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Appendix 5B
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”)
Review of Operations for the Quarter Ended 31 March 2018
Kore Potash, the potash exploration and development company whose flagship asset is the
Company’s 97%-owned Sintoukola Potash Project (“Kola” or the “Project”), located within the
Republic of Congo, is pleased to provide the following quarterly update, for the period to 31 March
2018 (the “Quarter”).
Highlights
- Kore Potash completed its listing on the AIM market of the London Stock Exchange (“AIM”) as
well as the main board of the Johannesburg Stock Exchange (“JSE”), in addition to its Australian
Securities Exchange (“ASX”) listing.
- US$13.14M raised through the placing and direct subscription of new ordinary shares in the
Company, and a convertible loan note, at a 67% premium to the Company’s last closing share
price on the ASX.
- Kola Definitive Feasibility Study (“DFS”) is progressing and focus has moved from design
engineering to estimating final construction costs and execution schedule. The construction
estimation phase will be key to finalisation of the overall estimate of the capex, opex and
construction schedule. The first series of quantities for some areas of the Project have now
been received for review. The final test results for the optimised float circuit have been
received and they have shown positive results that support the inclusion of the optimisations
in the DFS. The Company expects to publish the final results of the DFS in late Q2 or early Q3
2018.
- Kore Potash through its 97% subsidiary Sintoukola Potash S.A. was awarded the Sintoukola 2
Exploration Permit, dated 9th February 2018, by the government of the RoC [1]. This permit
covers areas the Company believes are prospective for sylvinite mineralization.
Corporate Activities
London and JSE listing successfully completed along with a well supported Fundraising
- On 29 March 2018 the Company successfully completed its admission to AIM and a concurrent
secondary listing of its ordinary shares on the main board of the JSE Limited as part of its
strategy to better access capital markets where there is a strong understanding of large scale
African mining projects and therefore attract a broader investor base.
- The Company also raised gross aggregate proceeds of US$13.14m, comprising a total of
US$12.89m raised from existing and new investors (the “Placees”) through the placing and
direct subscription of 83,523,344 ordinary shares in the Company at a placing price of AUD0.20
per new Ordinary Share, which was at a 67% premium to the Company’s last closing share price
on the ASX prior to the raise. In addition, the Company raised US$250,000 from the Chairman,
Mr David Hathorn, through a convertible loan note that will convert into ordinary shares upon
and subject to shareholder approval at the next general meeting of the Company. The Placees
have been granted 12,894,659 equity warrants on the basis of one equity warrant for every
US$1.00 invested exercisable at AUD0.30 for one ordinary share with a 3 year subscription
period.
Operational Activities
Project management
• The French Consortium (“FC”) undertaking the DFS has now reached peak mobilisation and, as
the engineering design moves towards completion, bills of quantities are being prepared for
the capital estimate. The work is supervised and guided by Kore Potash’s project team and has
the support from senior engineers at Sociedad Quimica y Minera (“SQM”) as well as
independent specialist reviewers to assist in the process. Q1 2018 has been successfully
utilized to start the process of optimizing, CAPEX and OPEX estimates, execution schedule and
final optimised designs. The DFS schedule was slightly revised, due to some additional redesign
work related to further optimisation of the flotation area of the process plant, with the DFS
completion date being moved to end of Q2/early Q3 2018. Third-party testing of the optimised
designs have been completed with results supporting an improved recovery from the PFS. Kore
Potash and the FC are looking at ways to minimise the impact on the EPC submission date
which is currently due to be submitted three months after the finalisation of the DFS. The cost
implications of this delay have been finalised and a change order agreed.
Process test work
- After agreeing on several process modifications in early Q1 2018, the 2018 DFS metallurgical
test work programme was completed at the Saskatchewan Research Council laboratory in
Canada, incorporating the modifications. The results of the final process test work are positive
and verify that the design modifications have yielded a robust potash flotation process. Test
work results have now been incorporated into the process modelling, and the FC is now
updating final DFS process flow diagrams, which are expected in Q2 2018.
Engineering development
- The procurement process is nearing completion, with most packages now finalized for the DFS.
The issuance of the final material take offs has now began. Final Piping and Instrumentation
Diagrams are in progress, and are expected in Q2 2018. Plot plans and 3D models are finalized
for the DFS, and shows the final layout of the process plant area model. Operating cost
estimation has now begun, with a high level of input from Kore Potash. Final report writing is
underway, with draft documents expected in Q2 2018.
Mine development
- The shaft design has been finalized. The Kola deposit will be accessed by 2 x 7m diameter shafts
with depths of approximately 260m. The intake shaft includes a man & material cage, while
the exhaust shaft will be equipped with a pocket belt ore hoisting system.
- The hydrogeological testing and modelling are complete.
- Detailed engineering design of underground facilities, including pump stations, workshops, the
underground equipment fleet and conveyors is complete.
- Engagement with potential Mining Contractors is progressing.
- Capital and Operating costs for the mine are being finalized.
- A preliminary mineral reserve estimate and mine extraction sequence are under internal
review.
Marine development
- A detailed model of the coastal erosion and sedimentation build-up was completed and this
led to a change in the final jetty length. Driven by expensive aggregates, an alternative design
comprising a ‘Combi-wall’ with sand-filled sheet-piled cells, versus the conventional rubble
mound gravity wall, has been adopted for the breakwater with both CAPEX and schedule
savings. The marine designs are complete, as are the specification of the transshipment and
loading equipment (FAZEL and FCTU vessels), which are currently being costed.
- The Sea Water Intake (SWI), Sea Water Outfall (SWO) and the construction methodology has
been finalized.
Brine outflow optimisation
- The field work component of the ecotoxicological test work required to incorporate marine
brine disposal into the Environmental and Social Impact Assessment (“ESIA”) has been
completed. Test work has commenced at the University of Cape Town with results expected
by the end of Q2 2018, for inclusion in the relevant Environmental Management Plans (EMP’s).
Earthworks and Civil design development
- The final overall site Plot Plans have been completed for the Process Plant, Mine Site and
Accommodation areas and reflect a compact layout to optimize bulk civil and earthworks
quantities. Stormwater runoff design has been finalized with controlled discharge into the
green zone (sea) effected at the Process Plant using existing or engineered channels.
- The structural steel and foundation design is complete with the optimization of light steel
frames for buildings.
Accommodation Camps
• The bids for the construction and operation of the construction accommodation camps have
been received and are under adjudication. Considerable effort is being implemented to
optimize the camps strategy based on estimates of manpower mobilization from preliminary
CAPEX estimates and will be a key focus over the next couple of months.
Road infrastructure
- The geometrical and pavement design of all roads is complete. The stormwater and drainage
ditches have been optimized by reducing batters thus allowing for green erosion control.
Optimisation of drainage and layer work design is ongoing.
Constructability review
- The second constructability review was completed in December 2017. This exercise identified
several areas for further optimisation and the Kore Potash project and FC teams are addressing
these areas together.
- The Construction Execution Plan, which integrates the constructability review and the
schedule, has been completed and final review comments are being addressed.
Environmental and social impact assessment (“ESIA”)
- The baseline studies for the Kola ESIA amendment were completed during the quarter. The
National ESIA amendment will be submitted to the local regulators by Q2 2018.
- Feedback consultations are planned for Q2 2018, which will form part of the International ESIA,
to be completed in Q3 2018.
- A delegation from the Ministry of Environment was hosted at the project site for the Dougou
ESIA, which is expected to be approved by end of Q2 2018.
Work streams initiated with RoC stakeholders and authorities
- Initial terms sheets have been submitted to and exchanged with both power and gas (for drying
and for self-generating power) supply companies and finalisation of these have been shifted
to Q2 2018 while the DFS final loads and consumptions are being completed.
- The Company has received preliminary authorisation for the use of the revised proposed
transhipment zone and is expecting the definitive authorization from the Minister shortly. All
construction and operation permits required for the implementation of the project are being
managed through a joint committee of the Marine Merchant’s representatives.
- Kore Potash is in the process of finalizing the Resettlement Action Plan (“RAP”) in support of
the Declaration d’Utilité Publique (“DUP”) process on the project land take area and received
the Ministry of Land affairs and Public Domain’s approval to apply for a new DUP covering the
whole project land take (mine, OLC, process plant and services corridor) in order to implement
the compensation on expropriation at the construction start up only.
- The Company has started preliminary discussions with the Customs with regard to setting up
a dedicated dry port for the Kola project clearing process at plant site (Tchiboula).
RoC regulatory requirements
- As previously announced, the Dougou Mining License was granted to Sintoukola Potash S.A.
through Presidential Decree n°2017-139 on 9 May 2017 and was published in the Official
Gazette on 18 May 2017. On 24 October 2017, the Company submitted the Minister of Mines
and Geology’s prior approval request of the Dougou Mining License transfer to the operator,
the newly incorporated Dougou Potash Mining S.A. in the RoC. This transfer is expected to be
approved and implemented through Decree by Q2 2018.
- The mining convention was signed by the RoC Government on 8 June 2017 and became
enforceable at that date but is still in the process of being ratified into law by the RoC
Parliament.
Exploration activity
No exploration activities were undertaken during the quarter, and no exploration results have been
received or are expected.
A new exploration permit ‘Sintoukola 2’ was granted by decree 2018-34 dated 9 February 2018 and is
expected to be gazetted shortly. This permit covers an area of 294 km2 adjoining the Dougou Mining
Lease. The Company is of the view that it is prospective for sylvinite mineralisation, possibly hosted by
extensions to the Dougou Extension Sylvinite Prospect. The Company is in the process of finalising the
mining research convention terms and conditions.
ENDS
30 April 2018
JSE Sponsor: Rencap Securities (Pty) Limited
For further information, please visit www.korepotash.com or contact:
Kore Potash Tel: +27 11 469 9140
Sean Bennett – CEO
Tavistock Communications Tel: +44 (0) 20 7920 3150
Jos Simson
Edward Lee
Canaccord Genuity – Nomad and Broker Tel: +44 (0) 20 7523 4600
Martin Davison
James Asensio
Rencap Securities – JSE Sponsor Tel: +27 (11) 750 1448
Yvette Labuschagne
Fivemark Partners Tel: +61 422 602 720
Michael Vaughan
Footnotes
1. Announcement dated 20th February 2018: Kore Potash awarded new 294 km2 exploration
permit which has significant potential to add to the Dougou Extension Project
2. Announcement dated 6 July 2017 (on ASX): Updated Mineral Resource for the High-Grade Kola
Deposit
3. Announcement dated 9 February 2015 (on ASX): Elemental Minerals Announces Large Mineral
Resource Expansion and Upgrade for the Dougou Potash Deposit.
4. Announcement dated 17 February 2015 (on ASX): Results for the Dougou Potash Project
Scoping Study
5. Announcement dated 20 October 2014 (on ASX): Elemental Minerals Announces Exceptional
Results from Dougou-Yangala Drilling
6. Announcement dated 11 September 2017 (on ASX): Dougou Extension Prospect Sylvinite
intersections up to 8.8 m thick within a zone of 8 by 5 km, open laterally
About Kore Potash’s Projects
Kore Potash (ASX: KP2) is an advanced stage mineral exploration and development company whose
primary asset is 97%-owned Sintoukola Potash S.A. (“SPSA”) in the RoC. SPSA has 100% ownership of
the Kola Mining Lease within which the Company’s lead project, the Kola Sylvinite deposit is located.
SPSA also has 100% ownership of the Dougou Mining Lease within which the Dougou Carnallitite
Deposit and the Dougou Extension Prospect are situated.
These projects are easily accessed, being located approximately 80 km to the north of the city of Pointe
Noire and 15 to 30 km from the Atlantic coast. The Projects have the potential to be among the world’s
lowest-cost potash producers and their location near the coast offers a transport cost advantage to
global fertilizer markets.
The Kola Deposit has a Measured and Indicated Sylvinite Mineral Resource of 508 Mt grading 35.4 %
KCl[2]. A Definitive Feasibility Study (“DFS”) which is underway, being conducted by a consortium of
world class engineering and construction companies consisting of Technip FMC, Vinci Construction
Grands Projects, Egis International and Louis Dreyfus Armateurs (the “French Consortium” or the “FC”).
The DFS contract was signed on 28 February 2017 and the study is scheduled to be completed towards
the end of Q2 2018, or early Q3 2018.
The Dougou Deposit is 15 km southwest of Kola and is a very large Carnallitite deposit with a Measured
and Indicated Potash Mineral Resource of 1.1 billion tonnes grading 20.6% KCl (at a depth of between
400 and 600 metres) hosted by 35-40 metres of Carnallitite within 4 flat-lying seams[3]. A Scoping Study
was completed by ERCOSPLAN of Germany in February 2015. This Study indicated that a low capital
cost, low operating cost (Life of Mine operating cost of US$68 per tonne MoP), and quick to production
carnallite solution mine could be established at Dougou, taking advantage of the deposit quality and
availability of low cost energy in the RoC.
The Dougou Extension Prospect (previously referred to as Yangala) lies immediately west of Dougou.
In 2012 and 2014 the Company drilled 2 holes, both intersecting a flat-lying layer of 4 to 4.5 metres
thickness with a grade of between 57 and 60% KCl[5]. Drilling of 4 additional holes in 2017 intersected
sylvinite of between 27 and 63% KCl over a range of thicknesses[6].
Kore Potash’s Mineral Resources
Resource Category Million Tonnes Grade KCl %
Measured 216 34.9
Indicated 292 35.7
Kola Sylvinite Measured + Indicated 508 35.4
Deposit
Inferred 340 34.0
TOTAL 848 34.8
Measured 341 17.4
Indicated 442 18.7
Kola Carnallitite Measured + Indicated 783 18.1
Deposit
Inferred 1,266 18.7
TOTAL 2,049 18.5
Measured 148 20.1
Indicated 920 20.7
Dougou Measured + Indicated 1,068 20.6
Carnallitite
Deposit
Inferred 1,988 20.8
TOTAL 3,056 20.7
Measured 705 23.3
Indicated 1,653 22.8
TOTAL MINERAL Measured + Indicated 2,358 23.0
RESOURCES
Inferred 3,594 21.3
TOTAL 5,953
22.0
Notes: The Mineral Resource estimates are reported in accordance with the JORC code 2012 edition. The Kola Mineral Resources were
reported on the 6 July 2017, and was prepared by Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group. Resources are
reported at a cut-off grade of 10% KCl. The Dougou Mineral Resource was prepared by ERCOSPLAN Ingenieurgesellschaft Geotechnik und
Bergbau mbH (“ERCOSPLAN“) and reported in the ASX announcement dated 9 February 2015. The form and context of the Competent
Person’s findings as presented in this document have not materially changed since the resource was first reported. Mineral Resources which
are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by
environmental, permitting, legal, marketing, or other relevant issues. The Mineral resources are considered to have reasonable expectation
for eventual economic extraction using underground mining methods.
Forward-Looking Statements
This news release contains statements that are "forward-looking". Generally, the words "expect,"
“potential”, "intend," "estimate," "will" and similar expressions identify forward-looking statements.
By their very nature and whilst there is a reasonable basis for making such statements regarding the
proposed placement described herein; forward-looking statements are subject to known and unknown
risks and uncertainties that may cause our actual results, performance or achievements, to differ
materially from those expressed or implied in any of our forward-looking statements, which are not
guarantees of future performance. Statements in this news release regarding the Company's business
or proposed business, which are not historical facts, are "forward looking" statements that involve risks
and uncertainties, such as resource estimates and statements that describe the Company's future
plans, objectives or goals, including words to the effect that the Company or management expects a
stated condition or result to occur. Since forward-looking statements address future events and
conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each
case could differ materially from those currently anticipated in such statements.
Investors are cautioned not to place undue reliance on forward-looking statements, which speak only
as of the date they are made.
Competent Person Statement
The information relating to Exploration Targets, Exploration Results, Mineral Resources or Ore
Reserves, and the results of economic studies, is extracted from previous reports, as referred to in
footnotes herein, and available to view on the Company’s website. The Company confirms that it is not
aware of any new information or data that materially affects the information included in the original
market announcements and, in the case of estimates of Mineral Resources or Ore Reserves, that all
material assumptions and technical parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The Company confirms that the
form and context in which the Competent Person’s findings are presented have not been materially
modified from the original market announcement.
Date: 30/04/2018 10:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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