Kodal Minerals Regulatory News (KOD)

The 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")

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

3 November 2016

Kodal Minerals Plc

("Kodal Minerals" or "the Company" and, with its subsidiaries, "the Group")

Unaudited Interim Results

For the six months ended 30 September 2016

Kodal Minerals Plc, the mineral exploration and development company, is pleased to announce its unaudited interim results for the six months ended 30 September 2016.

Highlights

· Completion of transformational acquisitions to gain exposure to lithium and gold exploration projects in West Africa:

o Secured exclusive rights to explore and acquire a controlling interest in a prospective high grade lithium project in Southern Mali, the Bougouni Lithium Project;

o Acquired a portfolio of highly prospective gold exploration targets in Côte d'Ivoire and Mali with existing joint ventures and commitment of up to US$4.7 million exploration spend by Australian Securities Exchange listed Newcrest Mining Limited ("Newcrest") and Resolute Mining Limited ("Resolute");

· Previous World Bank sponsored studies show high grade lithium anomalies in excess of 2.0% Li2O at the Bougouni Lithium Project. Initial field reconnaissance completed and geological mapping and rock chip sampling underway;

· Large geochemical gold anomaly identified at 100% owned Nangalasso gold project in Mali and surface geochemical sampling at 100% owned Korhogo gold project returned four new gold anomalous zones;

· Exploration work being funded through two successful capital raises - £680,000 in May 2016 to facilitate exploration in West Africa and a further £750,000 post period end for exploration at the Bougouni Lithium Project.

Kodal CEO Bernard Aylward commented, "I was delighted to join the Kodal Board in May 2016 bringing with me an exciting portfolio of gold exploration projects in West Africa. Since then we have added the Bougouni Lithium Project to our portfolio which has given the Group exposure to an exciting and high-grade lithium project. These strategic decisions have provided the Group with exposure to two commodities with complementary demand fundamentals, with lithium demand being driven globally by the uptake in electric cars and lithium-ion batteries, and gold being seen as a safe haven in the turbulent markets being experienced post the UK Referendum.

"We have retained our copper and phosphate/iron ore projects in Norway. However, our focus will be on developing the lithium and gold projects in West Africa and we look forward to further positive newsflow as we continue to unlock the value in these projects. At the same time, we remain on the lookout for further acquisitions of early stage and value accretive strategic mineral opportunities."

CEO Statement

Following a transformational period for Kodal, the Group is now actively exploring its lithium and gold projects in West Africa whilst maintaining its licences in Norway, providing exposure to two important commodities in an established mining jurisdiction.

This follows the Group's acquisition of 100 per cent of International Goldfields (Bermuda) Limited (the "IG Bermuda Acquisition"), which controls a portfolio of gold exploration projects in West Africa, from ASX listed Taruga Gold Limited in May 2016. The acquired portfolio includes eight mineral licences and two licence applications covering a collection of highly prospective gold exploration targets in Côte d'Ivoire and Mali on the West African Birimian Greenstone Belt. Importantly there are existing joint venture and farm-in agreements on four of these licence areas with two major producing ASX listed gold companies, Newcrest Mining Limited and Resolute Mining Limited, with an aggregate exploration spend of up to US$4.7 million. Newcrest has a farm-in agreement to spend US$1.7 million within three years to earn a 75% interest on the Dabakala gold project in Côte d'Ivoire and Resolute has the right to earn up to a 75% interest over two concessions and one concession application in Côte d'Ivoire through expenditure of US$3.0 million over four years. The consideration for the IG Bermuda Acquisition of £410,000 was satisfied by the issue of 1,025,000,000 shares in the Company. Further details are set out in note 4 to the interim financial statements.

Following this acquisition, the Group continued to increase its landholding in West Africa, through the acquisition of the Madina Lithium project in August 2016 (the "Madina Acquisition") and subsequently the acquisition of the contiguous Kolassokoro Lithium project in September 2016 (the "Kolassokoro Acquisition"), together the "Bougouni Lithium Project". Lithium has been identified by the Board as a high-value strategic mineral having recently seen strong demand for batteries (electric cars and static storage) and tight supply apply upward pressure on prices.

The acquisition of the Bougouni Lithium Project has allowed Kodal to develop a diversified portfolio of exploration assets with previous exploration activity indicating the potential for high-grade mineralisation to be defined. The Madina Acquisition and Kolassokoro Acquisition each involved an initial down payment, of US$25,000 (£19,118) and US$20,000 (£15,295) respectively, to secure exclusive access for exploration work on the concession area, with further payments over three years to secure ownership of the licences. Further details of the terms of these acquisitions are set out in note 4 to the interim financial statements.

The Group commenced exploration at the 500km2 Bougouni Lithium Project in September 2016. Results from geological reconnaissance conducted on the Kolassokoro and Madina concessions revealed the existence of a more extensive system of pegmatite veins than suggested in previously published literature. Historic sampling of the vein set has reported high-grade lithium mineralisation of up to 2.2% Li2O. Kodal has planned a staged programme of exploration aimed at rapidly advancing the project towards JORC compliant status in the near term. This work programme will consist of geological mapping and sampling of priority targets followed by an initial drilling programme in November 2016 and metallurgical test work. A second phase of drilling is then anticipated which will be used in geological modelling for detailed assessment and the potential declaration of a preliminary JORC compliant mineral resource estimate.

The Group has continued with its gold exploration programme in Mali, with a trenching programme completed at the Nangalasso Project with results announced in September 2016. The 345km2 Nangalasso Project consists of two concessions; the Nangalasso and Sotian concessions, over which Kodal holds exclusive access and option to purchase agreements. The project is located in southern Mali, approximately 250km from the capital of Bamako and 15km to the west of the world-class Syama gold mine operated by Resolute.

Previous exploration at Nangalasso has consisted of surface geochemical sampling, auger geochemical drilling, trench sampling and wide-spaced reconnaissance aircore drilling. A large geochemical gold anomaly has been defined at Nangalasso and results from the reconnaissance drilling include 3m at 7.1g/t gold within a broader zone of 21m at 1.25g/t gold, 3m at 7.84g/t gold, 1m at 7.8g/t gold and broad anomalous zones from trench samples including 7m at 3.84g/t gold.

The 2016 trench sampling programme consisted of five separate trench locations for a total of 264m. Trenches were dug to a depth of 2m below surface and samples were collected on a 3m composite basis. This sampling is considered a surface geochemical test and provided information regarding the depth of transported cover, information on the geological structure and alteration as well as confirmation of the surface gold anomalism. All trenches returned anomalous gold values that confirm the surface gold anomalism previously defined at Nangalasso with the highest results being 3m of 0.37g/t. 3m of 0.27 g/t and 6m 0.12g/t.

Kodal has also continued its exploration in Cȏte d'Ivoire with a surface geochemical sampling programme completed at the 100% owned Korhogo concession located in north-central Cȏte d'Ivoire. This area of Cȏte d'Ivoire is very under-explored and the level of exploration at Korhogo is at a very early stage. The geochemical sampling programme has returned encouraging results, as announced in October 2016, with four gold anomalous areas outlined over strike lengths of up to three and a half kilometres. Further exploration is required to determine the significance of the targets.

In Norway, the Group retains full rights to and has continued to maintain its licences covering the Kodal phosphate and titanomagnetite project ("Kodal Project") and the Grimeli copper project.

In October 2016, the Group announced that it had requested a temporary withdrawal from the planning process for its non-core Kodal Project in southern Norway so as to avoid expending further management time or incurring additional costs. The Kodal Project was fully impaired by the Group in its financial statements for the year ended 31 March 2015 in response to the dramatic fall in the price of iron ore. The Group was seeking to continue to progress the planning process but was not undertaking any further exploration or development work on the project. The Group has written to the relevant municipalities requesting a temporary withdrawal from the planning process on the basis that the Kodal Project is not currently economically viable and that this is unlikely to change in the short term. The Group understands that, subsequent to receipt of the withdrawal request, one of the municipalities proceeded to consider the planning application and voted against it. The Group has received no formal notification of this vote and has been advised that it is inconsequential. In any event, the licences remain valid until July 2023 and the Group has been advised that it can restart the planning process at any time if the economics of the project improve in the future.

The Group completed a capital raising of £680,000 before costs in May 2016 at the time of the Taruga Acquisition to facilitate exploration in West Africa. Since 30 September 2016, an additional £750,000 capital raising has been completed to expand the exploration programme to focus on the exciting Bougouni Lithium Project in Mali.

The Group has recorded a loss for the 6 month period to 30 September 2016 of £206,000 compared to £275,000 for the 6 months to 30 September 2015 and £466,000 for the year to 31 March 2016.

Cash balances as at 30 September 2016 were £315,000 compared to £283,000 at 30 September 2015 and £135,000 at 31 March 2016. Following the capital raising completed in October 2016, cash balances as at 31 October 2016 were £896,000.

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

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2016

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2016

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 2016 were approved by the board and authorised for issue on 2 November 2016.

The basis of preparation and accounting policies set out in the Annual Report and Accounts for the year ended 31 March 2016 have been applied in the preparation of these condensed consolidated interim financial statements. These condensed consolidated 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 2017 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 2016 and 30 September 2015 are unaudited and do not constitute full accounts under IFRS as adopted by the EU. The comparative figures for the year ended 31 March 2016 are taken from the 2016 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. The independent auditor's report on the 2016 accounts was unqualified and did not contain statements under sections 498(2) or (3) (accounting records or returns inadequate, accounts not agreeing with records and returns or failure to obtain necessary information and explanations) of the Companies Act 2006.

Going Concern

The Group is not yet revenue generating 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 Group has raised from the issue of new shares.

As at 30 September 2016, the Group held cash balances of £315,000 and following the capital raising completed in October 2016, cash balances as at 31 October 2016 were £896,000.

The Directors have prepared cash flow forecasts for the period ending 31 December 2017. The forecasts include the costs of the planned exploration work on the Group's concessions in Mali and Cȏte d'Ivoire, the costs of maintaining the Norwegian projects and the corporate and operational overheads of the Group. Further fund raising will be required at an appropriate time in order to undertake additional phases of the exploration work and the Group has historically been successful in raising additional funds in such circumstances. However, 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 fund raising. Accordingly, the interim financial statements have been prepared on a going concern basis.

Accounting for asset purchases

Where entities acquired do not meet the definition of a business, as defined in IFRS 3, they are accounted for as an asset purchase, with no goodwill recognised and assets and liabilities separately recognised and consolidated into the Group at a carrying amount based on relative fair values at the date of purchase. Transaction costs associated with the purchase are capitalised.

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. 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.

3. INTANGIBLE ASSETS

In September 2015, the Group conducted an impairment review of the Kodal Project in Norway in response to the significant fall in the iron ore price and determined that the carrying value of the project should be impaired in full. The impairment charges in subsequent periods in the table above relate to further minor expenditures on the Kodal Project which are impaired as they are incurred.

4. SUBSIDIARY ENTITIES

The consolidated financial statements include the following subsidiary companies:

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

On 20 May 2016, Kodal Minerals Plc completed the acquisition of IG Bermuda which through its four subsidiaries has interests in a number of gold exploration projects in Mali and Cȏte d'Ivoire in Western Africa. The consideration of £410,000 was satisfied by the issue of 1,025,000,000 ordinary shares of the Company, which were issued to Taruga Gold Limited ("Taruga"), a company listed on the Australian Stock Exchange and the previous owner of IG Bermuda. The consideration shares were subsequently distributed by Taruga to its shareholders as an in specie distribution. Due to the lack of processes and outputs at the time of purchase, the Board does not consider the entities acquired to meet the definition of a business. As such, the Group has accounted for the acquisition of IG Bermuda as an asset purchase.

IG Bermuda and its subsidiaries (the "IG Group") has interests in four licences in Mali and four exploration licences plus two further licence applications in Cȏte d'Ivoire. The IG Group has entered into a farm-in agreement with Newcrest Mining Limited over one of the Cȏte d'Ivoire licences and a joint venture agreement with Resolute Mining Limited over three licences and one licence application in Cȏte d'Ivoire.

Including fees and expenses, the total cost of the acquisition was £507,373. The relative fair values of the identifiable assets and liabilities acquired and included in the consolidation are:

Acquisition of the Bougouni Lithium Project

In August 2016, the Group completed the acquisition of the Madina Lithium project and subsequently in September 2016 completed the acquisition of the Kolassokoro Lithium project, together the "Bougouni Lithium Project". The acquisitions were made through Future Minerals Limited.

Acquisition of the Madina Lithium Project

The Group entered into an agreement with Gorutumu covering the Madina concession. Gorutumu is a Mali company with interests in mining concessions and related businesses in Mali. Madina is a mining concession owned by Gorutumu and issued by the government of Mali granting exclusive mineral exploration rights, both surface and sub-surface, over an area of approximately 250km2. The Madina concession was granted for an initial three-year term from July 2011, was renewed in April 2015, and can be further renewed in 2017 for an additional two years. Under the terms of the agreement, Gorutumu has agreed to grant the Group exclusive access to the project and rights to explore and mine the project (which includes any mining permits or licences granted in respect of the project). As consideration for the agreement, the Group has committed to making the following payments to Gorutumu:

· US$25,000 upon signing of the agreement on 20 August 2016;

· US$40,000 on the first anniversary of signing; and

· US$75,000 on the second anniversary of signing.

The payments grant the Group exclusive access and exploration rights, including access to all existing data on the project. Once all three payments have been made, the Group will have acquired a 90% interest in the project transferred to its ownership. Until the Group completes all payments to exercise the option, Madina will remain wholly owned by Gorutumu. Under the agreement, the Group is responsible for all exploration costs up to and including the cost of producing a feasibility study, progression to which will be dependent on the success of early stage exploration work. If an economic resource is identified, the agreement anticipates that the Group and Gorutumu will form a new mining company in Mali ("MadinaCo"), conduct the appropriate environmental studies and apply to the government of Mali for a mining licence. On application for a mining licence by MadinaCo, the Group must make a further payment to Gorutumu of:

· US$1 million if a resource (indicated or better) of less than 5 million ounces ("Moz") of gold has been defined; or

· US$2 million plus US$2 for each ounce above 5 Moz of gold if a larger resource is defined.

Under the agreement, Gorutumu will have the option of subscribing for 5% of the shares in MadinaCo (and 5% of any future equity contributions into MiningCo) or receiving a 2% net smelter royalty on MadinaCo's production (the "NSR"). The Group will hold 75% of the shares in MadinaCo, or 80% if Gorutumu chooses the NSR. The remaining 20% will be held by the government of Mali; this in turn is made up of 10% received in return for the mining licence on which no future capital contributions are required, and 10% that is subscribed for and on which future contributions will be required pro-rata to, and on the same terms as, other shareholders. The Group may return ownership of Madina to Gorutumu prior to application for a mining licence if it does not wish to proceed, with no consideration being paid by either party.

Acquisition of the Kolassokoro Lithium project

The Group has entered into an agreement with EMAS covering the Kolassokoro concession. EMAS is a Malian company with interests in mining concessions and related businesses in Mali. Kolassokoro is a mining concession owned by EMAS and issued by the government of Mali granting exclusive mineral exploration rights, both surface and sub-surface, over an area of approximately 250km2. The Kolassokoro concession was granted on 29 July 2010, and had a first renewal granted on 27 March 2015, and can be further renewed in 2017 for an additional two years. Under the terms of the agreement, EMAS has agreed to grant the Group exclusive access to the project and rights to explore and mine the project (which includes any mining permits or licences granted in respect of the project). As consideration for the agreement, the Group has committed to making the following cash payments to EMAS:

· US$20,000 upon signing of the agreement on 31 August 2016;

· US$30,000 on the first anniversary of signing. Upon this payment the Group will be entitled to a 51% ownership of the concession;

· US$50,000 on the second anniversary of signing. Upon this payment the Group will be entitled to a 70% ownership of the concession; and

· US$60,000 on the third anniversary of signing to acquire a 90% interest in the concession.

The payments grant the Group exclusive access and exploration rights, including access to all existing data on the project. These staged payments allow Kodal to explore the concession and gain beneficial interest as exploration advances. Once the payments have been made, the Group will have acquired a 90% interest in the project transferred to its ownership. The Group is entitled to terminate the agreement at any time except within 30 days of any of the payments or by not making a payment and will then relinquish any interest held in the project. Under the agreement, the Group is responsible for all exploration costs up to and including the cost of producing a feasibility study, progression to which will be dependent on the success of early stage exploration work. If an economic resource is identified, the agreement anticipates that the Group and EMAS will form a new mining company in Mali ("KolassokoroCo"), conduct the appropriate environmental studies and apply to the government of Mali for a mining licence. Additional cash payments to EMAS will be made on the commencement of mining:

· US$300,000 payment on the commencement of a gold mining operation; and/or

· US$50,000 payment on the commencement of mining for any other minerals.

Under the agreement, the Group and EMAS will subscribe for 80% of the shares in KolassokoroCo (and 90% of any future equity contributions into KolassokoroCo), with the Group holding at least 72%. The remaining 20% ownership (and 10% future equity contributions) will be held by the government of Mali; this in turn is made up of 10% received in return for the mining licence on which no future capital contributions are required, and 10% that is subscribed for and on which future contributions will be required pro-rata to, and on the same terms as, other shareholders. In addition, EMAS will have a 2% net smelter return royalty on KolassokoroCo's gold production from the concession.

5. ORDINARY SHARES

Allotted, issued and fully paid:

Share issue costs have been allocated against the share premium account.

Notes:

a) On 14 May 2015, 222,222,222 shares were issued at 0.18 pence per share in a placing. The associated share issue costs have been allocated against the share premium reserve.

b) On 19 May 2015, a total of 22,867,135 shares were issued at a price of 0.185 pence per share to a drilling contractor as part payment under a drilling contract.

c) On 23 June 2015, a total of 26,570,886 shares were issued at a price of 0.158 pence per share to a drilling contractor as part payment under a drilling contract.

d) On 20 May 2016, a total of 1,025,000,000 shares were issued at a price of 0.04 pence per share in connection with the acquisition of IG Bermuda.

e) On 20 May 2016, a total of 1,700,000,000 shares were issued at 0.04 pence per share in a placing. The associated share issue costs have been allocated against the share premium reserve.

6. EVENTS AFTER THE REPORTING PERIOD

Fundraising

On 3 October 2016, the Company announced a fundraising of £750,000, before expenses, by way of a subscription and placing of 750,000,000 ordinary shares at a price of 0.1p per share. The net proceeds of the placing and subscription will be used to launch an exploration programme at the Group's recently acquired Bougouni Lithium Project in Mali, in addition to funding working capital requirements.

In addition, the Company issued a total of 21,400,000 shares at a price of 0.1p per share to certain of its advisers and consultants in accordance with its contractual arrangements.

Kodal Project

In October 2016, the Group announced it had requested a temporary withdrawal from the planning process for its non-core Kodal phosphate and titanomagnetite project ("Kodal Project") in southern Norway so as to avoid expending further management time or incurring additional costs. The Kodal Project was fully impaired by the Group in its financial statements for the year ended 31 March 2015 in response to the dramatic fall in the price of iron ore. The Group was seeking to continue to progress the planning process but was not undertaking any further exploration or development work on the project. The Group has written to the relevant municipalities requesting a temporary withdrawal from the planning process on the basis that the Kodal Project is not currently economically viable and that this is unlikely to change in the short term. The Group understands that, subsequent to receipt of the withdrawal request, one of the municipalities proceeded to consider the planning application and voted against it. The Group has received no formal notification of this vote and has been advised that it is inconsequential. In any event, the licences remain valid until July 2023 and the Group has been advised that it can restart the planning process at any time if the economics of the project improve in the future.