Trading update, financing facility and TVR

RNS Number : 0300J
Kodal Minerals PLC
07 April 2020

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


7 April 2020


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


Trading update, financing facility and change to total voting rights


Kodal Minerals, the mineral exploration and development company focused on its Bougouni Lithium Project (the 'Project' or the 'Bougouni Project') in southern Mali, provides an update on current trading.  In addition, the Company announces that it has entered into a financing facility comprising a subscription for new ordinary shares of 0.03125p each in the Company ("Ordinary Shares") and linked equity sharing agreement (together, the "Financing Facility") with Riverfort Global Opportunities PCC Limited and YA II PN Ltd (the "Investors"), together with the issue of warrants over Ordinary Shares to the Investors.


Trading Update


Kodal Minerals continues to pursue its mining licence application and the Company has maintained communication with the Mali Government to determine when the next meeting will be called to complete the Financial and Ministerial review ("COMINE Meeting").  Kodal has completed all information to be submitted for the COMINE.


The Government of Mali has restricted international travel and closed its borders to people travelling from countries with Covid-19 infection.  As the travel restrictions impact on the Company's ability to attend the COMMIN meeting, the Company cannot at this stage provide guidance for the timing of the meeting or the overall mining licence application process.


The Covid-19 outbreak has affected Mali, however, current infection rates are low and the Company confirms all employees are well and report no infection.  The Company has ceased field work and all employees are off site.  Given the reduced workload, the Company has been able to lower its salaries in agreement with the employees to one third of base salary.


The Company expects field work in 2020 will be limited due to the Covid-19 restrictions.  A budget has been prepared for work to re-commence at the Bougouni Project, however, this will not be before the end of the wet season expected in late September.


The planned engineering review and studies focused on improving the proposed mining operation at the Bougouni Project are continuing using internal and external consultants.  Again, as the workload is restricted currently, the Company has budgeted for reduced outgoings and has reduced payments to consultants.


The Company has further reviewed the corporate overheads and Board fees and has taken action to reduce these costs.  The Board and executive fees have been reduced by approximately 60% of previous levels which is in line with the reductions in Mali.


As noted in the interim results announced on 6 December 2019, the Company needed to raise further funds in order to continue its development work and to be able to continue as a going concern for the foreseeable future.  Market conditions have impacted potential fundraising opportunities and have worsened with the Covid-19 pandemic. The Company has limited working capital and therefore, the Board has determined that the Financing Facility is in the best interests of the Company and shareholders. Although the monthly payments to the Company under the facility are variable, it is expected to provide sufficient monthly funding for the Company to operate at the limited capacity and reduced budgeted costs as outlined above.


The Financing Facility


In connection with the Financing Facility, the Investors have subscribed for 1,428,571,429 Ordinary Shares (the "Subscription Shares")at a price of 0.035 pence per share, raising £0.5 million before expenses (the "Subscription"). The Subscription proceeds will be used immediately to satisfy the Company's obligation to pay £0.5 million to the Investors to enter into an equity sharing agreement (the "ESA"), under which the Investors shall make monthly cash payments to the Company for a period of 12 months (which period can be shortened or extended up to 24 months at the Investors' discretion) based on the performance of Kodal's share price. 


The Subscription and the ESA are linked but the terms of these transactions are contained in separate legal agreements which are entered into concurrently and result in the Company's immediate cash position being unchanged as the proceeds from the Subscription nets off against the Company's immediate contractual payment under the ESA. 


The principal elements of the Financing Facility are outlined below. 


The Subscription

The Subscription will result in the issue of 1,428,571,429 Subscription Shares, representing approximately 13 per cent. of the Company's issued ordinary share capital as enlarged by the Subscription.  The Investors are entitled to receive a commission of three per cent. of the gross proceeds of the Subscription, being £15,000 (the "Commission").  The Commission will be paid to the Investors pursuant to the terms of the ESA (see below) over a period of 12 months.


Application will be made for the Subscription Shares to be admitted to trading on AIM and it is expected that admission will take place on or around 14 April 2020 ("Admission"). The issue of the Subscription Shares is conditional upon, inter alia, Admission occurring by not later than 8.00 a.m. on 14 April 2020 (or such later date as the Company and the Investors may agree, in any event being no later than 8.00 a.m. on 30 April 2020). 


The Subscription Shares, when issued and fully paid, will rank pari passu in all respects with the Company's existing Ordinary Shares, including the right to all dividends or other distributions declared, made or paid after the date of issue of the Subscription Shares.


The Subscription Shares will be issued utilising the Company's existing share authorities to issue new Ordinary Shares on a non-pre-emptive basis.



Under the ESA, conditional on the Subscription completing, the Company will pay the Investors £0.5m (the "ESA Payment") (which, for the avoidance of doubt, will be paid using the proceeds of the Subscription). In consideration for the Company making the ESA Payment, the Investors will make pro rata monthly payments to the Company over a 12 month period (which period can be shortened or extended up to 24 months at the Investors' discretion), wholly dependent on the performance of the price of Ordinary Shares each month. The first payment will be made on 30 April 2020 and subsequent payments will be made on the last trading day of each calendar month.  Provided the Investors do not alter the 12 month term of the ESA, each monthly payment will be for one-twelfth of the ESA Payment less one-twelfth of the Commission, giving a base monthly payment of £40,417 (the "Base Payment"), which shall be adjusted each month according to the performance of the price of Ordinary Shares ("Monthly Payment") calculated as set out below:


The adjustment to each Monthly Payment will be calculated by reference to:

1)  the average of the 12 lowest daily volume weighted average prices of Ordinary Shares for the calendar month corresponding to each Monthly Payment (the "Market Price");

2)  a price of 0.042 pence per Ordinary Share, being a 20 per cent premium to the price paid per Subscription Share (the "Benchmark Price"); and

3)  one-twelfth of the Subscription Shares (the "Monthly Shares").


If the Market Price exceeds the Benchmark Price, the Monthly Payment will be calculated as follows:


· The Base Payment plus (the Monthly Shares x (Market Price minus Benchmark Price) x 75 per cent.);


If the Market Price is less than or equal to the Benchmark Price, the Monthly Payment is calculated as follows:


· The Base Payment minus (the Monthly Shares x (Benchmark Price minus Market Price))



except that, if the Market Price is sufficiently low, such that the calculation of the Monthly Payment is negative, no payment will be made by the Investors to the Company or by the Company to the Investors and no Commission will be payable by the Company for the applicable monthly period. Such Commission will accrue and become due on the date falling 12 months from the date of the ESA.


Examples of what the Monthly Payment would be at various Market Prices can be found below:


Benchmark Price: 0.042p

Example Market Prices (pence):





Resulting Monthly Payments:






At any time, the Investors may shorten or extend the term of the ESA to up to 24 months and therefore, the amount of the Base Payment and the Monthly Shares used in the calculation of the Monthly Payment will be adjusted upwards or downwards accordingly to spread the remaining payments equally over the remaining term of the ESA. 


It should be noted that if the Market Price of Ordinary Shares (as calculated pursuant to the ESA) is less than the Benchmark Price then the Monthly Payment will be less than the pro rata proceeds of the Subscription for that particular month and the Company will not be entitled to receive the shortfall at any later date.Conversely, there is no upper limit placed on the Monthly Payment and any share price appreciation over the Benchmark Price will result in the Monthly Payment being higher than the pro rata proceeds of the Subscription for that particular month and the amount available in subsequent months will not be affected by this. Overall, therefore, there is no guarantee that over the term of the ESA the Company will receive the full Subscription proceeds of £500,000, but may receive a lower or higher amount, depending on the performance of the price of Ordinary Shares.


Further, despite the Subscription Price of 0.035 pence per share, shareholders should note that the Market Price on average over the term of the ESA needs to be at least at the Benchmark Price of 0.042 pence per share for the Company to receive at least the gross Subscription proceeds of £500,000.


In no event will fluctuations in the Ordinary Share price result in any increase in the number of Subscription Shares issued by the Company or received by the Investors.


Each Investor has agreed during the term of the ESA that it will not, and it will procure that its affiliates will not, hold any net short position with respect to Ordinary Shares or forward or short sell any interest that they have in any Ordinary Shares.


Monthly Payments will be deferred by the same period that the Ordinary Shares may be suspended from trading on AIM.


The Investors may terminate the ESA in certain circumstances, including for a breach of the ESA, an insolvency event, a takeover of the Company, the Ordinary Shares ceasing to be admitted to trading on AM or where either the Ordinary Shares are suspended from trading on AIM or no share trades take place, in each case for more than 15 consecutive business days.  If the ESA is terminated, the Investors shall not be obliged to make any further payments to the Company and any remaining Subscription Shares held will, subject to any necessary approvals or regulatory requirements, be sold to the Company (or a nominee of the Company) at an aggregate price of £1.00 to be held in treasury by the Company (or by the nominee of the Company).  


The Financing Facility contains certain warranties and indemnities from the Company in favour of the Investors. The Company has paid the Investors' legal and due diligence fees relating to entering into the ESA.



On completion of the Subscription, the Investors will be issued with warrants to subscribe for 228,571,428 new Ordinary Shares, exercisable for a period of three years from the date of the ESA at a price of 0.04375p per Ordinary Share.  The warrants are transferrable but will not be admitted to trading on AIM or any other stock market.


Total Voting Rights


Upon Admission, the issued share capital of the Company will consist of 10,675,312,548 Ordinary Shares. The Company does not hold any shares in treasury. Therefore, the total number of voting rights in the Company from Admission will be 10,675,312,548.  This figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in or a change to their interest in the Company under the FCA's Disclosure Guidance and Transparency Rules.


For further information, please visit or contact the following:


Kodal Minerals plc

Bernard Aylward, CEO


Tel: +61 418 943 345


Allenby Capital Limited, Nominated Adviser

Jeremy Porter/Nick Harriss



Tel: 020 3328 5656

SP Angel Corporate Finance LLP, Financial Adviser & Broker

John Mackay



Tel: 020 3470 0470

St Brides Partners Ltd, Financial PR

Catherine Leftley/Cosima Akerman



Tel: 020 7236 1177


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