Kodal Minerals, through its wholly-owned subsidiary Future Minerals, entered into an agreement with local Malian company Gorutumu Mining, to acquire a 90% interest in the 250 km2 Madina exploration concession in Bougouni-Sikasso for a total of US$140 000.
Staged over three years, Future Minerals has already made an initial payment of $25 000 to Gorutumu upon signing of the agreement on 20 August 2016 and will make a payment of $40 000 on the first anniversary of the effective date and $75 000 on the second anniversary of the effective date.
The payments grant Future Minerals exclusive access and exploration rights, including access to all existing data on the project.
Once all three payments have been made, Future Minerals will have acquired a 90% interest in the project transferred to its ownership.
Until Future Minerals completes all payments to exercise the option, Madina will remain wholly-owned by Gorutumu.
This acqusition is in line with Kodal’s strategy to identify value accretive strategic mineral opportunities in West Africa.
“The market dynamics surrounding lithium are highly compelling, and I am delighted to announce the acquisition of what I believe has the potential to be, a quality, high-grade lithium project with identified priority targets and known mineralisation,” says Kodal Minerals CEO Bernard Aylward.
The acquisition of Madina is a direct result of Kodal’s team leveraging its extensive West African experience to identify value accretive opportunities to build a portfolio of quality assets.
Future Minerals is responsible for all exploration costs up to and including the cost of producing a feasibility study, progression to which will be dependent on the success of early stage exploration work.
If an economic resource is identified, the agreement anticipates that Future Minerals and Gorutumu will form a new mining company in Mali (MiningCo), conduct the appropriate environmental studies, and apply to the government of Mali for a mining licence.
On application for a mining licence by MiningCo, Future Minerals must make a further payment to Gorutumu of $1 million if a resource (indicated or better) of less than 5 Moz of gold has been defined; $2 million plus $2 million for each ounce above 5 Moz of gold if a larger resource is defined.
Gorutumu will have the option of subscribing for 5% of the shares in MiningCo (and 5% of any future equity contributions into MiningCo) or receiving a 2% net smelter royalty (NSR) on MiningCo’s production.
Future Minerals will hold 75% of the shares in MiningCo, or 80% if Gorutumu chooses the NSR.
However, the remaining 20% will be held by the government of Mali; this in turn is made up of 10% received in return for the mining licence on which no future capital contributions are required and 10% that is subscribed for and on which future contributions will be required pro-rata to, and on the same terms as, other shareholders.
“We now intend to apply our exploration expertise to the project and rapidly advance it towards proving up a JORC-compliant mineral resource,” Aylward adds.
Further news regarding this exploration process and concurrent work programmes across Kodal’s gold properties, will be made in due course.