SHARES in Kodal Minerals lost more ground on Wednesday as the market absorbed a dispute between the UK-listed firm and its joint venture partner, China’s Hainan Mining Company.
The lithium spodumene project developer was trading at 32 pence per share in morning trade on the London Stock Exchange, taking losses in the last five days to 27.4%. Kodal is now has a market capitalisation of about £64m.
Kodal said yesterday it was not consulted ahead of a dispute over responsibility for payment of a $15m tax bill to Mali. The Chinese contend the tax call, as a result of $117.5m committed to their Bougouni spodumene project in southern Mali, falls to Kodal to resolve which Kodal disputes.
Kodal said its understanding with the Chinese is that the tax ought to be paid by Kodal Minerals UK, a subisidiary company that controls the mining permit over Bougouni and in which it and Hainan Group are joint venture partners.
“Kodal notes that it was not consulted by Hainan on its announcement released today and that the position stated by Hainan is not consistent with the discussions and correspondence between the parties and the Mali Government in connection with the finalisation of the MOU,” the company said on November 5.
“Kodal’s understanding of the position reached with Hainan is that all parties acknowledged that the $15m payment would be borne by KMUK.”
The dispute comes at an inopportune time for Kodal given it recently ended months of uncertainty over its mining licence which Mali recently granted to KMUK. In return, Kodal and Hainan agreed to comply with the country’s 2023 Mining Code in which the state and a state-backed investor will take up to 35% in Bougouni.
Mali’s interim government hopes its new mining code, signed into law last year (with regulations published this year), is expected to more than double the mining sector’s contribution to the country’s gross domestic product to around 20% and allow it to address a shortfall in production revenues.
On September 26, Kodal announced first production from Bougouni would be rescheduled to the first quarter of 2025 owing to heavy rainfall as well as shipping and transport delays.
First phase production of 125,000 tons a year of spodumene concentrate has been forecast for Bougouni. Construction of a flotation plant could increase production to 230,000 tons a year, depending on the market demand, the company said.
