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. 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

27 October 2020

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

Update on Lithium and Gold Projects and

Additional Financing of US$750,000

Kodal Minerals, the mineral exploration and development company focused on its Bougouni Lithium Project (the 'Project' or the 'Bougouni Project') in southern Mali is pleased to provide an update on progress of its Bougouni Project mining licence application, Sinohydro Corporation Limited ('Sinohydro') Memorandum of Understanding ('MoU') and gold exploration activities. In addition, the Company announces drawdown of US$750,000 as the second and final advance of the US$1.5 million unsecured convertible loan agreement (the 'Loan Agreement') with Riverfort Global Opportunities PCC and YA II PN Ltd (the 'Investors'), details of which were announced on 15 July 2020.

Highlights

· Company well-funded to continue Bougouni development plan and gold exploration strategy

· Mali Transition Government now fully active and progress on Mining Licence application re-commenced with all documents updated for new Ministry and Interim Constitution

· Under the MoU announced on 1 September 2020, Sinohydro is conducting initial technical review and discussion with Kodal Minerals prior to commencing field visits in November

· Gold exploration activity planned for Cote d'Ivoire to commence in November as seasonal rains cease and access opens

· Kodal has drawn down the second and final advance of US$750,000 (the 'Second Advance') under the Loan Agreement.

Bernard Aylward, CEO of Kodal Minerals, commented: "Completing this final advance of the Loan Agreement allows Kodal to continue its exploration and development programmes for the Bougouni Lithium project including planning of further engineering design and metallurgical testwork to optimise the process plant design. This mining project development work will be completed in conjunction with the review and assessment of the project by Sinohydro under the MoU. Work under this important MoU is continuing with Sinohydro completing translation of the extensive technical documents and commencing questions and comments following initial review. It is expected that Sinohydro will commence fieldwork at Bougouni in November.

"The Mining Licence application continues and Kodal can confirm that all Government documents have been updated to reflect the changes to the Mali Transition Government Ministry and the operation of the Constitution and the Charter of Transition. The documents are pending signing by the new Minister which will then allow the Company to receive notification of requirement to pay for the Mining Licence. Kodal is monitoring this situation and will provide updates when information is received.

"Finally, we will commence the gold exploration programme in November in Cote d'Ivoire, as previously described, following the cessation of the seasonal rains. This initial programme will focus on the exciting Dabakala geochemical anomaly as we look to define this area for first pass drilling to determine the potential for gold mineralisation to be discovered."

Funding

Full details of the Loan Agreement are provided in the announcement dated 15 July 2020 in which the Company announced the drawdown of the first advance of US$750,000 (the 'First Advance').

The Second Advance was subject to certain conditions precedent, including the provision of warranties by the Company and no event of default having occurred pursuant to the Loan Agreement.

Advances under the Loan Agreement are unsecured and carry interest at a rate of 9.85 per cent. per annum. Interest is to be paid on the last business day of each calendar month. In addition, the Company shall pay a fee of 5% on the value of each advance, which will be deducted from the gross proceeds of the advance.

Repayment

Each advance is repayable on the date that is 15 months from date of the relevant drawdown and can't be redrawn. Accordingly, the First Advance is due for repayment on 15 October 2021 and the Second Advance on 26 January 2022. The Company can make earlier payment of any advance for a fee of 10 per cent. of the amount being repaid (the 'Repayment Fee') and provided that for the five trading days immediately prior to the Company serving a repayment notice, the daily volume weighted average price of the Company's Ordinary Shares on AIM ('VWAP') is less than the Fixed Conversion Price (as defined below). No Repayment Fee will be payable in connection with a repayment within the first 30 days following draw down of the Second Advance.

Convertibility

Each advance and/or any interest due can be converted by the Investors into new ordinary shares of 0.03125p each in the Company ('Ordinary Shares') at any time at a price per Ordinary Share of the lower of:

i) a 30 per cent. premium to the 'Reference Price' of 0.072 pence (being the five day VWAP immediately prior to the drawdown of each advance) (the 'Fixed Conversion Price'), or 0.0935 pence for the Second Advance; and

ii) 93 per cent. of the average of the three VWAPs (as chosen by the Investors) of Ordinary Shares during the 10 trading days immediately preceding the date of any conversion notice (the 'Variable Conversion Price').

The Investors may convert only at the Fixed Conversion Price for the first 90 days following drawdown of an advance. Also, the Company has the sole right to suspend conversions at the Variable Conversion Price for one month by making a cash repayment equal to one tenth of the aggregate amount of the outstanding advances.

If while any advance remains outstanding, the Company issues Ordinary Shares at a price per share less than the Reference Price (save pursuant to arrangements in force at the date of this announcement), the Fixed Conversion Price for that advance shall be amended to be a 10 per cent. premium to the price of that new share issue.

Issue of warrants over Ordinary Shares

The Investors will be issued warrants over new Ordinary Shares equal to 10 per cent. of each advance ('Warrants'). The number of Warrants will be calculated as a quotient of the amount of the advance divided by 125 per cent. of the applicable Reference Price. The exercise price of each tranche of such Warrants will be 125 per cent. of the applicable Reference Price.

The Warrants will be exercisable for a period of 36 months from the date of issue. The Warrants are transferrable but will not be admitted to trading on AIM or any other stock market.

Accordingly, Warrants to subscribe for a total of 63,131,311 Ordinary Shares (representing approximately 0.55 per cent. of the Company's current issued share capital) will be issued to the Investors in respect of the Second Advance at an exercise price of 0.090 pence per share.

Mining Licence Application

Following the appointment of the Mali Transition Government and confirmation of the new Minister for Mines, Energy and Water, M. Lamine Seydou Traore, government agencies and activities have re-commenced. Kodal is monitoring progress of its Mining Licence application and can confirm that all documents have been updated to reflect the new Minister and constitution oversight. The documents are finalised and pending signature before proceeding to the finalisation of the Mining Licence application.

Updates will be provided as information is received.

Gold Exploration

Kodal maintains a suite of gold exploration projects in Mali and Cote d'Ivoire. An exploration programme has been prepared to target the Dabakala project in Cote d'Ivoire and the Nangalasso project in Mali as a priority.

Exploration in Dabakala has defined a new gold anomalous zone extending for over 8km in strike and over 2km width. This is a new area and requires infill sampling to define the zone for future reconnaissance drilling. The exploration programme is planned to be undertaken by Kodal's technical team and will commence in early November following the seasonal rains and re-opening of access to the project areas.

For the Nangalasso project, Kodal will undertake field mapping and reconnaissance and additional rock chip sampling to prioritise the gold anomalous zones with previous drilling and rank the targets for next stage drilling. This work will commence following the geochemical sampling at Dabakala.

**ENDS**

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