Kodal Minerals proposes West African acquisition and placing

Hitherto Norway-focused explorer Kodal Minerals has proposed the all-share acquisition of a group of gold exploration properties in Mali and Côte d'Ivoire and a fundraising of up to £680,000 to finance medium-term plans.

The west African properties are currently owned by Aussie-listed Taruga Gold, whose managing director, experienced geologist Bernard Aylward, would become the new chief executive of AIM-listed Kodal if the deal is agreed by shareholders at a vote on 13 May.

Kodal said it would pay Taruga £0.41mm through the issue of 1.03m new shares to the ASX-listed company in return for 100% of its Mali and Côte d'Ivoire properties.

Taruga owns eight exploration licences including four licences in Mali and Cote d’Ivoire and an additional two licences under application in Cote d’Ivoire, and has partnerships over some of these with bigger players Newcrest Mining and Resolute Mining.

The fundraising, via a £0.3m placing and £0.375m subscription offer with "certain investors" carried out by broker SP Angel, will represent 45% of the potential enlarged share capital of the company.

Of the proceeds, £380,000 will be used for licence and other admin payments and exploration at the West African properties; £25,000 for planning and geophysics at Norway's Kodal project; plus £275,000 for 12 months' worth of general working capital and corporate overheads.

Analyst John Meyer at the house broker said the acquisition, the injection of additional technical management, and joint ventures with major mining companies "changes the direction of Kodal Minerals towards gold exploration at a time when there is increasing optimism of a resurgence in gold".

"We look forward to news on the results of the recent drilling with Resolute Mining in Cote d’Ivoire and a continuing flow of results from across the portfolio as exploration proceeds."

Shares in Kodal, which topped 2p after their December 2013 flotation but sank to a low of 0.04p in February this year, rose to 0.73p in early trading before sinking to 0.0534p by noon, a fall of 33% for the day.