Kodal kicks off Bougouni lithium output in Mali

Kodal Minerals (LSE: KOD) has started spodumene concentrate production at the Bougouni project in southern Mali, the country’s second lithium mine to begin operations in less than two months.

The milestone was achieved during the commissioning of the Dense Media Separation (DMS) processing plant, the company said on Tuesday. Initial production yielded a spodumene concentrate with a lithium oxide (Li₂O) grade of 5.53%, consistent with Kodal’s planned production targets.

This achievement paves the way for the plant to ramp up to its full capacity of 10,000 tonnes per month.

“The operational focus over the coming weeks will be the finalization of commissioning and stress testing of the DMS processing plant as we ramp up to achieve nameplate capacity and steady state production,” CEO Bernard Aylward said.

He also confirmed plans to ship the first batch of lithium spodumene concentrate to China’s Hainan Group, by the end of the current quarter.

Shares in Kodal jumped on the news and were trading almost 5% higher to 0.42p in London mid-afternoon. That leaves the miner’s market capitalization at £83 million (US$103 million).

Steady capex

Construction costs for the Bougouni project have remained within the estimated $65-million budget, with only minor optimization tasks outstanding. The development has been financed by Kodal’s partner, Hainan Group, which holds a 51% stake in the project.

Canaccord Genuity’s analysts described the announcement as a “key positive milestone”. They highlighted the company’s expectation of achieving the plant’s capacity ahead of schedule while keeping the project within budget — below their capital expenditure estimates.

“Management should be commended for this build and we believe the market will strongly reward the progress as the operations begin to generate cash,” they said in a note to investors.

Kodal was in competition with Australia’s Leo Lithium (ASX: LLL) in the race to develop Mali’s first lithium mine. China’s Ganfeng Lithium bought Leo’s remaining 40% stake in the Goulamina lithium project last year, achieving first spodumene production in December.

Located 170 km south of Mali’s capital, Bamako, Bougouni is in an area hosting several established mining operations, including the Yanfolila mine held by Nioko after its purchase of Hummingbird Resources, and B2Gold‘s (TSX: BTO; NYSE-A: BTG) Fekola mine.

Kodal and Hainan jointly hold 65% of the Bougouni project, while the Malian government owns the remaining 35%.

Licence transfer

The company is now working on transferring the mining license to its Chinese partner. The Mali Mines Department has already approved the move, and final compliance steps are nearing completion, with the issuance of a new mining decree pending the signature of interim President Assimi Goïta.

Mali’s military leadership has introduced sweeping changes to the mining sector in recent years, adopting a tougher stance on foreign investors. In August 2023, the government enacted a new mining code that increases the state’s share of mining revenues and eliminates tax exemptions for mining companies.

The junta has proved aggressive in implementing the new rules, souring relations with major investors, including Barrick Gold (TSX: ABX; NYSE: GOLD), Resolute Mining (ASX: RSG; LSE: RSG) and B2Gold.