4.8 million strategic investment with our offtake partner Suay Chin and we were delighted to appoint Dr Qingtao Zeng to the Board as a result. Work on the ground has progressed rapidly and we have provided the market with positive results from our exploration work programmes. Initial results from the current drill programme are expected very shortly and we look forward to providing further news on this, together with updates on the process and metallurgical test work. We are confident that these results will provide further weight to our belief that Bougouni can produce a high quality, low impurity battery grade lithium carbonate."

Chairman's Statement

During the period, the Group has been actively pursuing its lithium and gold exploration programmes in West Africa focusing on the Bougouni lithium project in Mali ("Bougouni Project").

During the period, the Company completed its second drilling programme at the Bougouni Project, with a total of six prospects tested. Drilling has consisted of reverse circulation ("RC") drilling and diamond drilling, with a total of 76 RC drill holes for 10,260 metres completed and five diamond drill holes for 362 metres completed. In particular, the Ngoualana prospect within the Bougouni Project looks extremely exciting with the strike length of the mineralised zone currently confirmed at 650 metres. This zone remains open along strike and has yielded multiple high-grade intersections including 28 metres at 1.96% lithium oxide.

Subsequent to the period end, the Company has announced the commencement of a further drill programme aimed at both expanding and defining the lithium pegmatite veins previously identified, and testing new anomalies, including those identified through ground geophysical survey work undertaken over the summer. To date, 42 holes for 5,286 metres have been completed. Samples have been sent for assay and the first results are expected imminently.

The Company has also been continuing its test work on the metallurgy and processing of the spodumene concentrate from the Bougouni Project and during the period sent a sample to Shandong Ruifu Lithium Co Ltd ("Shandong Ruifu"), one of the largest lithium carbonate producers in China. In October 2017, the Company announced that Shandong Ruifi, successfully produced a high quality, low impurity battery grade lithium carbonate from this sample. Chemical analysis of the final lithium carbonate product reports low levels of impurities supporting its positioning as a premium product compared to many other products in the market. Additional testwork is to be completed at an independent metallurgical laboratory to provide further confidence in the product.

The Company has also been able to confirm the completion of the investment by Suay Chin International Pte ("Suay Chin") for a total of £4,825,000, giving it a 20% shareholding in the Company. Suay Chin is a Singapore-based investment company that has extensive contacts throughout the Chinese chemical industry and in particular the market for the production and supply of lithium products. Suay Chin made an initial investment into Kodal of £500,000 in March 2017 followed by Suay Chin and the Company entering into an agreement for Suay Chin to complete a further investment of £4,325,000 in two tranches (the "Further Subscription") in May 2017. The first instalment of the Further Subscription of £3,300,000 was completed in May 2017, the second instalment of £694,000 completed in July 2017 and, after the period end, the final instalment of £330,968 was received to complete the Further Subscription.

On completion of the Further Subscription, the previously disclosed undertaking became effective for the Company and Suay Chin to seek to negotiate an extended off-take agreement ("Off-take Agreement") on the basis of an agreed off-take term sheet. The parties agreed to commence negotiating the Off-take Agreement as soon as reasonably practicable following completion of a scoping study at the Bougouni Project. The off-take term sheet sets out certain agreed off-take principles which will be incorporated in any Off-take Agreement. These principles include the parties agreeing to buy and sell between 80% and 100% of the spodumene product produced at the Bougouni Project for a period of three years as well as the right for Suay Chin to match any third party off-take terms agreed for a further period of three years following the expiry of the Off-take Agreement.

Suay Chin has also entered into a lock-in agreement under which it is unable to dispose of any shares in the Company for 12 months from its initial investment in May 2017 and must adhere to orderly market principles for a further 12 months thereafter.

Following completion of the Further Subscription, Dr Qingtao Zeng, as the representative of Suay Chin, was appointed to the Kodal Board as a non-executive Director. Dr Zeng is an experienced mining consultant and his knowledge and advice will be of great benefit to the Company as it continues to explore and develop the Bougouni Project.

In December 2017, Kodal announced it had identified an irregularity with the Kolossakoro concession that is part of the Bougouni 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 EMAS 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 has reached an agreement with Triumvirat under which Triumvirat has withdrawn its applications and Kodal has filed new applications over two new 100 square kilometre licences covering the high priority areas within the former Kolassokoro area. If the applications are successful, Kodal will have a 90% interest in these new licences with Triumvirat having a 10% interest. Kodal will have therefore successfully maintained its 90% interest in this ground. Kodal is maintaining its exploration and definition programme at the Bougouni Project and is confident of its rights to the project area.

The Group has recorded a loss for the six month period to 30 September 2017 of £529,000 compared to £206,000 for the six months to 30 September 2016 and £1,178,000 for the year to 31 March 2017.

Cash balances as at 30 September 2017 were £4,093,000 compared to £315,000 at 30 September 2016 and £1,723,000 at 31 March 2017. Current cash as at 15 December 2017 is £3,793,000.

Robert Wooldridge

Chairman

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2016

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

General information

Kodal Minerals plc is a public limited company incorporated and domiciled in England & Wales. The Company's shares are publicly traded on the AIM market of the London stock exchange. Kodal Minerals Plc and its subsidiaries are involved in the exploration and evaluation of mineral resources in West Africa and Norway.

Basis of preparation

These unaudited condensed consolidated interim financial statements for the six months ended 30 September 2017 were approved by the board and authorised for issue on 17 December 2017.

The basis of preparation and accounting policies set out in the Annual Report and Accounts for the year ended 31 March 2017 have been applied in the preparation of these condensed consolidated interim financial statements. These interim financial statements have been prepared in accordance with the recognition and measurement principles of the International Financial Reporting Standards ('IFRS') as adopted by the EU that are expected to be applicable to the consolidated financial statements for the year ending 31 March 2018 and on the basis of the accounting policies expected to be used in those financial statements.

The figures for the six months ended 30 September 2017 and 30 September 2016 are unaudited and do not constitute full accounts. The comparative figures for the year ended 31 March 2017 are taken from the 2017 audited accounts, which are available on the Group's website, and have been delivered to the Registrar of Companies, and do not constitute full accounts.

Going Concern

The Group has not earned revenue during the period to 30 September 2017 as it is still in the exploration and development phases of its business. The operations of the Group are currently being financed from funds which the Company has raised from the issue of new shares.

As at 30 September 2017, the Group held cash balances of £4,093,000. The Group's cash balances at 15 December 2017 were £3,793,000.

The Directors have prepared cash flow forecasts for the period ending 31 December 2018. The forecasts include the costs of progressing the Lithium Projects and the corporate and operational overheads of the Group. The forecasts demonstrate that the Group has sufficient cash resources available to allow it to continue as a going concern and meet its liabilities as they fall due for a period of at least twelve months from the date of approval of these interim financial statements without the need for a further fundraising. Accordingly, the interim financial statements have been prepared on a going concern basis.

1. SEGMENTAL REPORTING

The operations and assets of the Group are focused in the United Kingdom, West Africa and Norway and comprise one class of business: the exploration and evaluation of mineral resources. The parent Company acts as a holding company. At 30 September 2016, the Group had not commenced commercial production from its exploration sites and therefore had no revenue for the period.

2. OPERATING LOSS

The operating loss before tax is stated after charging:

3. LOSS PER SHARE

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

The following reflects the loss and share data used in the basic EPS 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 period 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 earnings per Share as the Group is currently loss making. Diluted loss per Share is therefore the same as the basic loss per Share.

4. 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.

A share based payment charge of £300,207 for the period to 30 September 2017 (6 months to 30 September 2016: £9,778, year to 31 March 2017: £14,667) has been recognised in the profit and loss in relation to these options and warrants.

The options and warrants have been valued on the basis of a Black Scholes valuation model using the following key parameters:

5. TAXATION

There is no taxation charge for the period to 30 September 2017 (6 months to 30 September 2016: £nil, year to 31 March 2017: £nil) as the group continues to incur losses.

No deferred tax asset has been recognised in respect of losses as the timing of their utilisation is uncertain at this stage.

6. INTANGIBLE ASSETS

7. PROPERTY, PLANT AND EQUIPMENT

8. SUBSIDIARY ENTITIES

The consolidated financial statements include the following subsidiary companies: