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Kodal Minerals Shares Surged 17% on Bouguoni MDS Plant Plans

Simon Mugo trader
Updated 29 Sep 2022

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Key points:

  • Kodal Minerals shares surged 17% after unveiling a new production plan.
  • The company wants to construct a DMS plant to fast-track production.
  • Investors cheered the news, which could generate over $1bn in revenue.

The Kodal Minerals PLC (LON: KOD) share price surged 16.98% after unveiling a plan for the rapid development of its Bouguoni lithium mine in Mali. The company plans to construct a lower-cost dense media separation (DMS) processing plant at Bouguoni to take advantage of the current high prices of lithium.

The lithium and gold mining and exploration company noted that installing a dense media separation (DMS) plant would cost $65 million compared to a complete flotation plant, estimated at $154 million. In addition, the DMS plant can be constructed and operationalised within 12 months, while the flotation plant would take 22 months to be ready.

Also read: The Best Lithium And Lithium Mining Stocks To Buy.

Investors cheered the announcement that would shorten the time Kodal Minerals will take to get its spodumene concentrate on the market to take advantage of the record-high lithium prices, which have tarded as high as over $5,000.

Kodal Minerals told investors that building the DMS plant would generate revenues of up to $1.05 billion in less than four years based on the current broker price of $2,080 per tonne free on board (FOB).

The company intends to construct a downstream floatation plant using the cash flow generated from the DMS plant to exploit further the lithium deposits discovered at Boumou and Sogola-Baoulé.

The DMS plant will allow the company to exploit the lithium resources at the Ngoualana deposit by feeding 1Mtpa of lithium ore to a DMS processing plant. The plant is expected to generate over 130,000 tonnes of spodumene concentrate with a projected lifespan of 4 years.

Bernard Aylward, Kodal Minerals’ CEO, commented: “The DMS plant scenario provides Kodal with a fast-track option towards achieving our goal of becoming the first operational lithium mine in Mali. At much-reduced capital and operating costs, and an expected construction timeline of around 12 months, the DMS development option provides Kodal with a near-term solution to take full advantage of the continuing buoyant lithium market.”

Kodal Minerals is currently negotiating with potential funders and offtake partners to secure funding for the DMS plant. Still, it is yet to sign a firm agreement regarding the same.

*This is not investment advice.

Kodal Minerals share price.

Kodal Minerals share price 29-09-2022
Source: Tradingview

The Kodal Minerals share price surged 16.98% to trade at 0.3100p, rising from Wednesday’s closing price of 0.2650p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading