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Kodal Minerals Plc / Index: AIM / Epic: KOD / Sector: Mining
17 December 2020
Kodal Minerals plc ("Kodal Minerals", "Kodal" or the "Company")
Acquisition of Advanced Fatou Gold Project in
Project Level Funding Proposal for Major Exploration Campaign,
& Gold Portfolio Update
Kodal Minerals, the mineral exploration and development company focused on its Bougouni Lithium Project in southern
In conjunction with the Acquisition, Kodal Minerals has received a subsidiary-level project funding proposal from AIM-quoted Riverfort Global Opportunities PLC and Riverfort Global Opportunities PCC (together, the "Investors") to provide up to
· Acquisition of the advanced Fatou Project,
i. Historic Mineral Resource of over 350,000oz gold from one prospect
ii. Fatou consists of two concessions:
i. Fininko Concession, covering 100 sq. km, with Kodal to earn up to 90 per cent. through staged payments and exploration expenditure; and
ii. Foutière Convention, covering 200 sq. km, with Kodal to earn up to 90 per cent. through staged payments and exploration expenditure
· Fatou acquisition includes a significant historic database that is currently being reviewed
i. Kodal expects to complete targeted drilling to confirm and expand the defined mineralisation at Fatou within a 9-month period
· Gold exploration programme at Fatou consisting of targeted reverse circulation ("RC") and diamond drilling to commence as soon as possible
· Expanded gold exploration programme to include geochemical sampling, which is currently underway at Dabakala, as well as reconnaissance aircore drilling, RC drilling and targeted diamond drilling at other selected Gold Assets.
· Funding proposal from the Investors to provide up to
· At completion of the spend of the
i. convert the funding to a 40 per cent. holding in a gold joint venture to be formed with Kodal holding 60 per cent. (subject to certain percentage adjustments as detailed below);
ii. convert the funding into new Kodal shares at a price to be determined; or
iii. seek repayment of the funding over a 15-month period.
· Funding is initially non-dilutionary to existing shareholders and will be used to acquire the Fatou Project, as well as to explore and develop this project and the other assets in Kodal's gold portfolio
Bernard Aylward, CEO of Kodal Minerals, commented: "I am very pleased to announce the acquisition of the Fatou Gold Project; this is an exciting opportunity for Kodal to acquire an advanced gold project that has immediate drill targets for testing and that complements our existing gold project portfolio in southern
"Kodal's existing gold assets are located within the highly prospective Birimian sequence of
"The Company's primary focus remains the Bougouni Lithium Project. The Company is maintaining regular communications with the Mali Transition Government to monitor the progress of the Bougouni Lithium Project's Mining Licence application. Bougouni is our key focus and will be the Company's first opportunity to develop a mining operation in
The Fatou Project consists of two concessions, the Fininko (also known as Fatou) and Foutière concessions, located 280km south of
The Fatou Project is complementary to Kodal's existing activities in southern
Kodal expects to commence exploration immediately and its field team has already made reconnaissance visits to the project area to confirm areas of historical exploration, the location of artisanal mining and host rock of mineralisation, and to determine suitable access for exploration activities and a field camp (refer three photos below).
The Fatou Project is hosted within the Birimian sequence of
The dominant structural feature observed at the Fatou Project is a major northwest-trending shear zone which aligns the gold targets, local shear fabrics, folds, cross faults, low angle faults, planar fabrics, and crenulation. The northwest shears are inferred to be steeply dipping to slightly east-dipping and further low-angle structures have been interpreted in drill hole modelling that dip to the east.
Figure 1: Fininko and Foutiere project locations, south
Figure 2: Fatou Project - concession locations and historic exploration drilling. Background is regional geological interpretation
Photos - Active artisanal workings within the Fatou Project and an image of gold recovered from workings (top)
Historic exploration identified gold mineralisation occurring as free gold in multi-stage quartz and quartz-carbonate ± sulfide veins. Sulfides associated with gold include pyrite, pyrrhotite, arsenopyrite, and possible bismuthinite. Gold-bearing veins are mostly subvertical in orientation striking north-south to north-westerly and appear to occur in clusters and local envelopes.
Gold in quartz and quartz-carbonate±sulfides veins are orogenic and typical of most gold occurrences throughout
An initial Mineral Resource estimate was prepared in November 2014 for previous explorer Rockridge of over 350,000 ounces gold (0.6g/t cut-off) and was estimated for only the Fatou Main prospect and represent only part of the potential of the project.
Previous work on the Fatou concession includes regional soil sampling by a United Nations Development Program in the early 1980s and further soil sampling later in the 1980s by Orgagoe, a Malian company. In the late 1990s to 2001, AngloGold undertook exploration that included soil sampling, aerial geophysics, RAB drilling, and RC drilling. Results indicated the presence of gold in surface and subsurface samples, but no follow-up work was completed due to changes in corporate exploration strategy.
Rockridge commenced exploration work in 2010 which has included extensive soil sampling, geophysical surveys, drilling, mapping, and initial metallurgical tests. This work culminated in the initial resource estimate.
Kodal has received the extensive historical exploration database and is verifying the information and re-assessing all prospects. The exploration has been systematic, and drilling has focussed on the key targets of the Fatou Main prospect and the Fininko prospect.
Kodal is finalising exploration plans commencing at Fatou Main as a first priority and then at Fininko located to the south. The object of this initial exploration drilling will be to confirm and expand the know gold mineralisation and provide data to support data for a JORC compliant Mineral Resource estimate to be completed. In addition, the Company will target new areas of artisanal mining, previous untested geochemical anomalies and target the Foutiere concessions for reconnaissance exploration along the southern strike of the identified mineralised structure.
The Company, through its wholly owned subsidiary IGS-Mali SARL ("IGS-Mali"), has been granted exclusive rights to explore and an option to purchase up to 90 per cent. of two concessions (Fininko and Foutiere concessions) in
As consideration for the Fininko concession agreement with Sacko, IGS-Mali has committed to pay up to
The Company has further agreed that a 2 per cent. Net Smelter Return ("NSR") Royalty will be granted to Sacko. IGS-Mali has the right of first refusal on any sale or proposed transfer of the NSR or retained interest in the concession.
The Company has the right to terminate the agreement with Sacko at any time in written notice. If the agreement is terminated after the fifteen-month payment and IGS-Mali has completed exploration exceeding
The Fininko concession is an Arrete that was granted on 18 February 2018 for an initial 3-year term with two 2-year renewals available.
As consideration for the Foutiere concession agreement with Falcon, IGS-Mali has committed to pay up to
The Company has further agreed that a 1.5 per cent. NSR Royalty will be granted to Falcon. IGS-
The Company has the right to terminate the agreement with Falcon at any time in written notice.
The Foutiere concession is a Convention under
In accordance with
Funding Term Sheet - summary terms of the proposal
Kodal has agreed a conditional term sheet with Riverfort Global Capital Ltd, acting on behalf of the Investors, to provide Kodal with funding of up to
The Funding Amount would be provided to Kodal quarterly in advance to support an exploration budget for Kodal's Gold Assets with the implicit intention to realise value for some or all the Gold Assets ("a Monetising Event") on or before 31 October 2021 (the "Decision Date"), at which time the Investors would become entitled to a 40 per cent. interest in the Gold Assets and would have rights as detailed below.
Kodal's Gold Assets are defined to include the Nangalasso project, the SLAM project and the Fatou project in
The Funding Amount is to be used exclusively to advance the Gold Assets, in an agreed manner between Kodal and the Investors to cover costs including the Acquisition, all standard exploration activities including metallurgy and resource estimation and would also pay a management fee to Kodal for costs associated with the management and compliance of the projects. Kodal and the Investors would review the budget at least quarterly and amend it as necessary.
The Funding Amount would be free of any interest and fees and gives the Investors rights of convertibility of the Funding Amount into either i) equity of a subsidiary of Kodal holding the Gold Assets ("GoldCo") or ii) new Kodal ordinary shares, or the Investors can seek repayment, as set out below:
Upon the Decision Date, a Monetising Event or expenditure of the Funding Amount, whichever is earlier, the Investors can either:
1) convert the Funding Amount to GoldCo shares representing 40 per cent., but with a mechanism to increase or decrease such percentage according to the proportion of the final agreed exploration budget that the Funding Amount and any additional payments made by the Investors would represent:
a. an additional 10 per cent. of shares in GoldCo can be acquired by the Investors (save in the event of a Monetising Event) by payment to Kodal of between
2) convert the Funding Amount to new ordinary shares of Kodal at a price per share equal to the 5-day VWAP prior to the Decision Date; or
3) seek repayment of the Funding Amount, which would be repayable in equal monthly tranches over 15 months (or earlier if Kodal elects), failing which, the Investors would be entitled to 100 per cent. ownership of GoldCo.
For the avoidance of doubt, it is expected that each of the Investors would provide half the Funding Amount and therefore would each be entitled to half of any shares issued pursuant to 1) and 2) above.
At this stage, the Funding Amount is conditional upon completion of due diligence by the Investors and execution of binding contracts and security arrangements within the next 30 days. Accordingly, there can be no guarantee on the outcome of discussions with the Investors and that ultimately the Funding Amount will be provided. If a contract for the Funding Amount is not ultimately agreed, Kodal will consider alternative options to fund the Acquisition and exploration budgets, including potentially utilising Kodal's own cash resources.
The Term Sheet provides that, in consideration for Kodal granting exclusivity to the Investors for the next 30 days, the Investors will advance
Gold Portfolio Update
Kodal has maintained a suite of gold assets in
Kodal is currently completing infill geochemical sampling at the Dabakala project in
Kodal has received a proposed exploration programme from Resolute for the Nielle project located in northern
For further information, please visit www.kodalminerals.com or contact the following:
Kodal Minerals plc
Bernard Aylward, CEO
Tel: +61 418 943 345
Allenby Capital Limited, Nominated Adviser
Jeremy Porter/Nick Harriss
Tel: 020 3328 5656
SP Angel Corporate Finance LLP, Financial Adviser & Broker
John Mackay/Adam Cowl
Tel: 020 3470 0470
St Brides Partners Ltd, Financial PR
Susie Geliher/Cosima Akerman
Tel: 020 7236 1177
The exploration results and activity reported in this announcement have been reviewed by Mr Bernard Aylward who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Aylward has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Qualified Person as defined in the AIM Note for Mining and Oil & Gas Companies dated June 2009. Mr Aylward consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.