Kodal Minerals (LSE: KOD) has grown the Bougouni lithium project resource in southern Mali by more than 40% over a 2019 estimate, further de-risking the project slated for first production next year, it said Tuesday.
The company attributes the 10.6 million tonne increase to 31.9 million tonnes (inferred and indicated) grading 1.06% lithium oxide (Li2O) for 337,200 tonnes of metal, to its drilling programs early this year at the Ngoualana and Boumou deposits.
The resource totals 11.6 million indicated tonnes grading 1.12% Li2O for 129,900 tonnes of metal, plus 20.3 million inferred tonnes at 1.02% Li2O for 207,100 tonnes of metal.
Kodal offers the clearest and fastest path to cash flow among London-listed lithium developers, said Canaccord Genuity mining analyst Alex Bedwany in a note to clients.
“The resource estimate now supports a significantly longer life than that outlined in the 2022 feasibility study, and we expect this to continue to grow,” he said. The analyst maintained a ‘speculative buy’ rating on the equity and raised the target price to 1.85p from 1.65p.
Plans are in place to return in November to extend the resource area and conduct additional drilling to aid future mine planning.
The January to May drilling program was the first program conducted at Bougouni since 2019.
“The results of the drilling program confirm our positive view of the prospectivity within our project area, while the updated resource highlights the potential for further resource growth at the project through continued drilling of our priority targets,” CEO Bernard Aylward said in a news release.
Construction ready
Bougouni is fully licenced, with Kodal gearing up for first lithium production by late next year, using a low-cost dense media separation plant (DMS). It aims to be Mali’s first lithium producer, competing with Australia’s Leo Lithium (ASX: LLL). Kodal expects a 12-month construction timeline for the DMS plant.
This step is backed by US$117 million from Hainan Mining covering an offtake agreement for all output.
The flotation plant, which will come later, will be funded with cash flow generated from the initial phases and located close to the Sogola-Baoulé and Boumou pits. The project is initially designed for a four-year mine life, with the potential to extend operations based on exploration results from nearby unexplored prospects within the mine lease.
Kodal recently stated its Bougouni project was unaffected by Mali’s new legislation that increases state shares in mining projects. The law, enacted by interim President Assimi Goita, raises government stakes to 20% in new projects, with an additional 5% for local investors.
Mali’s National Directorate of Geology and Mines has validated Kodal’s Bougouni licence, ensuring the project’s phased development can proceed.
Kodal shares closed 1.52% higher in London at 0.67p, bringing the 12-year trend to a gain of 129%. Shares touched 0.20p and 0.93p during the period, and the company has a market capitalization of £114 million ($24 million).
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