Kodal Minerals* (LON:KOD) 0.325p, Mkt Cap £17m – Chinese...

Kodal Minerals* (LON:KOD) 0.325p, Mkt Cap £17m – Chinese offtaker preparing to buy £4.3m of stock at 65% premium following initial £0.5m investment at 30% premium

• Suay Chin International Pte Ltd which has strong support from Shandong Mingrui Chemical Co Ltd has taken an initial stake in Kodal Minerals.
• The Chinese group ‘has’ paid for £500,000 worth of shares at a price of £0.003 per share highlighting its interest in the company and not just the Bougouni lithium project.
• Suay China is now undertaking due diligence which, if successful, will increase its shareholding in Kodal to 20% of the company at a price of £0.0038/s for a further cash investment of £4.3m representing a 65% premium to yesterday’s closing share price.
• Kodal and Suay Chin International have agreed to start talking about an off-take agreement over 20% of the spodumene concentrate to be produced from Kodal’s Bougouni project.
• Kodal is about to recommence drilling its Bougouni lithium project in Mali with similar-ish results to Birimian Limited’s results at its closely named and more advanced Bougouni Goulamina project in Mali.
• Anecdotal evidence indicates there is a supply shortage of lithium feedstock in China which is causing prices to rise dramatically particularly for smaller contracts.
• This appears to be causing Chinese companies to move quickly to take stakes in promising, higher-grade, lithium projects around the world where processing routes are reasonably well defined.
• Lithium Carbonate prices which were generally considered to be around 6,500-8,500/t last year are now reported to vary between $10,000-18,000t for larger contracts and $18,000-21,000/t for smaller contracts in China. We suspect the larger contracts are still being priced towards the lower end of the range but Tesla’s entry into the market for its new Gigafactory and rising demand in China, Japan and South Korea is raising prices significantly for smaller contracts.
• Morningstar estimates a potential supply shortfall of 100,000t by 2025 as lithium demand rises 16% each year till then

Conclusion: The subscription shows how serious Chinese companies are in securing future lithium supply and confirms our view that the Bougouni area of Mali looks like is may make a meaningful lithium production centre in future years.
Shandong Mingrui has previously offered to buy Birimian Limited for A$107.5m but the deal fell over when Shandong failed to deliver A$10.75m into an escrow account in January.

Suay Chin International Pte Ltd was set up in January this year specifically to act as a trading group for the supply and source of lithium feedstock into the Chinese Lithium market.

The Suay Chin team is said to be well connected, funded and with relevant industry experience and to have support from key Chinese manufacturers.
The statement says that Suay Chin has strong support from Shandong Mingrui which is a long-term supplier to existing lithium carbonate producers in Shandong Province.

The race to secure feedstock materials for battery producers is hotting up with Chinese companies moving to grab higher-grade lithium projects and prospects. This follows China’s recent multi-billion purchase of the Tenke Fungurume copper, cobalt mine in the DRC.

http://www.*.co.uk/columns/sp-angel/27271/today-s-market-view-asiamet-resources-kodal-minerals-strategic-minerals-tri-star-resources-27271.html

Easier to get money from a Singapore enterprise for now it seems, “supported” by Shandong.

BGS has already uncovered a unique deposit >15mt already economic. First mover like PLS in WA. Kodal has shown some promise with 1000m of drills and “a few” 20m hits. Needs a bigger campaign. It remains to be seen how they will develop, and still have their work cut out to find a motherlode that BGS already has proven. Whether they can find something complimentary, such as an AJM or DKO and at what scale, or still searching like a MCT, CXO and others.

The Kodal developments should be positive as it’s a more likely to support a wider mining province, satellite deposits/JVs and attract more investment partners like now. How likely will there be 2 separate processing plants and duplication of costs here…not.
Just because there are pegmatites does not mean there is decent lithium. BGS has had a remarkable hit rate with very few dud hits so far.
Note Kodal 8 Feb announcement

“The final assay results for the drilling at the Kola prospect were also received with no additional high-grade lithium intersections to report. The drilling continued to hit pegmatite bodies, and a review of the geological logging, assays and geological mapping is underway to determine the next steps for the Kola prospect.”