Certain information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the UK Market Abuse Regulations. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Kodal Minerals Plc / Index: AIM / Epic: KOD / Sector: Mining

 4 May 2021

Kodal Minerals plc

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

Update on Mining Licence Application for the Bougouni Lithium Project

Kodal Minerals, the mineral exploration and development company focused on the Bougouni Lithium Project and its gold assets in West Africa, is pleased to provide this update on the Mining Licence application that is in progress for the Bougouni Lithium Project ('Bougouni' or the 'Bougouni Project').

The Company reports that a committee meeting has been held in Bamako, Mali, at the Direction Nationale de la Geologie et des Mines ("DNGM") to review the feasibility study and proposed mining development for Bougouni.  The meeting was attended by the Company's representatives, including its Country Manager, Senior Geologist, Environmental Consultant and economic advisors.  The Company has received confirmation that the feasibility study and mining development plan have been ratified and approved by the DNGM committee, subject to the Company making some minor corrections to bring the mining licence application in line with the new Mali Mining Code of 2019. The Company then expects to receive a formal notification from the DNGM requesting payment of the Mining Licence fee prior to the formal production of the "Exploitation Decree" (Mining Licence) for approval by the Prime Minister. Further details of the next steps to granting the Mining Licence are set out below.

Bernard Aylward, CEO of Kodal Minerals, commented: "We are very pleased with this development in our Mining Licence application, which again confirms the high standard and full range of our completed feasibility study and mining plan at Bougouni.  We continue to work closely with the DNGM and Mali Government representatives to finalise the grant of the Mining Licence as soon as possible.  This will be a major milestone for Kodal and one which will significantly de-risk our project as it will then be fully permitted to commence site development works.

"This application process has taken longer than originally anticipated due to outside influences in the year of 2020; however, it is very positive timing for Kodal to be in control of a high-quality, pre-production lithium asset with the market dynamics as compelling as they are now.  Kodal continues to monitor the lithium market and notes that the lithium (spodumene concentrate) price has risen strongly from its lows in 2020 and further, that there is widespread analyst consensus of supply deficits from as early as next year.  The powerful lithium demand drivers linked to battery production include Government stimulus, as well as from major vehicle manufacturers and public utilities, and we believe that the Bougouni Project is ideally positioned to capitalise on this window of opportunity to become a strategically located high-grade and low-cost lithium producer in the near term.  I look forward to reporting on further developments in due course."

Further Information

Mining Licence Application

The ratification and approval of the Company's lodged feasibility study and mining development plan is a major step toward the granting of the Mining Licence for Bougouni.  The next steps are summarised below:

i.      Kodal to finalise minor changes to the lodged licence application to bring it in line with new Mining Code 2019, which is expected to be completed this week.

ii.     After filing the updated application, Kodal is expected to then receive a formal notification from the DNGM with a request to pay the fee for the Mining Licence of 100,000,000 XOF (approximately £135,000)

iii.    Upon payment of the fee, the DNGM will then draft the Exploitation Decree (Mining Licence) which is forwarded to the Ministry of Mines, Energy and Water.

iv.   If all is in order, the Ministry of Mines, Energy and Water will then forward the Exploitation Decree to the office of the Prime Minister for formal signing, which is the final step in the process.

At the completion of this process, the timing of which is uncertain, a new Mining Licence would be issued to Kodal Mineral's subsidiary company in Mali, Future Minerals SARL.  At this point Bougouni will be fully permitted for development, with the Environmental Permit having previously been granted in November 2019 following approval of the Company's ESIA study.

Separate to the granting of the Mining Licence and as required by local law, the Company will subsequently negotiate a shareholders agreement and operators contract ("Mining Agreements") with the Government to establish a new company that will be the mining entity.  It is noted that the Government cannot take its position in the mining entity until the Mining Agreements have been finalised and approved by the Mali Government Assembly.

Summary of the Bougouni Project Feasibility Study

The Bougouni Lithium project feasibility study has demonstrated the potential for a robust mining operation with attractive economic fundamentals.  Further studies continue with a particular focus on optimising the processing plant flow sheet to further improve lithium recovery and lower capital and operating costs.

The key highlights of the Bougouni Project Feasibility Study are:

o  Minimum 8.5-year mine life, producing on average approximately 220,000 tonnes of ~6% spodumene concentrate per annum, at life of mine lithium average metallurgical recovery of 71%, based on laboratory metallurgical recoveries of 75%;

o  Total life of mine production of 1.94Mt of concentrate and revenue exceeding US$1.4bn, with an initial assumed concentrate sale price of $680/t increasing 2% year-on-year;

o  Proposed 2Mtpa processing plant utilising a conventional flotation circuit to maximise spodumene recovery;

o  Estimated C1* cash costs of US$431 per tonne of concentrate (US$466 including royalties and sustaining capital);

o  Capital requirement for development estimated to be US$117M plus contingency; and

o  Forecast payback period of 1.7 years and IRR of 58% (51% post tax).

*C1 is the net direct cash cost that represents the cash cost at each processing stage from mining through to recoverable metal as indicated in the Company's announcement on 27 January 2020.

**ENDS**

For further information, please visit www.kodalminerals.com or contact the following: