Kodal Minerals, a UK-listed firm, has been facing a challenging situation with its joint venture partner, China’s Hainan Mining Company, leading to a drop in its shares. The dispute revolves around a $15m tax bill in Mali, with the Chinese arguing that Kodal should be responsible for the payment due to their investment in the Bougouni spodumene project.
Despite Kodal’s market capitalization of about £64m, its shares have been on a downward trend, trading at 32 pence per share on the London Stock Exchange. The company expressed its disappointment in not being consulted by Hainan before the tax dispute announcement, highlighting discrepancies in the understanding between the parties and the Mali government.
The timing of this dispute is unfortunate for Kodal, as it recently secured a mining license in Mali, agreeing to adhere to the country’s 2023 Mining Code, which involves state involvement in the Bougouni project. This new mining code aims to boost the mining sector’s contribution to Mali’s GDP and increase production revenues.
Furthermore, Kodal had to reschedule the first production from Bougouni to the first quarter of 2025 due to various challenges such as heavy rainfall, shipping, and transport delays. The company had initially forecasted a production of 125,000 tons a year, with the potential to increase to 230,000 tons a year based on market demand once the flotation plant is constructed.
Overall, the tax dispute and production delays have put pressure on Kodal Minerals, impacting its share performance and raising concerns about the future of the Bougouni project. The company will need to navigate these challenges effectively to ensure the project’s success and maintain investor confidence in the long run.
