Mali Seals Lithium Mine Deal with Hainan Mining Under New Mining Law
As from the 1st of November 2024, the new Mining Law in Mali comes under effect. According to the amended regulation, the Malian government and local investors must hold at least 35% stake in any mining project as from that date.
As such, the Bougouni #lithium mining project which is a JV between Kodal Minerals (LSE: KOD) and Hainan Mining (SSE: 601969) is expected to be undertaken under the new legal framework. According to the agreement, the Malian government will hold 25% share in the project at a value estimated at USD 4.3 million while other local Malian investors will hold another 10% share.
“We are excited about the role Kodal Minerals will play in the global #EV revolution, providing feedstock to Hainan’s lithium hydroxide plant in China, which, in turn, is supplying Asian markets including Japanese and Korean car battery makers.”
Kodal Minerals CEO Bernard Aylward
In return, the foreign investors will secure a 10-year mining license, which is renewable upon expiry. Exploitation is expected to kick off at the start of 2025. In September 2024, the mining equipment reached the Port of Abidjan in Cote d’Ivoire and had to be transported over land to landlocked Mali.
The #JV has hired Beijing High Dynamic for the crushing plant and Haiwang Technology Group as supplier of the Dense Media Separation (DMS) units. Local firm Bambara Resources will be in charge of the installation.
Kodal initiated a feasibility study back in 2020 and estimated that the project would require an investment of USD 65 million. In turn, Hainan Mining is a JV between Chinese multinational conglomerate Fosun International and Hainan Steel Group.
At the end, Kodal raised USD 118 million thanks to the capital injection form Hainan Mining. The extra money will go toward further exploration to secure #CriticalMinerals.
According the deal, a new entity — Kodal Mining UK — was incorporated in the UK with Hainan Mining as the controlling shareholder with 51% stake, while Kodal will retain the remaining 49%. Hainan Mining brought USD 100 million to the table in exchange for equity in the project.
A Special Purpose Vehicle (SPV) has been registered in Mali under the name of ‘Les Mines de Lithium de Bougouni (LMLB)’. After hashing out the modalities of the SPV, Kodal Mining UK (KMUK) transferred its mining licence to LMLB. Now, KMUK owns 65%, while the government of Mali and local investors hold 35% in LMLB.
Under a binding MoU, the Government of Mali will extend customs and duties exemptions for all equipment during the construction phase and facilitate all required permits, including export permits for spodumene concentrate.
In return, The Government of Mali will receive USD 15 million, payable in two instalments: one upon signing and another one downpayment at the end of 1Q25 after the first batch of ore is exported.
Bougouni is a town in southern Mali and the mining sites include Ngoualana and Boumou. The sites are opencast pits with mineralization at varying depths between 50-150 meters. In accordance to the JORC Mineral Resource Estimate (MRE), Kodal reported reserves of 31.9 million tonnes spodumene with at least 1.06% concentration of lithium oxide (LiO2).
It is estimated that the Bougouni mine can produce 125,000 tonnes of spodumene concentrate annually. The output can be ramped up to 230,000 depending on the market demand.
Demand for #lithium is projected to be robust with a 17% year-on-year increase in the coming years, driven by an acceleration in the #EnergyTransition and adoption of #EV.