Canaccord Genuity raises target price on Kodal Minerals

Analysts at Canaccord Genuity raised their target price on exploration and development firm Kodal Minerals from 1.50p to 1.65p on Monday following the group's new agreement with joint venture partner Hainan Mining to complete the financing package for its Bougouni lithium project.

The package was previously conditional upon the mining licence being transferred by the Malian Government to the new JV entity. However, Canaccord pointed out that although there had been administrative delays since the package was announced, this condition has now been waived in anticipation of the licence transfer occurring during construction.

"In return, Kodal has agreed warranty/indemnities up to $100.0m in the case that the licence is not transferred. We consider this outcome unlikely," said Canaccord.

The Canadian bank said Kodal's roughly $118.0m financing package fully funds the initial 130 kilotonnes per annum development and also provides additional capital to advance exploration and other projects in its portfolio.

"Early works have already commenced and the company anticipates a ~12-month process to production of first spodumene concentrate. This suggests that Kodal is likely to be the first London-listed lithium stock with cash flow in CY24," said Canaccord, which reiterated its 'speculative buy' rating on the stock.

"We forecast ~60% FCF yields in the first full year of operation (FY26/mostly CY25 given March year-end)."

Reporting by Iain Gilbert at Sharecast.com