Bougouni, Mali – In a significant development for the mining sector, Kodal Minerals has announced a binding memorandum of understanding (MoU) with the Malian government to finalize the transfer of the Bougouni lithium project mining license. This strategic agreement involves Kodal Mining UK (KMUK), a joint venture where Hainan Group holds a 51% stake and Kodal owns 49%. The license will be transferred from Future Minerals to a newly formed Mali-registered company, Les Mines de Lithium de Bougouni SA (LMLB).
The Bougouni lithium project, located in southern Mali, has garnered considerable investment, receiving $117.5 million from Hainan Group in November 2023. This funding encompasses a $100 million investment directed towards KMUK, which oversees the project’s development as the parent company of both Future Minerals and LMLB. The MoU stipulates that the mining license will operate under the 2023 Mining Code of Mali, enhancing legal clarity and operational framework for the project.
Key highlights of the MoU include the allocation of a 35% equity interest in LMLB to the Malian State and local investors, while KMUK retains the remaining 65%. The license is initially valid for ten years and is eligible for renewal in accordance with prevailing mining regulations at the time.
Moreover, the agreement extends customs and duties exemptions during the construction phase and ensures that all necessary permits, including export permits for spodumene, are issued promptly. KMUK is required to make a $15 million payment to the Malian State, divided into two installments: an initial payment of $7.5 million upon signing the MoU and a second payment due before March 31, 2025.
Kodal Minerals CEO Bernard Aylward remarked on the significance of the MoU, stating, “This agreement represents the final legal step needed as we swiftly progress with the project’s construction, aiming for production to commence in the first quarter of 2025.” He emphasized the project’s importance and the ongoing support from the Malian government, which has been critical in expediting discussions.
The partnership between Kodal and the Malian government has flourished, especially following an audit of the mining sector initiated by the government in 2022. This audit led to the release of the 2023 Mining Code in August 2023, which included consultations with industry stakeholders and advisors. The Implementation Decree, detailing the economic implications of the code, was finalized in July.
KMUK’s successful negotiations with the commission established a clear path for the Bougouni mining license transfer, solidifying the terms of the Hainan transaction that underpins the project’s development.
The MoU outlines provisions for customs and tax exemptions during the construction phase, including temporary admission of essential vehicles and machinery, import duty exemptions on vital tools, petroleum products, and spare parts needed for the project.
Under the terms of the agreement, Mali’s government and local investors will secure a 35% equity stake in LMLB through newly issued shares, as outlined in the 2023 Mining Code. This includes a 10% free participation right initially reserved for the State, with an additional 25% stake available at an estimated cost of $4.3 million.
Crucially, the MoU guarantees that the State and national investors’ equity will not be diluted below 35% in any future capital increases for LMLB. Additionally, KMUK will maintain the right to recover all capital investments and intercompany loans as a priority.
The agreement also mandates the formation of a shareholder agreement, ensuring that the LMLB board includes at least four directors appointed by the State, along with two independent directors. This structure aims to enhance governance and accountability within the project.
In conclusion, the signing of this MoU marks a pivotal moment for the Bougouni lithium project and reflects the strong collaboration between Kodal Minerals and the Malian government, paving the way for the development of one of Mali’s key mineral resources.
