First lithium production at Bougouni and DMS plant delivered on budget
Kodal Minerals has crossed a major milestone. The Stage 1 Dense Media Separation (DMS) processing plant at the Bougouni Lithium Project in Mali was built on time and within the US$65 million budget, with “power on” achieved in January 2025. First spodumene concentrate rolled off the line in February 2025.
By the end of July 2025, Bougouni had produced over 40,000 tonnes of concentrate while awaiting the export permit. The plant is operating steadily, with minor optimisation ongoing. DMS, by the way, is a simple, lower-cost process that separates lithium-bearing rock from waste using density – a sensible first step before moving to a more capital-intensive flotation circuit.
Mining is running 24/7, and the ore stockpile stood at over 220,000 tonnes at 1.17% Li2O at year end, equating to roughly 2.5 months of feed. That’s a helpful buffer for ramp-up.
Offtake agreement with Hainan: pricing, volumes and why it de-risks cash flow
Post year end, Kodal and its operating partner finalised an offtake agreement with Hainan Mining for 100% of Stage 1 production. It’s a four-year deal starting once the Mali export permit lands. Pricing references the Shanghai Metals Market 6% spodumene (SC6) CIF China index, with standard adjustments for grade, quality and freight.
There’s a take-or-pay commitment – Hainan must purchase or pay for agreed volumes – and a minimum expected shipment of 8,000 wet tonnes per month. Payment terms are friendly to working capital: 95% on loading at the West Africa port, with the remaining 5% on delivery in China. A floor price will apply from 1 January 2026 (to be agreed), with the floor suspended for the initial export period. In plain English: greater revenue visibility and reduced counterparty risk for the ramp-up phase.
Mining licence transfer and the 2023 Mining Code: alignment with the State
A critical box was ticked in April 2025 when the Bougouni Mining Licence was transferred to Les Mines de Lithium de Bougouni (LMLB), a KMUK subsidiary, alongside a binding MoU confirming migration to Mali’s 2023 Mining Code. Customs exemptions for construction were confirmed, and the project retains priority rights to recover capital and intercompany loans.
The State and national investors will hold 35% in LMLB via new shares, with an agreed acquisition price for the additional 25% of approximately US$4.3 million. KMUK made a one-off MoU payment of US$15 million to the State – a key driver of KMUK’s loss this year and of Kodal’s reduced carrying value for its 49% stake. The one remaining gate is the export permit, which the Company expects “very shortly”.
Production ramp-up, resources and Stage 2 expansion plans
Stage 1 targets 10,000 tonnes per month of concentrate in line with the offtake schedule. Early concentrate grades were reported above 5.3% Li2O. The current JORC Mineral Resource Estimate is 32.0 Mt at 1.06% Li2O across Ngoualana, Sogola-Baoulé and Boumou, with Boumou showing wide, higher-grade extensions in drilling (for example, 52m at 1.51% Li2O from 175m; 32m at 1.11% Li2O from 93m).
The plan is two-stage: DMS (2025-2028) followed by a flotation plant from 2028 through 2036. Stage 2 capex is estimated at US$175-200 million and is intended to be funded from Stage 1 cash flows. The resource growth target is 50 Mt, with Boumou a key feed for Stage 2 and potential supplemental feed for the DMS.
Financial headlines: losses narrow, cash steady, net assets lower
Kodal reported a Group operating loss of £2,446,000, improved from £3,344,000 last year. Group net assets fell 21% to £45,584,000, largely reflecting Kodal’s £9.0 million share of KMUK’s loss (which included the US$15 million MoU payment). Cash rose modestly to £16,888,000, with interest income stepping up to £247,000 and accrued interest on the KMUK loan of £166,000.
Gold exploration spend dropped to £133,000 as focus rightly shifted to Bougouni construction and commissioning. The carrying value of gold assets was trimmed by 25% to £1,623,000 after an impairment of £641,000, mainly due to permitting delays in Côte d’Ivoire.
| Key numbers (year to 31 March 2025 unless stated) | Figure |
|---|---|
| Operating loss | £2,446,000 |
| Cash and cash equivalents | £16,888,000 |
| Group net assets | £45,584,000 |
| Kodal share of KMUK loss | £9.0 million |
| One-off MoU payment to State (KMUK) | US$15 million |
| Concentrate produced (to July 2025) | 40,000+ tonnes |
| Ore stockpile at year end | 220,000+ tonnes at 1.17% Li2O |
| MRE | 32.0 Mt at 1.06% Li2O |
| Stage 1 DMS capex | US$65 million (on budget) |
| Stage 2 capex estimate | US$175-200 million |
| Offtake volume guide | Minimum 8,000 wmt per month |
Lithium market context: stabilising prices and a supportive demand outlook
Management notes SC6 pricing stabilised in early 2025 around US$850-900/t after a weak 2024. China’s EV market – still supported by subsidies – underpins demand, with a possible global supply deficit forecast by 2026. Canaccord Genuity is pencilling in US$1,000/t for Q1 2026. For Kodal, a stabilising price environment plus take-or-pay offtake is a constructive backdrop for ramp-up.
Community, people and ESG touchpoints
Local relations matter in Mali. Kodal reports 94% of the 608-strong site workforce is Malian, with 292 recruited locally. Practical initiatives included a new access road to Ngoualana village and replacement of the solar-powered water pump, alongside continued school support. These are the sort of basics that build social licence and operational resilience.
Key risks to watch in 2025
- Export permit timing – critical to ship inventory and trigger offtake cash flows.
- Commodity price risk – spodumene volatility affects earnings; a floor price is due from 1 January 2026.
- Political and permitting risk – Mali and Côte d’Ivoire dynamics; licence renewals and export logistics.
- Stage 2 funding and delivery – US$175-200 million capex to be internally funded; execution risk remains.
- Associate structure – Kodal owns 49% of KMUK; minority position means less control over some decisions.
Gold portfolio update: Fatou ready for a push; Côte d’Ivoire on hold
Thanks to the US$17.75 million Hainan investment in 2023, Kodal is funded for targeted exploration at Fatou. Fieldwork and targeting were completed, with historic resources around 350,000 ounces and recent intercepts including 23m at 1.63 g/t Au from 82m and 6m at 1.49 g/t Au from 40m. In Côte d’Ivoire, licences remain in good order but forestry permitting delays stalled progress, prompting a £641,000 impairment.
My take: why this update matters for Kodal Minerals shareholders
This is the de-risking RNS many investors have waited for. Construction delivered on time and budget, first product in Q1 2025, and a binding offtake with take-or-pay terms. The remaining near-term swing factor is the export permit. Once that is granted, shipments start, 95% cash is received on loading, and the ramp to 10,000 t/month becomes the focal KPI.
On the flip side, net assets fell and the carrying value of KMUK dropped as Kodal absorbed its share of KMUK’s loss, driven by a one-off US$15 million State payment. That’s painful but largely behind the company. Stage 2 capex is sizeable, but deferring until Stage 1 cash flows are established is sensible. The market setup looks better than a year ago, and the ore stockpile plus early grade performance support a smoother ramp.
Overall, I see this as a strongly positive step-change update with one key caveat: permit timing. Nail that, keep the plant stable, and 2H 2025 should be about shipping, cash generation and progress toward Stage 2.
Housekeeping: AGM
The AGM will be held at 2:30pm on 30 September 2025 at Fieldfisher LLP, 9th Floor, Riverbank House, 2 Swan Lane, London EC4R 3TT.
Quick jargon buster
- Spodumene concentrate: lithium-rich product sold to refineries to make battery chemicals.
- DMS (Dense Media Separation): a gravity-based process to upgrade ore at lower cost and complexity.
- CIF China: cost, insurance and freight included to the Chinese port.
- Take-or-pay: the buyer must take agreed volumes or pay anyway, improving revenue certainty for the seller.
