London-listed Kodal Minerals has signed an offtake agreement for the spodumene concentrate produced by the Stage 1 dense media separation (DMS) processing plant at its Bougouni lithium project, in southern Mali.

The offtake agreement is between the local Mali-registered mining company Les Mines de Lithium de Bougouni (LMLB) – a subsidiary of Kodal Mining UK (KMUK) in which Kodal has a 49% shareholding – and Hainan Mining Co.

Hainan will be the exclusive buyer of 100% of the product produced by the DMS processing plant at the project.

The offtake agreement is for a period of four years with a yearly review of the quantities to be sold and floor price for the concentrate.

Kodal says the spodumene concentrate price is to be referenced to the Shanghai Metals Market (SMM) published price for 6% spodumene concentrate, which is a cost, insurance and freight (CIF) price for delivery in China.

The final price received by LMLB takes into consideration price adjustments based on grade and quality of material delivered and a calculated conversion of the free-on-board (FOB) price to CIF price at the loading port in West Africa.

Kodal says no discount is applied to the SMM published price for the calculation reflecting the arms’ length negotiation of the parties in finalising the agreement.

The company explains that the offtake agreement pricing will be subject to a floor price. The floor price for the initial period of export is suspended and the parties are negotiating an agreed floor price to take effect from January 1, 2026.

It notes that the parties are to agree a yearly quantity and schedule with an expected minimum of 8 000 wet metric tonnes to be shipped each month.

LMLB will receive an initial payment upon loading of a shipping vessel with spodumene concentrate at the export port in West Africa – initially Abidjan port, in Côte d’Ivoire – equivalent to 95% of the value of the shipment, with the remaining 5% to be paid following delivery and confirmation at the destination port in Hainan, China.

Kodal says the offtake agreement is a “take or pay” agreement where LMLB must supply the spodumene exclusively to Hainan, and Hainan must buy and take delivery of, or pay for, an agreed yearly quantity.

A procedure for sampling, assay and weighing of the spodumene concentrate will be completed at the mine site upon departure from Bougouni, at the loading port prior to loading and final confirmation at the destination port in Hainan.

The procedures will finalise a Certificate of Analysis and Certificate of Weight that will be used for the calculation of payment.

Kodal says the product quality required has been specified for lithium oxide (Li₂0) content, levels of iron impurity and moisture content and these items will be measured in the sampling procedures.

Additionally, the company notes that the offtake agreement provides for dispute resolution should variations in the assay grade and weight arise.

Meanwhile, the DMS processing plant continues to operate well at Bougouni and technical improvements continue to be made as the plant nears nameplate capacity.

The DMS processing plant has produced over 40 000 t of spodumene concentrate to date and material is loaded into bags ready for export.

Kodal says the LMLB team continue to work with the Mali government to finalise requirements for an export licence to facilitate the first sale of spodumene concentrate.

The first phase of the Bougouni project has a 1.4-million-tonne-a-year beneficiation production line, which is expected to produce 100 000 t/y to 120 000 t/y of lithium concentrate with a yield of more than 5.5% Li₂O.

“This is another important milestone for the development of Bougouni and confirms the conditions and pricing mechanism for the sale of all the spodumene concentrate produced by the DMS processing plant for the initial four-year term of the offtake agreement,” says Kodal CEO Bernard Aylward.

Aylward notes that the offtake agreement sets the price received by LMLB to the SMM published market price with standard adjustments for grade variation.

In addition, he explains that the payment term of LMLB receiving 95% of the value of the shipment upon loading at the export port provides confidence in the cash flow of the operation in the initial period of export and its move to commercial production at nameplate capacity.

“The offtake agreement confirms the strong interest of our development partner Hainan in the successful development of Bougouni and we look forward to our first export of product and first shipment to depart from the Abidjan port,” says Aylward.