KODAL Minerals’ Bougouni lithium project generated enough cash in its first full six months of commercial production to clear its project debt, helped by a sharp recovery in lithium prices and strong margins at the Mali operation.
The Bougouni operation repaid an initial $13m to holding company Kodal Mining UK (KMUK) during the six months to June. Further payments after the period took the total to $33m, allowing KMUK to repay its Hainan Mining loan in full and terminate the facility. Kodal said this left the group debt-free.
The rapid repayment comes despite production running below budget during the period. Bougouni produced 53,195 tons of spodumene concentrate, with output affected by maintenance and breakdowns in its crushing circuit.
Mining at the Ngoualana open pit was also initially behind plan because of equipment availability and blasting problems.
Bougouni had generated about $93m in revenue from more than 69,000 tons of completed exports by the end of June. Its third shipment of about 20,400 tons alone brought in $39.05m.
Kodal’s financial adviser and joint broker SP Angel said strong lithium prices and the first six months of commercial production had enabled Bougouni to clear its project debt. The broker kept its buy recommendation and 0.85 pence target price on Kodal.
However, the lithium market has weakened sharply in recent weeks. SP Angel said Chinese lithium carbonate prices had fallen below 120,000 yuan ($17,900) a ton on the Guangzhou exchange, from more than 160,000 yuan at the start of September — a decline of about 25%.
It cited excess battery manufacturing capacity, a new battery tax and slower economic growth as pressures on demand.
The strong first-half performance marks a sharp change from last year, when Bougouni was producing concentrate but struggled to export it because of delays in securing approval from Mali’s government.
CEO Bernard Aylward said at the time the company was spending money producing material that its Chinese partner Hainan wanted to buy but which Kodal could not ship.
The export delays have since been resolved, with shipments through Côte d’Ivoire’s Port of San Pedro now operating without restriction. KMUK has also secured approval to export a further 125,000 tons of concentrate.
Kodal reported a £3.5m profit for the half compared with a £3.7m loss a year earlier. Its 49% share of KMUK’s profit amounted to £4.6m.
Kodal maintains its interest in Bougouni through a 49% stake in KMUK, which in turn holds 65% of Les Mines de Lithium de Bougouni, the owner of the project.
