Aim-listed Kodal Minerals has reported that the spodumene production result for the second quarter ended June 30 was below management’s budget, mainly owing to maintenance and breakdown issues with the crushing circuit delaying feed to the dense media separation (DMS) processing plant at the Bougouni lithium project, in Mali.

The lower quarterly production was driven by poor performance in May that stemmed from crushing circuit issues. The site team completed repairs of the crushing circuit and significant improvement was noted in June.

The site team is continuing to monitor the DMS processing plant and crushing circuit and is continuing a regular maintenance and repair programme to ensure consistent performance.

The company notes quarterly production of 26 174 dry metric tonnes (dmt) of spodumene concentrate grading 5.34% lithium oxide and year-to-date production of 53 195 dmt of spodumene concentrate.

Kodal says the third spodumene export shipment arrived in Hainan, China, on June 27 and final confirmation of the shipment is being completed prior to finalisation of the payment for the shipment.

As usual, the company explains, the final payment is pending confirmation of adjustment for grade, shipping and insurance costs; an interim payment of $34.4-million has already been received for 95% of the estimated final value.

Post-quarter end, a fourth export shipment was loaded and departed the Port of San Pedro on July 11, with a further about 24 200 t of spodumene concentrate and is expected to arrive in Hainan in late August.

Kodal says the Les Mines de Lithium de Bougouni (LMLB) operation has made an initial repayment against loans advanced by its main shareholder, Kodal Mining UK (KMUK), with an initial payment of $13-million transferred during the quarter.

Kodal says KMUK has used the funds received to pay down the majority of the funds owed under the Hainan loan facility.

The Hainan loan facility comprises interest-bearing debt and is the only external debt for KMUK.

Kodal says the Bougouni operation is continuing to generate a strong margin from the production of spodumene concentrate and is benefiting from the strong lithium price environment and high demand for the spodumene concentrate.

The operation is generating cashflow and expects to continue repayments to KMUK.

CEO Bernard Aylward says the Bougouni operation is continuing to export spodumene concentrate, adding that the strong price environment for the product is enabling LMLB to generate very positive returns.

He says the operation is planning to continue regular exports of spodumene concentrate on a six-week to two-month schedule with cargo loads of up to between 15 000 and 20 000 dmt.

“Spodumene concentrate exports continue on schedule and the fourth shipment departed San Pedro shortly after quarter end, further demonstrating the reliability of the export route from Bougouni to Côte d'Ivoire,” says Aylward.

NGOUALANA

Meanwhile, Kodal reports that the Ngoualana openpit mining continued to operate during the quarter with additional mining equipment mobilised and work began in the pit.

The company explains that operations at the Ngoualana openpit were behind plan for the quarter with mining initially impacted by the availability of machinery and the blasting efficiency.

The openpit mining contractors have mobilised additional equipment to site and operations improved in May and June.

The company says it actively manages the supply of key input materials at its operations and has suffered no issues with respect to either fuel or explosives availability.

Aylward says the team is focused on meeting the operation budget as well as maintaining prudent cash control to ensure ongoing margins for the Bougouni lithium operation remain strong.

BOUGOUNI DEVELOPMENT PLAN

Further, Kodal notes that the work programme for the proposed Phase 2 flotation plant development continued during the quarter.

The company says the update for the environmental- and social-impact assessment is continuing with meetings and discussions with relevant communities progressing as well as assessment of potential compensation payments to the affected communities within the expanded footprint of the Boumou prospect.

Kodal says the development team is working with consultant engineers for the proposed flotation plant design, noting that the team plan to ship an additional 20 t of samples for metallurgical testing and optimisation of plant design.

In addition, the testwork will also complete Bond Work Index studies required to finalise the mill selection for the flotation plant crushing circuit.

The Phase 2 development programme will continue during the year, and update announcements will be provided as necessary and in these quarterly reports.

“For the current quarter, the Bougouni operation has normal operations scheduled and has made preparation for the upcoming wet season to ensure steady production.

“Revenue from both the third and fourth shipments is expected to be received during the current quarter and as we continue to see a strong spodumene price environment, the Bougouni operation is benefiting from the high spodumene lithium price and expects to continue to make regular repayments to KMUK,” says Aylward.

Kodal says it maintains its involvement and interest in the Bougouni lithium project through its 49% shareholding in KMUK in partnership with Hainan Mining, which, as the 51% shareholder, has ultimate control.

KMUK holds a 65% shareholding of the subsidiary mining company LMLB, which owns the project in partnership with the Mali government, and KMUK provides the management oversight and operational control of mining activities at Bougouni.