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 August 2023

Kodal Minerals plc

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

Bougouni Lithium Project Funding Package - Kodal receives Prepayment of US$3,500,000

and

Update on Conditions Precedent for Funding Package Completion

Kodal Minerals, the mineral exploration and development company focused on lithium and gold assets in West Africa, announces a conditional prepayment of US$3,500,000 (the "Prepayment") as part of the funding package for the Bougouni Lithium Project announced on 19 January 2023 (the "Funding Package") agreed between the Company and Hainan Mining Co. Limited ("Hainan") and its wholly owned UK-incorporated subsidiary Xinmao Investment Co. Limited ("Xinmao" and together, the "Hainan Group"). 

The Company is also pleased to provide an update on the restructuring of Kodal's subsidiary companies in Mali and advancing of the conditions precedent for closing the Funding Package.

Highlights:

· Kodal to receive a US$3,500,000 Prepayment of the subscription agreement entered into as part of the Funding Package.

· Kodal will apply the funds to the continued advancement of the Bougouni Lithium project and has sole discretion over use of funds including for general working capital.

· The Prepayment is repayable or convertible into new ordinary shares of the Company should the Funding Package not proceed.

· Kodal is completing the registration of a new company in Mali, Les Mines de Lithium de Bougouni SA ("LMLB"), and this company will be the owner of the Bougouni mining licence.

· Kodal is also commencing the process of transferring the mining licence from Future Minerals SARL to LMLB as a key condition precedent for completion of the Funding Package.

Bernard Aylward, CEO of Kodal Minerals, remarked: "We are very pleased to have received the support of the Hainan Group with the Prepayment for some of the subscription agreement, allowing us to continue to advance the Bougouni Lithium project while we work towards completion of the Funding Package. This Prepayment does not add further dilution to our shareholders and confirms the confidence of both parties in being able to finalise the Funding Package. Kodal and our partners the Hainan Group continue to work together to progress plans for the development of the Bougouni Lithium Project and are working hard to finalise this transaction to allow construction to commence and the mine to rapidly move to production.

"Kodal continues to work with the Government of Mali in the finalisation of the new mining company, LMLB, and the transfer of the mining licence to it. Kodal has maintained strong relationships with the local Bougouni communities as well as the Government and we and the Hainan Group are looking forward to working with the Government as a partner in the Bougouni Project - under the Mali mining code, the Government will have an initial free-carried interest of 10% of the project and the right to purchase an additional 10% of the project."

Further details of the Prepayment

As announced on 19 January 2023, the Funding Package being provided by the Hainan Group comprises a US$100 million investment to acquire 51% of the Bougouni project company, Kodal Mining UK Limited, and a further US$17.75 million subscription for new ordinary shares in Kodal Minerals PLC at 0.5p per share. On 1 February 2023, the Company announced receipt of the deposit of US$7 million from the Hainan Group pursuant to the terms of the Funding Package, held in escrow pending completion of the Funding Package (the "Deposit"). As announced on 31 June 2023, the long stop date for the completion of the Funding Package has been extended to 31 August 2023 or such later date as may be agreed by the parties (the "Longstop Date").

Kodal and the Hainan Group have now entered into a prepayment agreement ("Prepayment Agreement") to provide Kodal with US$3,500,000 from the Deposit to allow Kodal to continue to advance the Bougouni Lithium project and for general working capital purposes. A summary of the key items of the Prepayment Agreement is provided below:

Under the Prepayment Agreement dated 2 August 2023, the Hainan Group has agreed to make a prepayment of US$3,500,000 (the "Prepayment Amount"), to be released from the Deposit, in respect of the US$17,750,000 subscription amount (the "Subscription Amount") payable under the subscription agreement entered into between Xinmao and the Company dated 19 January 2023 (the "Subscription Agreement") as part of the Funding Package. Accordingly, on completion of the Subscription Agreement ("Completion"), the Subscription Amount due from the Hainan Group shall be reduced to reflect receipt of the Prepayment Amount. No new ordinary shares in Kodal will be issued to Hainan Group in respect of the Prepayment prior to Completion and no interest is charged on the Prepayment save as set out below. The Company is entitled to apply the proceeds of the Prepayment Amount at its sole discretion, including for general working capital purposes.

In the event that Completion does not occur by the Longstop Date or the Subscription Agreement is otherwise terminated, the Company shall repay the Prepayment Amount plus accrued interest (calculated at a 10% annual interest rate applied from the date when the Prepayment is received) on or before the date falling 90 days after the termination of the Subscription Agreement (the "Repayment Date"). If the Company is unable to repay the Prepayment Amount on the Repayment Date, an additional 2% annual interest rate shall apply and Xinmao shall have the right but not the obligation by serving notice to the Company (the "Conversion Notice") to elect to convert part or all of the outstanding Prepayment Amount plus accrued interest into new ordinary shares in Kodal at a price per share which is the lower of: (i) 85% of the mid-market closing price of the Kodal's ordinary shares on the business day immediately prior to the date on which the Conversion Notice is received by the Company; and (ii) 85% of the VWAP for the 20 consecutive business days immediately prior to the date on which the Conversion Notice is issued by Hainan.

Kodal has agreed that any funds received from the proposed sale of the Bougouni West licences to Leo Lithium Limited (or its subsidiaries) (as announced on 19 April 2023) will be placed into a dedicated account and Kodal will not use these funds unless it is to repay the Prepayment and any accrued interest should Completion not occur by the Longstop Date or the Subscription Agreement is otherwise terminated. Kodal expects to receive £1,600,000 upon completion of the Bougouni West sale. Following Completion, the funds received for the Bougouni West sale will remain exclusively for Kodal to use at its sole discretion.

**ENDS**

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