A potential second placing worth about £4.3-million with trading company Suay Chin International, if completed, will ensure that West Africa-focused mineral exploration and development company Kodal Minerals is well funded to produce initial mineral resource estimates at its Bougouni lithium project, in southern Mali, and commission further scoping studies.

This is according to Kodal CEO Bernard Aylward, who says Suay Chin is “very positive” about assisting Kodal through Bougouni’s metallurgical testwork and development phase.

Kodal has entered into an agreement with Suay Chin to start negotiations for an offtake agreement for over 20% of the spodumene concentrate to be produced from the project in future, with potential for this to increase to 100% at a later date.

Suay Chin was formed to take advantage of its extensive connections to supply the Chinese lithium market, with a range of clients from acid producers and lithium carbonate producers to the final lithium-ion battery manufacturer. Suay Chin has strong support from chemicals company Shandong Mingrui, which is a long-term supplier to existing lithium carbonate producers in the Chinese province of Shandong, explains Kodal.

Its agreement with Kodal allows Suay Chin a period of 30 days to undertake due diligence on Kodal and the Bougouni project, including conducting site visits, preliminary metallurgical testing and confirmation of geology.

This development follows the conclusion of a £500 000 share placing with the Singapore-registered company at an issue price of £0.003 a share for the issue of about 166-million new ordinary shares of £0.003125 each in Kodal. This represents a 30% premium compared with the closing share price on March 9.

Aylward states that, with the additional funding, Kodal will continue to advance Bougouni rapidly.

“This placing and the negotiations for an offtake agreement are a great endorsement of our Bougouni lithium project and emphasises the perceived strategic and commercial value of its development. Our exploration activity has confirmed the lithium mineralised pegmatite veins at surface and the demonstration of high-grade lithium mineralisation from our drilling has generated a lot of interest in fast-tracking potential development.

“This investment highlights the emerging lithium mineralised region in Mali and Kodal is continuing to progress its strategy of developing a mining hub at Bougouni based on multiple high-grade lithium pegmatite veins within the project area.”

Following the due diligence period with regard to the offtake agreement, if it is successfully completed, the agreement stipulates that Suay Chin must increase its shareholding in Kodal to 20% at a price of £0.0038 a share on completing a second share placing within a further 15 days, or 30 days, with Kodal’s consent.

The price of the proposed second placing represents a 65% premium compared with the closing share price on March 9.

Following the completion of the second placing, Suay Chin will have the right to nominate a director to the board of Kodal and will also negotiate an extended offtake agreement for 100% of the spodumene product produced at Bougouni.

Aylward said in February that the company would return to drill its Ngoualana prospect at its Bougouni lithium project, in southern Mali, as soon as possible, following the company’s receipt of the project’s first assay batches for a reverse-circulation (RC) drilling programme.

“We expect to start a follow-up drilling programme in February and to advance the priority targets with the aim of establishing a maiden resource as soon as possible,” Aylward pointed out.

He describes the first drilling intersection from Ngoualana, which remains open along strike and at depth, as “highly encouraging”, with wide, high-grade mineralisation intersected in drilling confirming surface observations. “We are eagerly awaiting the final assay results as our drilling continued to intersect a wide, coarse-grained pegmatite body with high spodumene content.”

The first drill hole at the Ngoualana prospect has returned 21 m at 1.7% lithium oxide from a depth of 62 m, including a high-grade core of 12 m at 1.81% lithium oxide from 69 m.

A further seven drill holes from Ngoualana are awaiting assay results, with drilling continuing to intersect a wide (up to 30 m downhole) main pegmatite vein and multiple subsidiary and parallel veins.

The company says the geological review of the drilling programme indicates that the Ngoualana vein has a strike length of more than 250 m and it remains open along strike.

The Ngoualana vein is hosted in a sequence of metasedimentary rocks.

Drilling at Bougouni’s Sogola prospect has confirmed high-grade, nearsurface mineralisation and intersections include 3 m at 1.92% lithium oxide from surface, including a maximum value of 2.94% lithium oxide. Results indicate that, at Sogola, the pegmatite has split into several narrow veins of variable width (less than 8 m) that remain open at depth and along strike.

The strike length of the veins exceeds 300 m, with coarse spodumene again identified in the drill chips. The Sogola vein is hosted in a granodiorite unit. Drilling at Bougouni’s Kola prospect, a narrow continuous pegmatite unit, has confirmed the pegmatite veins and returned high-grade assays up to 2 m at 1.94% lithium oxide. Coarse spodumene has been noted in drilling and this closely relates to the assay results, which are pending for the additional two Kola drill holes.

The pegmatite vein has a strike length exceeding 400 m. The prospect remains open along strike and at depth; however, the vein is narrow where currently explored.

Aylward notes that it is Kodal’s strategy to build a major project within its Bougouni licence area that will be amenable to mining, extracting from multiple sources.

Further, initial drilling at Sogola and Kola has confirmed the high-grade lithium mineralisation; however, as the pegmatite bodies are narrow, exploration will con- tinue to assess these prospects as potential support for the development of a significant zone at Ngoualana.