Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Kodal Minerals soars on lithium offtake talk and Chinese investment

"Anecdotal evidence indicates there is a supply shortage of lithium feedstock in China"
picture of Tesla banner
Chinese firms are positioning themselves ahead Tesla's ramp-up

Kodal Minerals PLC (LON:KOD) rocketed as a Chinese group agreed to buy in at a huge premium to the share price and negotiations began for an offtake deal for lithium from its Bougouni asset in Mali.

Suay Chin, a newly formed lithium trader, is to acquire £500,000 worth of shares 0.3p per share and is undertaking due diligence ahead of a possible £4.3mln injection at 0.38p that would give it a 20% stake.

The off-take agreement relates to 20% of the spodumene concentrate to be produced from Bougouni.

According to house broker SP Angel, Suay Chin’s move is part of a trend currently, with Chinese firms looking to secure lithium assets ahead of the expected explosion in electric car use and renewable energy storage.

Anecdotal evidence indicates there is a supply shortage of lithium feedstock in China ,which is causing prices to rise dramatically particularly for smaller contracts, said the broker.  

It is also prompting Chinese companies to take stakes in promising, higher-grade, lithium projects around the world where processing routes are reasonably well defined.  China’s recent multi-billion purchase of the Tenke Fungurume copper, cobalt mine in the DRC, highlights the trend.

Shandong Mingrui, which has close links to Suay Chin, made an offer to buy another Bougouni region lithium mine owner, Birmian, in January, though this deal eventually fell through. 

Lithium carbonate prices in China have risen from US$6,500-8,500/t last year to between US$10,000-18,000t for larger contracts and US$18,000-21,000/t for smaller contracts, said the broker. 

“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.”

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.”

Suay Chin was set up in January this year specifically to act as a trading group for the supply and source of feedstock into the Chinese lithium market, added SP Angel, and is said to be well connected, funded and have support from key Chinese manufacturers as well as Shandong Mingrui, which is already a major supplier in to January.

Bernard Aylward, Kodal Minerals’s chief executive, said the deal highlighted the perceived strategic and commercial value in its development. 

 “Our exploration activity has confirmed the lithium mineralised pegmatite veins at surface and the demonstration of high-grade lithium mineralisation from our drilling has generated a lot of interest in fast-tracking potential development. 

“Suay Chin is very positive about assisting us through the metallurgical testwork and development phase of the project, and with the additional funding we will continue to advance the project rapidly.”

View full KOD profile View Profile

Kodal Minerals PLC Timeline

Related Articles

1517945503_serbian-landscape.jpg
February 06 2018
Zeleznik is one of the four licenses being sole funded under the option agreement between Mundoro and JOGMEC
miners
February 06 2018
Coro Mining is on the move in Chile, with feasibility work nearing completion and new ground to work on
1509542969_Lithium_381225958_58c8743f4a122.jpg
November 01 2017
Pan Asia Metals is building strength in depth in South East Asia

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use