West Africa-focused lithium and gold mineral exploration and development company Kodal Minerals, along with Kodal Mining UK (KMUK), Hainan Mining and Hainan’s wholly owned UK-incorporated subsidiary Xinmao Investment, have agreed on terms to complete a funding package that was initially announced on January 19. 

KMUK, as Kodal’s new UK registered subsidiary, was formed to hold Kodal’s Mali lithium assets and will be owned 49% by Kodal and 51% by the Hainan group.

“Kodal and Hainan have maintained high levels of communication throughout this process of finalising the funding transaction. This has allowed the parties to agree to the waiver of the final conditions precedent in the interest of moving forward with the project. Kodal and Hainan are both very keen for the next important stage of mine development to commence as soon as possible,” Kodal CEO Bernard Aylward said on October 27.

The agreement for completion of the transaction follows from the waiving of certain conditions precedent relating to the reorganisation of Kodal’s Mali lithium assets.

One of the conditions precedent is the transfer of the Bougouni mining licence from Kodal's Mali subsidiary company Future Minerals to KMUK’s new Mali subsidiary Le Mines de Lithium de Bougouni (LMLB).

The second of the conditions precedent is the transfer of the Sogola-Nord concession to Future Minerals, which will also become a 100%-owned subsidiary of KMUK. The Mali government will become a shareholder in the mining company following completion of the transfer and finalisation of shareholder agreements and when LMLB has been established to be the holder of the Bougouni mining licence and operator of the mine.

These transfers will occur at a later date once formal approval of the Direction Nationale de la Geologie et des Mines (DNGM) in Mali has been received. Kodal said it continues to liaise with the DNGM to seek completion of the transfers as soon as possible. In the meantime, these assets are deemed to be held on trust for the benefit of KMUK, while Kodal progresses the Bougouni project with the funding from Hainan.

Kodal has agreed on warranties and indemnities up to $100-million in relation to the waiving of these conditions precedent for the transfer of the Bougouni mining licence and the Sogola-Nord concession. The warranties and indemnities cover the period from completion to the point of transfer of the licence and the concession, with a two-year period for claims to be made. Kodal will warrant the good standing of the licence and concession at the time of transfer.

The parties are looking to finalise all remaining compliance items as soon as possible with the expected transfer of money, which will amount to $117.75-million in total (of which $3.5-million was already received as a prepayment in August) for the completion of the transaction now expected in the first half of November.

Consequently, the parties have extended the long stop date for completion of the transaction to November 15. Upon the receipt of funds pursuant to the transaction, the parties expect to accelerate the development and mining activities of the Bougouni lithium project, targeting production as quickly as possible.

“The development activity is progressing on site with the road upgrades to provide access for the start of construction of site infrastructure. Off-site Kodal, Hainan and our consultants are continuing to finalise the engineering design of the processing plant as well as progressing mine design and site optimisation,” Aylward said.

He added that the completion of the funding package transaction was a major milestone for the development of the Bougouni project.