The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR")

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

28 March 2024

Kodal Minerals plc

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

Bougouni Lithium Project -

Termination of Suay Chin International Spodumene Offtake Right of First Refusal

Kodal Minerals, the mineral exploration and development company, is pleased to announce an agreement between Kodal Minerals, Kodal Mining UK Limited ("KMUK"), the Bougouni Lithium Project joint venture company 49% owned by Kodal, Hainan Mining Co Ltd ("Hainan" and with its subsidiaries "Hainan Group" which owns 51% of KMUK) and Suay Chin International Pte Limited ("Suay Chin") to terminate the Right of First Refusal ("ROFR") granted to Suay Chin, as part of its original investment in Kodal in 2017, over 80% of the spodumene product produced at the Bougouni Lithium Project in Southern Mali.

As announced on the 15 November 2023, Kodal and the Hainan Mining Group ("Hainan") entered into a joint venture development agreement for the Bougouni Lithium Project, with both parties consequently being shareholders of KMUK, 49% owned by Kodal and 51% by the Hainan Group.  KMUK was established as a UK registered company as the development vehicle for the Bougouni Lithium Project.  As part of the transaction, Kodal initially granted the right to Hainan to finalise a spodumene off-take agreement at market price for the available 20% of spodumene concentrate to be produced form the project and agreed to work with Hainan to secure the release of Suay Chin's ROFR.  KMUK has now finalised negotiations with Suay Chin to release the ROFR over the spodumene concentrate for a two-stage termination payment totalling US$14 million to be paid by KMUK in two instalments, as set out in more detail below.  This allows Kodal and KMUK to enter into negotiations with the Hainan Group to finalise an offtake agreement with Hainan for 100% of the spodumene product produced at the Bougouni Lithium Project.  It has been agreed between Kodal and Hainan that any offtake agreement reached between KMUK and Hainan Group will be based on market prices for spodumene and will require express written approval from Kodal Minerals as shareholder of KMUK. The offtake agreement with Hainan will initially relate to spodumene production from the Stage 1 Dense Media Separation (DMS) processing plant.

Bernard Aylward, CEO of Kodal Minerals, remarked: "As KMUK pushes ahead with development of at our flagship Bougouni Lithium Project aiming for first production before the end of calendar year 2024, the team has also been working to finalise the offtake agreements for the sale of our spodumene product.   Our negotiations with our JV partner Hainan have thus ensured that we will achieve the optimum market price for our spodumene with no discount offered and we are now confident of achieving this positive result for all our product from Bougouni, with Stage 1 (DMS) set to produce 125ktpa Li₂O and Stage 2 (Flotation) output to increase to c.230ktpa Li₂O."

Summary of the Agreement

The agreement reached between Kodal, KMUK, Suay Chin and Hainan provides that the original agreement between Suay Chin and Kodal relating to the proposed offtake agreement and Right of First Refusal signed on 7 May 2017, will be terminated for a total termination fee of US$14 million payable by KMUK in two instalments:

·    US$7 million to be paid within 10 business days of the signing of an offtake agreement between KMUK and Hainan (as approved by Kodal Minerals as KMUK shareholder);

·    US$7 million to be paid within 10 days of the first shipment of spodumene concentrate from the Bougouni Lithium Project, or on 31 October 2024, whichever date is earlier.

The original agreement for the offtake of spodumene from the Bougouni Lithium Project signed between Suay Chin and Kodal in 2017, provided Suay Chin with the Right of First Refusal over not less than 80% of the lithium concentrate products from the project within three years following the Bougouni Lithium Project commencing production.

**ENDS**

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