Mineral exploration and development company Kodal Minerals has entered into an agreement with Kodal Mining UK (KMUK), the Bougouni lithium project joint venture company 49% owned by Kodal, Hainan Mining Co (Hainan, and with its subsidiaries Hainan Group which owns 51% of KMUK) and 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 in November 2023, Kodal and the Hainan Mining Group entered into a joint venture development agreement for the Bougouni 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 project.
As part of the transaction, Kodal initially granted the right to Hainan to finalise a spodumene offtake agreement at market price for the available 20% of spodumene concentrate to be produced from 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 termination payment totalling $14-million to be paid by KMUK in two instalments.
To this end, $7-million is to be paid within ten business days of the signing of an offtake agreement between KMUK and Hainan, as approved by Kodal Minerals as a KMUK shareholder.
A further $7-million is to be paid within ten days of the first shipment of spodumene concentrate from the Bougouni project, or on October 31, 2024, whichever date is earlier.
This allows Kodal and KMUK to enter into negotiations with the Hainan Group to finalise an offtake agreement for 100% of the spodumene product produced at the Bougouni 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.
The original agreement for the offtake of spodumene from the Bougouni project signed between Suay Chin and Kodal in 2017, provided Suay Chin with the ROFR over not less than 80% of the lithium concentrate products from the project within three years following the Bougouni project starting production.
“As KMUK pushes ahead with development of our flagship Bougouni 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 125 000 t/y lithium oxide and Stage 2 – flotation – output to increase to circa 230 000 t/y lithium oxide,” says Kodal CEO Bernard Aylward.