Gold and lithium miner Kodal Minerals has agreed a conditional funding package of just under $118-million with UK-based Xinmao Investment, which will fully fund the development and start of production at the Bougouni lithium project, in Mali.
The financing will also support a major exploration programme at the site to define additional lithium mineralisation and increase the life-of-mine at Bougouni.
Xinmao is a wholly-owned subsidiary of China-based Hainan Mining, which is, in turn, a subsidiary of Chinese multinational Fosun International.
Kodal CEO Bernard Aylward says the funding package is a great outcome for the company following a competitive and complex process to ensure it receives the appropriate recognition for the underlying value of the asset.
He adds that the investment enables Kodal to fast-track to production of spodumene concentrate in what is a strong market for it.
“The level of funding allows us to fully fund the dense media separation plant, with mining planned to start at the high-grade Ngoualana deposit. The lithium sector remains buoyant with high demand and market prices for spodumene concentrate. The demand is driven by the increasing uptake of electric vehicles,” Aylward comments.
Kodal is seeking to complete an offtake agreement for the amount of product that is free to sell outside of existing arrangements and will also review the potential to become involved in downstream processing to enhance the value of the product.
Hainan chairperson Liu Mingdong says the investment in Kodal is in line with Hainan’s strategy of improving the level of resource and feedstock security globally, as well as to build a lithium hydroxide supply chain.
The terms of the funding agreement include that Hainan will become a 51% shareholder in Kodal’s newly incorporated UK subsidiary, Kodal Mining UK. In turn, this company will become the shareholder of a new Mali mining company to be formed by Kodal to own and develop the Bougouni project.
In addition to the funding agreement, Hainan has indicated it will complete an equity subscription into Kodal for $17-million, which will see it become the largest shareholder of 14.8% in Kodal.