Kodal Minerals (LON: KOD) seems to have everything going for it at Bougouni. There's lithium there, they've signed up with a lithium processor, once they get the paperwork sorted out they'll have the financing to build the mine and concentration plant. So, why isn't everything hunky dory and zippededoohdah? The specific reason given is as follows from Kodal: “Kodal has made significant progress with the re-structure of the subsidiary companies in the UK and Mali. However, certain condition precedents, as outlined in the Company's announcement on 31 May 2023, remain to be completed in Mali. Kodal remains in regular contact with the local Government to satisfy these outstanding condition precedents.” Now that's something we recognise.
As we've said before about Kodal Minerals: “The processor gains a derisked source of material for their plant. The mine gains finance and a takeoff contact - a derisked buyer for production. Given that market structure it is actually a significant signal that a project is not serious if it cannot gain finance from one of the processors. So, the Kodal Minerals contract with Hainan actually operates in these second and third ways. Firstly, it provides the capital for development and so on - that's good, no cash call on shareholders. Secondly, it works as a validation of all of the claims and statements so far. If Hainan's willing to send that much money to Kodal then what Kodal says is probably true….. “ By the standards of the lithium market Kodal seems to have done everything just fine and should be worth much more than it is.
Kodal Minerals share price from London Stock ExchangeHowever, as we said about Atlantic Lithium: “Blue Orca's claim is that the mining licences in Ghana were obtained by the illegal deployment of cash and brown envelope payments. They are therefore unlikely to stand and Atlantic, and therefore Piedmont, are out of luck. Of course, the idea of bribery in West Africa brings to mind Captain Renault, we're all shocked, shocked. “
This is not just us being arch, We have worked in minerals and mining in different parts of the world. There just are some places where, umm, fees, commissions, are a necessary part of getting things done. Like, say, paperwork to transfer ownership of a mining licence from one subsidiary to another. It's also true that under modern law it can be illegal to pay bribes in odd parts of the world. In fact, we'll quite happily admit to having paid bribes back when it was legal to do so - the authorities used to take the view that that's jut how foreigners are sometimes, when in Rome etc. Modern day mores don't work quite that way.
Now, we don't know this, we have no inside information at all. But we strongly suspect that Kodal's problem is that someone in the jurisdiction is looking for a handout to complete that paperwork. How to deal with this - given the illegality these days of a straight bribe - is the problem. Be interesting to see if they solve it too - but we do think that's what's depressing the Kodal Minerals share price.
