Bougouni Project Update & Appointment of Broker
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
16 December 2022
Kodal Minerals plc
("Kodal Minerals", "Kodal" or the "Company")
Bougouni Project and DMS Development Update
Appointment of Joint Broker
Kodal Minerals ("Kodal" or the "Company") , the mineral exploration and development company focused on lithium and gold assets in West Africa, is pleased to provide an update on project development progress at its Bougouni Lithium Project in southern Mali ("Bougouni" or the "Project"). The Company is committed to accelerating the development of the Project through the lower capital cost dense media separation ("DMS") processing plant option, which will also allow the Company to take advantage of a near-term buoyant lithium market. In addition, the Company is pleased to announce the appointment of Canaccord Genuity Limited ("Canaccord") as joint broker to the Company with immediate effect.
Highlights:
· The Company is progressing with plant engineering and environmental studies required for the DMS plant option (see announcement of 29 September 2022).
· The Company is finalising engineering and environmental work to support formal approval for the DMS option from the Mali Government, for which application is currently expected to be submitted in early 2023 (the "Change Notification").
· Activities and status of work is:
o DMS plant concept designs - complete.
o Tailings storage layout and concept design - complete .
o Environmental studies required for the Change Notification - progressing.
· Exploration Manager appointed to lead all exploration and pre-development activities from site, with a focus on expanding DMS ore sources within the existing mining licence permit area.
· Canaccord appointed as joint broker.
Bernard Aylward, CEO of Kodal Minerals, remarked: "Our engineering team has made great progress with the various design concepts and environmental updates required to finalise the requirements to commence the fast-track DMS development. We anticipate that the formalised Change Notification will be issued to the Malian authorities in early 2023.
"The recent decision by the Mali Ministry of Mines to suspend the issuance of new mining permits does not impact the Company's development progress. Engineering activities have therefore continued to progress in parallel with the Company's ongoing negotiations with potential financing partners.
"To support the Company's fast track development timeline, Kodal has re-appointed experienced Exploration Manager George Michaelides. George was responsible for the Company's initial exploration and drilling programmes at Bougouni, from which our 21.3Mt Resource was defined. George will be tasked with expanding our resource base with the objective of extending the life of mine.
"We are also pleased to announce the appointment of Canaccord as the Company's joint broker, enhancing our corporate coverage in partnership with our long-term broker SP Angel. We look forward to the contribution Canaccord can make as we progress with our financing solution for the development of the Bougouni lithium mine."
Canaccord Engaged as Joint Broker
The Company has appointed Canaccord to act as joint broker, effective immediately. Canaccord is the global capital markets division of Canaccord Genuity Group Inc., offering institutional and corporate clients investment banking, merger and acquisition, research, sales and trading services from offices in North America, UK & Europe, Asia, Australia and the Middle East.
Bougouni Tenure
The Company is the 100% owner of the Bougouni project in Mali consisting of granted concessions. The concessions include the Mining Licence granted under the 2019 Mining Code and extending over 97.2 sq. km covering the proposed open-pit mining and processing operation at Bougouni (as announced on 8 November 2021). The Mining Code has provision for a notification of change which will be required for obtaining approval for the DMS option ("Change Notification"). Kodal has conducted initial discussions with the DNGM to seek their endorsement for the change and has commenced formulating the notification.
On 28 November 2022, the Mali Ministry of Mines announced that it has suspended the allocation of new mining titles. This does not impact the Company as all mining licences are granted and in good standing. The Company is free to continue with its development activities unencumbered.
DMS Development Highlights
The Company has commenced the engineering and environmental work to support the development of the Bougouni lithium project (refer to announcement of 29 September 2022). The Company recognises the opportunity to commence operations with the construction of a modular DMS processing plant to treat the spodumene bearing ore from the Ngoualana deposit which, due to its coarse grain properties, delivers high DMS recoveries. Key benefits of a DMS operation include:
· Capital development cost estimated at US$65 million, generating an estimated NPV7% of approximately US$557 million (US$420 million post-tax) and, based on full equity funding, a short payback of 2 months from commencement of operations.
o utilising a conventional circuit to maximise spodumene recovery of over 130,000 tonnes per annum of spodumene concentrate; and
o an initial 4 year mine life.
· DMS operation revenue forecast to exceed US$1.05 billion in less than 4 years, based on prevailing broker consensus pricing averaging US$2,080 per tonne (FOB basis).
· Once financing and Mali Government update and approvals are received, the Company estimates a construction and commissioning time of 12 months for a DMS plant, compared to 22 months for the alternative of a full flotation plant.
The Company maintains its overall plan to fully develop the project by the development of the proposed flotation plant and will work to a development opportunity whereby the two developed processing plants (a DMS and a flotation plant) operate concurrently, allowing the Company to maximise spodumene production and target an annualised production in excess of 330,000 tpa of concentrate. The economics and timing of the flotation plant development will continue to be reviewed.
Kodal is progressing discussions with various parties to secure funding for construction of the DMS plant and mining operation.
DMS PlantEngineer
Kodal has entered into a formal contract with DRA Global South Africa ("DRA") for the design and supply of the DMS plant. The scope of the contract includes:
· supervision of confirmatory metallurgical testwork;
· detail design of the crushing modules;
· detail design of the DMS plant and associated services; and
· procurement services for the purchase of all plant equipment and crushing modules, post finalisation of project funding.
Embarking on this early start to plant engineering will provide a fast-track progression to procurement of the plant and crushing modules, once project financing is secured.
Confirmatory Metallurgical Testwork
Metallurgical testwork samples newly obtained from the Ngoualana deposit have been received at the Nagrom testwork laboratory in Perth, Western Australia. Testwork is underway and will comprise a programme of confirmatory testwork to provide additional data related to the ore characteristics and DMS recovery.
The initial testwork programme of Ngoualana material estimated DMS recoveries averaging 70% for a 6.0% Li2O spodumene product (refer to announcement of 20 August 2019). Therefore, the current testwork programme will be used to provide additional supportive data for crushing and plant design, and to confirm the recoveries stipulated in the plant design criteria are achievable.
As announced in the Company's announcement of 11 May 2020, the initial laboratory recovery result was validated via the 600 tonne of Ngoualana bulk sample that was shipped to the Shengli Yishui plant, located approximately 160km from the port of Qingdao in the Shandong province of China. The processing of Ngoualana ore at the Yishui plant achieved DMS recoveries in the range of 65% to 71%, targeting a 6.0% Li2O spodumene. Downstream processing in the flotation circuit, improved the yield to an overall recovery of up to 83%.
Therefore, the Company is confident that the upside capacity in the plant design, coupled with historical abovementioned testwork results, will meet and likely exceed the DMS study criteria of producing a 5.5% Li2O spodumene product at a life of mine average recovery of 63.5%.
Mine Design
The DMS option at Bougouni is based on an initial mine life of four years and processing material from the Ngoualana deposit, via an open cut, truck and shovel contractor mining operation.
Kodal has engaged specialist mining consultants Orelogy in Perth to complete the detailed mine design. The pit designs are progressing and the Company is formulating a mining contract tender package which will be issued for competitive tendering in the new year to experienced and capable contractors active in the region.
The early mining engineering and tendering approach will provide a faster track engagement of the mining contractor once project financing has been secured.
Future Flotation Plant Development
The implementation of the DMS development option does not preclude the development of a flotation plant facility, the original PFS base case. The Company is confident that the DMS operation will quickly provide the necessary cash flow to expand the operation to install a flotation plant in the future. Please refer to the Company's announcement of 29 September 2022 for further information.
Tailings Storage Facility for the DMS Option
The Company has engaged Knight Piésold in Perth to provide tailings storage facility designs and main access haul road designs for the DMS option. Tailings storage layout and concept design for the change notification are complete, and Knight Piésold will send a representative to the Bougouni site in January 2023 to update field investigations specific to the Ngoualana mine development. Knight Piésold provided the study engineering services to complete the original Feasibility Study over the Project.
Exploration Upside at Bougouni
The exploration upside at Bougouni is positive, with a number of drill ready targets providing opportunity to expand on both the DMS material, and flotation material. Kodal has re-signed Mr George Michaelides as Exploration Manager in Mali, to lead the pre-development site activities, with a focus on investigating opportunities for increasing the Company's global resources. George led the exploration activities which discovered the lithium resources at Bougouni, and after a three-year stint at Kinross, has returned to Kodal.
The Ngoualana, Sogola-Baoulé and Boumou pegmatite veins comprise the current Mineral Resources at Bougouni but represent only three of the ten lithium spodumene prospects identified to date and highlights the opportunity for the Company to expand lithium resources across the Company's 350 sq. km project area.
Environmental Studies for the DMS Option
Kodal was granted an Environmental Permit over the Project in November 2019. Digby Wells Environmental supported the Company with the ESIA studies required for the permit. Kodal has re-engaged Digby Wells to conduct supplemental studies required to support the Change Notification application.
The supplemental studies include updates to various field data gathering and specialist studies, including dust and noise monitoring, surface water and hydrogeological assessments, and waste rock geochemistry analysis. Digby Wells will also provide an update to the Company's Community Development Plan, in incorporate the findings of all studies into the change notification.
Forward Plan
Kodal will progress the formulation of the Change Notification for submission to the Mali authorities in the coming weeks. It is anticipated that the Change Notification will be submitted for approval to the Direction Nationale de la Geologies et des Mines (DNGM) early in the new year.
The Company is formulating its exploration programme which will include in-fill drilling at Ngoualana, and plans for drilling at the other prospective lithium deposits across the Company's 350 sq. km project area in the near future.
**ENDS**
For further information, please visit www.kodalminerals .com or contact the following:
|
Kodal Minerals plc Bernard Aylward, CEO |
Tel: +61 418 943 345
|
|
Allenby Capital Limited, Nominated Adviser Jeremy Porter/Vivek Bhardwaj/Nick Harriss
|
Tel: 020 3328 5656 |
|
SP Angel Corporate Finance LLP, Financial Adviser & Joint Broker John Mackay/Adam Cowl
|
Tel: 020 3470 0470 |
|
Canaccord Genuity UK Limited, Joint Broker James Asensio/Gordon Hamilton
|
Tel: 0207 523 4680 |
|
St Brides Partners Ltd, Financial PR Susie Geliher/Ana Ribeiro
|
Tel: 020 7236 1177 |
Glossary
JORC
-
'Australasian Code for Reporting of Mineral Resources and Ore Reserves' of December 2012 ("JORC Code") as prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy. Terms including Measured, Indicated and Inferred Resources as defined therein.
1Mtpa - One million tonnes per annum, pertaining to throughput of the proposed plant.
PFS - pre-feasibility study (refer to announcement of 15 June 2022.
C1 (Brook Hunt) - Under the Brook Hunt definition, C1 costs are direct costs, which include costs incurred in mining and processing (labour, power, reagents, materials) plus local general and administration costs, freight and realisation and selling costs.
Incoterms: FOB - Incoterms are a set of internationally recognised rules which define the responsibilities of sellers and buyers in the export transaction.
DNGM - Direction Nationale de la Geologies et des Mines; which in English translates to "The National Directorate of Geology and Mines". This Directorate reports to the Minister of Mines, being the administrative body in charge of mining activities in Mali.
NPV7% - net present value at a cashflow discount rate of 7%.
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