Eight years of effort by Kodal Minerals will be rewarded by the end of this year when the company’s Bougouni lithium project in Mali enters production. As CEO BERNARD AYLWARD tells ARTHUR TASSELL, the project, which is now fully funded as a result of Kodal’s partnership with China’s Hainan Group, is being developed in two stages. Stage 1 is a low capex operation based on a DMS processing route while Stage 2 will see the construction of a much bigger capacity flotation plant.
Bougouni is located in southern Mali approximately 170 km south of Bamako, the country’s capital, in an area well served by power and road infrastructure. It is one of two lithium projects currently under construction in Mali, the other being the Goulamina project of China’s Ganfeng, which is also expected to be commissioned later this year.
Leo Lithium was Ganfeng’s partner on Goulamina but recently announced it was withdrawing from the project.
Kodal Minerals acquired the Bougouni property in 2016 from Malian owners. “Although a World Bank-sponsored study around 2006 identified the area as having lithium potential, it was unexplored when we acquired the ground,” Aylward says.
“We put in our first drill hole in 2016 and by 2018 we were able to produce a maiden mineral resource. This has since been expanded quite considerably and we now have a JORC-compliant indicated and inferred resource inventory, which stands at 31.9 Mt at 1.06% Li2 O.”
Aylward is a geologist with over 20 years’ experience in exploration and mining. He knows West Africa well and was GM of Azumah Resources, which took the Wa (now Black Volta) gold project in Ghana to an advanced stage of development prior to Azumah being acquired by Ibaera.
A Feasibility Study (FS) on Bougouni, which envisaged a 2 Mtpa processing plant using a conventional flotation circuit to maximise spodumene recovery, was completed in early 2020 and updated in 2022. Within weeks of publication of the updated FS, Kodal Minerals announced that it had identified an opportunity to fast-track the project into production at a much-reduced capex by staging the development of the project, with Stage 1 consisting of a DMS plant.
“Starting up production using a flotation plant would have required a capex which we then estimated at US$154 million,” says Aylward. “The DMS approach we’ve now adopted drastically reduces this to US$65 million, with payback expected within about three months of the start-up of production. The DMS plant will have a throughput capacity of 1 Mtpa and will produce approximately 125 ktpa of 5.5% to 6% Li2 O concentrate.”
He adds that the time required to construct the Stage 1 project is around 12 months compared to at least 22 months for a full flotation plant. The Stage 1 development is based on open-pit mining of the Ngoualana deposit, one of the three main pegmatite deposits – the others are Boumou and Sogola-Baoulé – making up the project. The ore from Ngoualana has coarse grain properties, which will facilitate high DMS recoveries – as high, in fact, as 71% according to recent test work. The JORC-compliant mineral resource at Ngoualana totals 6.7 Mt at 1% Li2 O, sufficient to support a Stage 1 mine life of four to five years.
“There is every possibility that we could extend the life of Stage 1,” says Aylward. “Ngoualana still has scope to grow and we could also add ore from a couple of nearby prospects. In addition, some of the mineralisation at the Boumou deposit appears to consist of coarse spodumene crystals, which could be conducive to DMS processing. We will be doing some metallurgical test work on this mineralisation to see if this is indeed the case.”
An attractive proposition
Aylward says the metrics of the DMS project are extremely attractive. “Assuming an average life of mine concentrate price of US$2 080 per tonne, it generates an IRR of 274% and an NPV7 of US$420 million. We estimate the pre-tax free cash flow at US$712 million. The operating cost per tonne of concentrate produced is a competitive US$674, which provides a very healthy margin at current lithium prices.”
Kodal’s partnership with Hainan, announced in January 2023, has been critical to the implementation of the Stage 1 project. In terms of the agreement, Hainan, a subsidiary of Fosun International, has acquired a 14.7% interest in Kodal Minerals via a US$17.75 million investment and, separately, a 51% stake in the Bougouni asset by providing US$100 million in funding. This is sufficient to meet the capital cost of Stage 1 and also to fund further exploration to increase the project’s resource base.
Hainan has also committed to taking all the product from Stage 1. It will provide the feedstock for Hainan’s new lithium hydroxide plant in China, which has just been commissioned. As a result of the agreement, Hainan personnel have been integrated into the project team developing the mine. Hainan’s Yushen Cai (whose experience includes managing the giant Husab uranium mine in Namibia) is GM of the JV entity implementing the project and he is backed up by Kodal’s Steve Zaninovich (who has 30 years’ experience in project development and production in West Africa) as Deputy GM.
Work on site started in earnest at the beginning of this year and (as of the time of writing of this article) the civil and earthworks were at an advanced stage, while the major components of the processing plant were en route to site from China.
The supplier of the dual crushing circuit modules and ancillary equipment is Beijing HighDynamic Technology Co (BHD) while the DMS equipment has been manufactured by Haiwang Technology Group.
Haiwang is providing a performance guarantee for the DMS plant based on achieving 4 848 tonnes per day of ore feed over a continuous seven-day period. This translates to an annualised throughput rate of 1.2 Mtpa (after allowances for routine maintenance and downtime), which provides the project with major potential production upside.
Following a tender process to four companies with local regional experience and based on the designs from Haiwang, the civil construction/ concrete contract has been awarded under budget to a Malian company, Bambara Resources SARL. Bambara is a locally owned Malian company established in 2017 to provide services to the mining industry in Mali.
Although Bambara is the main contractor, it will utilise under subcontract the services of an established and experienced Malian-based company GZB Mali, which boasts 13 years of construction experience in Mali and has a Chinese parent. The project team believes this contracting arrangement will be crucial to correctly interpreting the designs and drawings during construction, since they have been developed in Chinese as part of the Haiwang package.
The mining contract has been awarded to a consortium of Auxin Mining Services SARL and EGTF. Auxin is a subsidiary of Beijing Auxin Chemical Technology Ltd, which is, in turn, controlled by China North Industries Corporation (NORINCO). Auxin has existing contract mining operations at projects in Namibia, Nigeria and Zimbabwe. For its part, EGTF is a fully owned Malian company which has worked with numerous mining companies in West Africa, including Randgold/Barrick (Morila and Loulo) and AngloGold Ashanti (Siguiri).
The consortium has already mobilised to site and has been busy in recent weeks with bush clearing, topsoil stripping and stockpiling, and bulk earthworks. It will start on prestripping of the Ngoualana orebody shortly. Once the mine is in operation, the product of Bougouni will be transported to international markets via the port of San Pedro in Côte d’Ivoire.
“The logistics are relatively straightforward. We’re connected to San Pedro – which is our preferred port although there are alternatives – by a nearly 900 km long asphalt-surfaced road, which is in generally good condition although there are stretches in Côte d’Ivoire that are potholed,” says Aylward.
“With the level of concentrate production we’re planning, we would expect to have 100 trucks on the road at any one time but there are plenty of experienced transport companies operating in the region who can handle an operation of this size.” He adds that Kodal Minerals has completed the construction of a dedicated access/haulage road over a distance of 8 km from the DMS plant to the main highway.
Stage 2 plans
Turning to the Stage 2 project, Aylward says no decision has yet been taken on its timing. “An investment decision will depend on many factors but, ideally, we would hope to have it in operation within several years of Stage 1 being commissioned. Probably the very earliest we could see production would be 2027.”
In its early years at least, the flotation plant will operate in parallel with the DMS plant. It will have a throughput capacity of 2 Mtpa and produce around 230 ktpa of concentrate. It will be located close to the Boumou and Sogola-Baoulé deposits, which will be the source of the ore. The plant has an estimated capex of US$175 million and will be funded using the cash flow from Stage 1.
Based on the current MRE, Stage 2 will have a life of at least 10 years. Kodal Minerals is, however, targeting an increase in the resource base from the current 31.9Mt to 50 Mt and a new exploration programme was launched earlier this year. Both Boumou and Sogola-Baoulé are seen as having significant upside potential while Kodal also believes the largely unexplored Kola and Bougouni South prospects offer potential for resource growth.
As a final comment on Bougouni, Aylward says that he expects the lithium market to be buoyant – although sometimes volatile – for many years to come.
“When we acquired the project in 2016, the price of spodumene concentrate was around US$600/tonne. The price subsequently spiked, going as high as US$6 800/tonne in 2021. It has come off considerably since then but the outlook nevertheless remains positive. We’re confident that we’re bringing the project to market at the right time and that it will be a huge success story, not just for Kodal Minerals and Hainan but also for Mali.”