Hainan will also complete an equity subscription into Kodal. Credit: Steve Morfi from Shutterstock.com.

Gold and lithium miner Kodal Minerals has agreed on a $117.5m conditional financing package with UK-based Xinmao Investment for the development of the Bougouni Lithium Project in Mali.

The financing will also be used by Kodal to support a major exploration and development programme at the site to define further lithium mineralisation.

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Xinmao is a wholly owned subsidiary of China’s Hainan Mining, which is owned by China-based Fosun International.

Under the funding agreement, Hainan will commit $100m to acquire a 51% stake in Kodal’s newly incorporated UK subsidiary, Kodal Mining UK (KMUK).

KMUK will become the shareholder of a new Mali mining company, which will be formed by Kodal to own and develop the Bougouni Lithium Project.

Hainan will also complete a $17.75m equity subscription into Kodal Minerals to become the largest shareholder in the latter at approximately 14.8%.

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Kodal Minerals CEO Bernard Aylward said: “The level of funding will allow us to fully fund the dense media separation plant with mining planned to commence at the high-grade Ngoualana deposit, as well as to support major drilling and exploration campaigns to discover and define additional lithium mineralisation to seek to increase the life of the mining operation at Bougouni.

“Kodal will be looking to complete an off-take agreement for the amount of product that it is free to sell outside of existing arrangements and will also review the potential to become involved in downstream processing to enhance the value of the product if viable.”

The funding transaction is subject to the approval of certain authorities and regulators in China.

Hainan Mining chairman Liu Mingdong said: “This investment in Kodal and Kodal Mining UK is in line with Hainan Mining’s strategy of improving the level of resource and feedstock security, and commencing the building of our lithium hydroxide supply chain.”