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Update on Kola Financing Process and Activities in Republic of Congo
Kore Potash plc
(Incorporated in England and Wales)
Registration number 10933682
ASX share code: KP2
AIM share code: KP2
JSE share code:KP2
ISIN: GB00BYP2QJ94
(“Kore Potash” or the “Company”)
31 March 2023
Update on Kola Financing Process and Activities in Republic of Congo
Kore Potash plc (“Kore” or “the Company”), the potash development company with 97%-ownership of
the Kola and DX potash projects in the Sintoukola Basin, located within the Republic of Congo (“RoC”), is
pleased to announce an update on the Kola financing process and the Company’s recent activity in the
RoC.
Highlights
• Discussions continue towards finalising terms for the Engineering, Procurement and Construction
(“EPC”) contract at the Kola potash project.
• PowerChina International Group Limited (“PowerChina") and SEPCO Electric Power Construction
Corporation (“SEPCO”) have commenced work to support the provision of guarantees regarding
the EPC contract.
• Summit Consortium confirms the financing proposal for the full capital cost of Kola will be
provided within 6 weeks of finalisation of EPC terms.
• Increased communication with the RoC Ministry of Mines is improving support for Kore.
• A review of the strategic options available for the DX project is underway.
• British embassy staff visits Kola and Pointe Noire.
Construction Contract Negotiations
On 28 June 2022 Kore announced the signing of a Heads of Agreement (“HoA”) with SEPCO for the
construction of the Kola potash project (“Kola”).
Under the HoA, SEPCO undertook to continue negotiations with Kore towards an EPC contract for the
construction of Kola. Importantly, the HoA recognises the outcomes of the Kola Optimisation Study, which
was announced on 27 June 2022 and confirmed the capital cost of Kola, the construction period and
related EPC contract terms.
Discussions with SEPCO to finalise key EPC terms progressed through the end of 2022 despite some delays
resulting from actions instigated in China to control the Covid pandemic, as announced to Kore
shareholders on 10 October 2022.
Recognising the world-class scale of Kola, the length of the proposed construction period and the total
financing requirement, Kore has requested that SEPCO’s parent company, PowerChina, provides the
typically required EPC contract guarantees, including performance and retention bonds supporting the
completion of construction and the operating performance of Kola.
PowerChina is now actively involved in the process to finalise the EPC contract terms. As part of this
process, PowerChina is reviewing aspects of the Kola design and the planned construction schedule and
has had direct communications with the management of Kore. PowerChina’s review has generated a
number of potential design improvements to the project that identify opportunities to further reduce
the capital cost and the construction schedule. Discussions on incorporating these design improvements
into the EPC contract continue.
PowerChina has engaged a number of external experts to support its review of the Kola design and they
require completion of this review to support the provision of the required EPC contract guarantees.
PowerChina has not yet advised Kore of the timeline to complete its reviews and internal approvals.
The process to conclude EPC contract discussions has taken longer than the Summit consortium initially
envisaged, notwithstanding it is necessary to conclude these discussions prior to receiving their financing
proposal.
Kola Financing Process
On 6 April 2021 Kore announced the signing of a Memorandum of Understanding (“MoU”) with the
Summit consortium for the financing of Kola, which required completion of an optimisation study on Kola
and agreement on terms for an EPC contract. Kore continues to work with the Summit consortium to
provide financing for the full construction cost of Kola which is intended to be based on royalty and debt-
finance.
The successful outcomes of the Kola Optimisation Study were in line with the Summit consortium’s
requirements and supported the ongoing financing discussions. The financing parties of the Summit
consortium have, again, reinforced their ongoing strong interest in financing Kola and await finalisation
of the EPC contract terms.
Summit has advised that the financing proposal for the full construction cost of Kola will be provided to
the Company within 6 weeks of EPC terms being finalised.
Kore continues to hold the view that the members of the Summit consortium have the capability to
provide the required financing to commit to the construction of Kola and that pursuing this financing
opportunity currently remains the best path forward for Kore’s shareholders.
Congo Government Relations
Since receiving the communication from the RoC Minister of Mines announced on 19 October 2022 the
Company has significantly increased the frequency of dialogue with the Ministry of Mines. This has led to
a significant improvement in our relationship and a mutual understanding of the road ahead.
A common theme throughout the Company’s recent dialogue with the Ministry of Mines is that the
Ministry continues to express its strong support and the support of the RoC Government for Kore Potash
to develop the Kola project, while encouraging Kore to find ways to accelerate the smaller DX project.
Key members of Summit consortium, including SEPCO and PowerChina, have independently written to
the Ministry and met with them in-person to assist in establishing their credentials and experience. The
feedback to us from the Ministry is that these visits have been appreciated and are assisting the Ministry
to better understand the Kola project and the capability of the Summit consortium members.
DX Project
On 24 January 2023, the Company announced updated Mineral Resources, Ore Reserves and the
Production Target for the DX project. This updated information incorporated all results from the
completed diamond drilling campaign initially announced to Kore shareholders on 27 May 2021.
The updated information confirms that the DX project is a financially attractive, low capital cost project
with a shorter construction period than Kola.
At present, the Company remains focused on completing the financing of Kola and moving forward to
construction of Kola as soon as possible. This strategy is aligned with the expectations of the Government
of the RoC.
Recognising the RoC Government’s desire to accelerate the production of potash in the Congo, Kore has
agreed with the Government to now consider the strategic options available for the DX project that can
bring value forward for all stakeholders and allow more rapid development of the DX project to contribute
to the economy of the RoC. The Ministry of Mines is working cooperatively with the Company to fully
explore all strategic options. These options may include forming a joint venture for the development of
DX with a 3rd party or a sale of the DX project.
British embassy visit to Kola
On 16 March 2023, Kore Potash hosted a site visit to Kola by a delegation from the British embassy in
Kinshasa in the neighbouring Democratic Republic of Congo. The British delegation included the Deputy
Ambassador, Mr Sam Jeremy. Kore arranged for the delegation to visit an important local museum, and
to meet with the people in a village in the Kola area where the Company has helped rebuild a school. The
delegation was able to visit the project areas where the Kola shaft, processing and transport infrastructure
will be built. The visit also created opportunity to discuss Kore’s approach towards ensuring positive social
and environmental outcomes and helped develop understanding of the large positive economic impact
that the Kola project will have in the region.
The Company is very appreciative that the embassy staff committed time to visit the Kola site.
This announcement has been approved by the Board of Kore Potash plc.
ENDS
For further information, please visit www.korepotash.com or contact:
Kore Potash Tel: +27 84 603 6238
Brad Sampson – CEO
Tavistock Communications Tel: +44 (0) 20 7920 3150
Emily Moss
Adam Baynes
SP Angel Corporate Finance – Nomad and Joint Tel: +44 (0) 20 7470 0470
Broker
Ewan Leggat
Charlie Bouverat
Shore Capital – Joint Broker Tel: +44 (0) 20 7408 4050
Toby Gibbs
James Thomas
Questco Corporate Advisory - JSE Sponsor Tel: +27 (11) 011 9205
Doné Hattingh
Date: 31-03-2023 08:01:00
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