In conversation with Bernard Aylward: leading the lithium charge

Bernard Aylward, chief executive officer of Kodal Minerals, believes demand for lithium will increase exponentially over the next few years, writes Leon Louw. 

Kodal Minerals is one of only a few lithium-focused exploration companies listed on the Alternative Investment Market (AIM) in London. Please tell us more about your concessions in Africa.

The Bougouni Lithium Project consists of two concessions, the Kolassokoro and Madina licence areas, which cover a contiguous area of 500km² and is located about 180km south of Bamako, the capital of Mali. We have easy access via sealed road from Bamako.Bernard WEB

Regional geological studies were undertaken in 2008 to assess the lithium mineralisation of the Bougouni–Sikasso region of southern Mali, which identified areas of high potential. The studies were completed by consultants CSA Global and were commissioned and funded by the World Bank as part of the SYSMIN economic development programme.

Kodal commenced a detailed geological study and rock chip sampling programme in September 2016. The results from this work have highlighted the high-grade lithium mineralisation at Bougouni and identified new zones of pegmatite mineralisation.

Since then Kodal has been undertaking several drilling programmes in the area. What are the latest results?
Kodal completed a reverse circulation (RC) drilling programme at the Bougouni project in June 2017. The final assay results for the Ngoualana prospect, within the Bougouni project site, have now been received. The results confirm an eastern extension of the deposit and that the prospect remains open along strike and at depth. We plan to continue with the drilling programme at the end of the wet season.

Th drill core from the five diamond drill holes at Ngoualana is being processed, with core from the first holes submitted to the laboratory for analysis and the remaining holes being cut on site. In addition to the analysis for lithium oxide (Li2O), samples are being selected for additional metallurgical testing.


Things are turning in West Africa.


 

Kodal is maintaining its busy exploration programme, with work at the Bougouni project currently involving preparation for a ground geophysical survey designed to test if the structures hosting the mineralised pegmatite veins can be detected and delineated to assist in future drill targeting.

In addition, the company is continuing with the metallurgical testing of the original samples sent to China, to extend processing through to the production of a battery grade lithium carbonate to confirm the specifications of the product.

Are there any specific reasons why Kodal listed on the London Stock Exchange?
Up until now, the market has been very responsive to positive announcements and positive news. Only four lithium-focused companies — all in the initial stages of development — are listed on the AIM. The market capitalisation of this select group is about GBP200-million, compared with the GBP700-million market cap for lithium companies listed on the Australian Stock Exchange (ASX) and the GBP700-million listed on the Toronto Stock Exchange (TSX). In a market where lithium-focused companies are thin spread, it is extremely positive if a company like Kodal is able to present a project consisting of coarse-grained rock and mineralisation outcropping on surface.

AIM is a good market for companies exploring in Africa. I think that there is certainly a lot more knowledge of, and confidence in, projects in Africa, and especially in West Africa, compared to some of the other markets.

Which major lithium producers would you consider as competition?
There are quite a few exploration and pre-development companies in the world today, which we obviously regard as competition. However, the big mines currently in production include Galaxy Minerals in Australia and Greenbushes in Australia. Greenbushes is the largest hard rock lithium producer in the world today. There are also massive lithium and brine producers in Argentina and Chile. Although there is a lot of lithium production, the increased demand for high-grade lithium-bearing spodumene justifies the development of additional ore bodies. Once in production, we can provide a spodumene concentrate with a grade up to or possibly greater than 6% lithium.

Kodal also has gold projects in its portfolio; how will shareholders benefit from such a diverse range of minerals?
There is a shortage of lithium in world markets. China is looking for many additional sources, and this is a fantastic opportunity for Kodal. Bougouni is a good project and we could unlock that potential at a low entry price and expose shareholders to that uplifting value. At the same time, Kodal is maintaining its gold projects. The value for shareholders is in the fact that they are exposed to two key world commodities. The increase in demand for lithium worldwide has been exponential.

Will the lithium produced in Mali be exported to China?
China is the main end user. However, Kodal will sell the product to any interested party. The primary aim is to demonstrate that the company can be a good supplier — whether that means selling to China or the Elon Musk Tesla factory. The fact is there are more than enough end-users looking for certainty of supply. 

Listed lithium-focused companies

Listed in London (AIM)

  • Bacanora Minerals
  • European Metals
  • Rare Earth Minerals
  • Kodal Minerals [emphasise in a different colour please]

Listed in Australia (ASX)

  • Altura Mining
  • Birimian
  • Lithium Australia
  • Neometals
  • Pilbara Minerals

Listed in Canada (TSX) 

  • Advantage Lithium
  • American Lithium
  • Dajin Resources
  • Frontier Lithium
  • International Lithium
  • Lithium Americas
  • Lithium X Energy
  • Millenial Lithium
  • Nemaska
  • Neo Lithium Corporation
  • Rock Tech Lithium
  • Southern Lithium Corporation
  • Standard Lithium
  • Stria Lithium Incorporated
  • Ultra Lithium Incorporated

How does Kodal’s lithium deposit in Mali compare with other global deposits?
One of the major mining operations in Australia — Pilbara Minerals — produces a lower spodumene concentrate than we are expecting to produce in Mali. We have good access to road, rail, and port infrastructure. There is plenty of water and easy access, so we have a lot of positives for rapid development of our project. A number of other companies are talking about massive projects that require large capital. Many of these developments are a long way from port, and they are still in the early exploration phases, so we certainly have several advantages over them. It is a common rule of thumb to say grade is king and we have high grade, so it’s all good.

Tell us more about the infrastructure. Where is the project located, and how far will you rail the product?
We plan to use a combination of rail and road. Bougouni is about 180km south of Bamako via a good-quality bitumen road. From Bamako, the main access will be to enter Côte d’Ivoire and link with a railway, and from there on, rail to the port at Abidjan. Although a large hydroelectric project is in close proximity, we anticipate being self-sufficient in terms of electricity to counteract the possible unreliability of power supply. The project is centrally located. In terms of infrastructure, we have several advantages. The infrastructure is already in place and there is no additional cost. Kodal’s primary cost will be to develop a small concentrating plant.

What will the processing entail?
The material is crushed, then screened, after which it is separated by DMS or spirals.

What makes this discovery significant?
The mineralisation is outcropping, which enables us to geologically map and sample it prior to drilling. Rock chip sampling has allowed us to prioritise key areas for drilling. In the first batch of drill results, the best results were 21m at 1.7% Li2O. As we released more results, it became even better. At 28m, which is really shallow, the results returned 1.8% Li2O. At the Ngoualana prospect, we initially drilled eight holes and each one of those eight holes returned good high-grade mineralisation, good width, good continuity, and indicates potential to expand and potentially define a resource. The same applies to all our other targets in the area as well.

What is your main aim in Mali?
The aim is to build what I refer to as a mining hub in the Bougouni area. Kodal will extract lithium from multiple sources of high-grade pegmatite, which will be concentrated from a central plant and shipped out — multiple sources referring to different veins and different pits.

Are you planning to mine from a number of different pits?
In our reconnaissance work we tested three areas. The results from Ngoualana were better than expected. One of the prospect’s results were as expected and one slightly lower, but the grade was higher.

Our mapping and rock chips have identified five more targets where we returned more than 2% Li2O. This is of course extremely high grade and we are able to demonstrate good width and continuity of additional pegmatite bodies, which we will drill test in our next phase of drilling. So, to answer your question, yes, we will be looking to mine from several pits.

In addition to Bougouni, Kodal has another lithium project in Mali. Is Diendio as prospective as Bougouni?
Yes, that’s right. Bougouni consists of the Kolassokoro and Madina concessions and the Diendio Project, which covers a 109km² area, consisting of the Diendio Sud, Diossyan Sud, and Manakoro Nord concessions.

There are indications of strong lithium mineralisation at Diendio. The two projects are basically next to each other, so we have been able to use the same team for both projects. In total, Kodal has more than 600km² of very prospective lithium-bearing ground in Mali under its control.

Are there any other companies with lithium projects in Mali?
Yes, Birimian (ASX-listed) is about 50km to the west of us. Birimian also has a project that was identified by the World Bank Study and they acquired that about 12 months before us. (We acquired the assets in September 2016.) Birimian moved very rapidly into a scoping stage. In January this year, the company announced a potential transaction with a Chinese company, selling its project for AUD107-million. Unfortunately for Birimian, that transaction fell through. What it has done, however, is to prove that there is a definite base level or a floor to the valuations of these projects. It also showed that there is certainly a demand for the product. We know that the Chinese group that made the offer had been to site. They inspected the property, inspected the work and knew a lot about our project. We know that there is a lot of interest in acquiring the Mali product. It is unfortunate for Birimian that the deal fell over. However, they are still moving ahead with developing the project on their own.

How difficult is it to raise finance in the current economic climate?
Kodal acquired capital relatively easily following the acquisition of the lithium exploration projects and we have had great support in the market. At our fundraising in January last year, we raised GBP1-million. Since then our share price has overperformed.


It is a common rule of thumb to say grade is king and we have high grade, so it’s all good.


 

We have also undertaken a placement with Singapore-based company Suay Chin Pte Limited, who have completed placements of GBP4.5-million to date, with a smaller amount of approximately GBP300 000 to complete within the next six months. This has ensured that Kodal is particularly well funded for our exploration programmes and we can continue the rapid assessment of the lithium projects.

What piqued your interest in Mali? Why not look at other lithium-rich African countries like Mozambique?
Kodal has been involved in several projects in Mali and Côte d’Ivoire before, so we had a team of administration and geological staff in West Africa for more than 10 years. These were gold projects. We are familiar and comfortable with the area and have established many important contacts. The company has acquired a good suite of gold exploration projects in Mali.

Is it easy doing business in Mali?
Mali, Côte d’Ivoire, and Burkina Faso are all francophone countries. They all have a similar mining code. These countries are certainly all pro-mining. Mali has more than 20 years of gold mining experience.

In West Africa, you know there is a path from exploration, discovery, development, and production that is clear, and as long as you are doing the right thing and doing the right work, you will be able to develop the project in the timeframe that you set yourself. This is exactly what investors want.

Do you do the drilling yourself or do you have contractors?
We use a local West African contractor called Geodrill. The company is based in Ghana. The owner, Dave Harper, was one of our first shareholders. Geodrill doesn’t have a base in Mali yet. The company has a fleet of 47 drill rigs and I think all of them are busy at the moment. Many projects are in exploration phase. Things are turning in West Africa.


Click below to read the September/October 2017 issue of African Mining

AM SeptOct2017

 

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