Wrap Text
Review of operations for the quarter ended 30 June 2018
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”)
KORE POTASH – REVIEW OF OPERATIONS
FOR THE QUARTER ENDED 30 JUNE 2018
London, England – 31 July 2018 – Kore Potash, the potash exploration and development company whose
flagship asset is the 97%-owned Sintoukola Potash Project (“Kola” or the “Project”), located within the Republic
of Congo (“RoC”), is pleased to provide the following quarterly update, for the period to 30 June 2018 (the
“Quarter”).
HIGHLIGHTS
- Kola Definitive Feasibility Study (“DFS”) is at an advanced stage. Work continues to complete the overall
estimate of the construction schedule, capital and operating costs and the DFS Report.
- The Company is engaging with the consortium of French engineering companies (“the French Consortium”
or “FC”) and using third-party consultants to further optimise the capital and operating costs outcomes of the
DFS.
- The FC now anticipate completion of the current scope of work for the DFS before the end of September 2018
following which the Company will review the completed DFS.
- Amendments to the Kola environmental and social impact assessment (the “ESIA”) have been made reflecting
project design changes since the ESIA was approved. The amendments have been submitted to the Director
General of the office of the Minister of Environment and Tourism on 7 July 2018 for their review.
- The Mining Convention for the Kola project, which has been approved by Cabinet, is now being reviewed by
the RoC Parliament for approval, as required prior to becoming law.
- Appointment of Mr Brad Sampson as Chief Executive Officer and Executive Director, effective from 4 June
2018.
- Appointment of Mr Jose Antonio Merino as a Non-Executive Director on 23 May 2108. Jose Antonio is
nominated by Sociedad Quimica y Minera de Chile S.A. (“SQM”) and replaced Pablo Altimiras, whose
resignation was announced on 26 April 2018.
- At the end of the Quarter the Company held US$14.2 million in cash at bank.
Brad Sampson, Chief Executive Officer of Kore Potash, commented:
“The potential for Kola and the wider Sintoukola basin to be a globally important producer of potash is clear. As
the DFS is concluded it is important to achieve the optimal project design and engineering and position Kola to
realise its potential.”
“We are working closely with the French Consortium, the government of the Republic of Congo and our advisers
to finalise the delivery of the DFS to generate long-term value for shareholders.”
“The project is at an exciting stage and I look forward to progressing Kola through the financing and construction
phases."
CORPORATE ACTIVITIES
Appointment of CEO
- Brad Sampson was appointed as CEO and Executive Director on 4 June 2018. Brad, a mining engineer, has
more than 25 years’ resources industry experience across numerous locations including West and Southern
Africa. In addition to significant mine development and operating experience, Brad has held leadership
positions at several publicly listed companies. Brad was most recently CEO of Australian Securities Exchange
listed Tiger Resources. Prior to this Brad held senior positions at Newcrest Mining Ltd, was CEO at AIM/ASX
listed Discovery Metals Ltd, and other notable positions include General Manager at Goldfields operations in
South Africa and Australia.
- Appointment of Jose Antonio Merino as a Non-Executive Director nominated by SQM. Jose Antonio joined
SQM in 2016 and is currently M&A Director, prior to which he worked at EPG partners as head of a mining
private equity fund, at Asset Chile, a Chilean boutique investment bank and at Santander Investment. He is a
qualified civil engineer having graduated from Pontificia Universidad Catolica de Chile.
- On 27 June 2018, the Company’s AGM was held with all resolutions passed.
OPERATIONAL ACTIVITIES
The Kola Definitive Feasibility Study
- The Company’s activities are focused on the development of the Sintoukola Potash project and the Company
is currently working to complete a DFS on this project. The DFS is being undertaken with a consortium of
French engineering companies comprised of Technip France, Vinci Construction Grands Projets, Egis
International and Louis Dreyfus Armateurs SAS.
- The DFS is at an advanced stage with test work and engineering design complete and work to conclude capital
and operating cost estimates continuing. The FC now anticipate completion of the current scope of work for
the DFS before the end of September 2018 and to then present it to the Company for review.
- In parallel with the completion of the DFS the Company has commissioned third-party review of some aspects
of the DFS with a view to optimising the DFS outcomes and subsequent Engineering, Procurement and
Construction (EPC) pricing.
- The Company is also engaging with the FC to optimise the capital costs of the project prior to finalisation of
capital and operating cost estimates.
Process Design
- The DFS metallurgical test work campaign has been completed at the Saskatchewan Research Council
laboratory in Canada. The process design, process flow diagrams (PFD) and piping and instrumentation
drawings (P&ID), and heat and material balance have been completed. The process design has been
independently audited by Hatch in Canada.
Engineering
- Engineering for the mine, process plant, marine and off-site (HV line and gas pipeline) is complete and is
supported by plot plans and general arrangement drawings that form the basis for final material take-offs. The
DFS procurement process for major equipment is also complete.
Mine Design
- The DFS geological and hydrogeological testing and modelling of the mine is complete. The DFS mine design
including shaft access is complete.
Marine Engineering
- The marine infrastructure design including jetty and breakwater is complete. The specification and cost
estimate for the trans-shipment and loading equipment is complete.
- The Sea Water Intake and Sea Water Outfall designs and the marine construction methodology has been
finalised.
Earthworks and Civil Design.
- The overall Plot Plans have been completed for the Process Plant, Mine Site, Marine and Accommodation
areas and reflect a compact layout aiming to minimise bulk civil and earthworks quantities. Stormwater runoff
design has been completed.
Road Design
- The design of all planned roads is complete.
Constructability review
- The Construction Execution Plan, which integrates a constructability review and construction schedule, is being
finalised.
Environmental and social impact assessment (“ESIA”)
- The Kola ESIA received a Certificate of Conformity from the Government of the Republic of the Congo on 10
October 2013.
- The DFS design has incorporated a number of value adding design changes to Kola since the approval of the
ESIA and the Company undertook to amend the ESIA accordingly.
- The work to amend the Kola ESIA is complete. The amended ESIA was submitted to the Director General of
the office of the Minister of Environment and Tourism on 7 July 2018 and is currently awaiting the Minister’s
approval.
- In addition to the ESIA, the Company is completing an analysis to identify and close any gaps between the
ESIA approved by the Government of the RoC and established international industry practice and the Equator
Principles. This process will generate an environmental and social action plan (ESAP) that the Company
believes will meet debt financiers’ requirements.
- Public consultations with Interested and Affected Parties on the amendments to the ESIA took place between
7 -15 July 2018.
Work streams initiated with RoC stakeholders and authorities
- The Company is progressing discussions toward a Memorandum of Understanding for power supply with an
existing independent power producer (IPP), Centrale Electrique du Congo.
- Discussions with ENI Congo are continuing for the supply of gas (for drying and/ or for self-generating power).
- The Company is awaiting final approval from the Minister of Merchant Marine for the use of the preferred trans-
shipment zone.
- A Resettlement Action Plan (“RAP”) for the project land and a second framework RAP for the services corridor
(for gas and power conveyance) have been prepared.
- A new Declaration d’Utilité Publique (“DUP”) process covering the entire project land area (mine, over land
conveyor, process plant and services corridor) is expected to be launched shortly by the Ministry of Land Affairs
and Public Domain. The DUP will define any compensation arrangements required as a result of Kore’s activity
on the land area.
RoC regulatory requirements
- The Mining Convention (approved by the cabinet on 8 June 2017) is currently being reviewed by commissions
of the two chambers of the RoC Parliament. Parliamentary ratification of the mining convention required for the
Mining Convention to become law.
- The Company has submitted a proposed Mining Research Convention to the Government in relation to the
Sintoukola 2 exploration licence that was granted to the Company on 9 February 2018. The approval of a
Mining Research Convention is a required step prior to commencement of exploration activity (including
drilling).
- The intra-group transfer of the Dougou Mining License from Sintoukola Potash S.A., to the operating entity
incorporated in the RoC, Dougou Potash Mining S.A, is expected to be approved by the Ministry of Mines and
Geology shortly and implemented through Governmental Decree.
Exploration activity
- No field-work exploration activities were undertaken during the quarter, and no exploration results were
received or are expected in the near term.
Cash Balances
- At 30 June 2018, the company had USD 14.2m cash at bank.
31 July 2018
JSE Sponsor: Rencap Securities (Pty) Limited
For further information, please visit www.korepotash.com or contact:
Kore Potash Tel: +27 11 469 9140
Brad Sampson – 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 (Pty) Limited – JSE Sponsor Tel: +27 (11) 750 1448
Yvette Labuschagne
Johannesburg Office: +27 11 469 9140
www.korepotash.com
- ENDS –
About Kore Potash’s Projects
Kore Potash (ASX: KP2) is an advanced stage mineral exploration and development company whose primary asset
is 97%-owned interest in the Sintoukola project, a potash project located in the Republic of Congo. The Sintoukola
project comprises the Kola (Sylvinite deposit) and Dougou (Carnallitite deposit including the Dougou extension
prospect) mining licences.
These projects are located approximately 80 km to the north of the city of Pointe Noire which has a major port
facility, and within 30 km of 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[1]. A
Definitive Feasibility Study (“DFS”) which is underway, being conducted by a consortium of world class engineering
and construction companies consisting of Technip France, Vinci Construction Grands Projets, Egis International
and Louis Dreyfus Armateurs SAS (the “French Consortium” or the “FC”). The DFS contract was signed on 28
February 2017 and the study will be presented to Kore for review in September 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[2]. A Scoping Study was completed by
ERCOSPLAN of Germany in February 2015[3]. 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[4]. Drilling of 4 additional holes in 2017 intersected sylvinite of between 27 and 63% KCl
over a range of thicknesses[5].
Footnotes
1. Announcement dated 6 July 2017: Updated Mineral Resource for the High-Grade Kola Deposit
2. Announcement dated 9 February 2015: Elemental Minerals Announces Large Mineral Resource
Expansion and Upgrade for the Dougou Potash Deposit.
3. Announcement dated 17 February 2015: Results for the Dougou Potash Project Scoping Study
4. Announcement dated 20 October 2014: Elemental Minerals Announces Exceptional Results from Dougou-
Yangala Drilling
5. Announcement dated 11 September 2017: Dougou Extension Prospect Sylvinite intersections up to 8.8 m
thick within a zone of 8 by 5 km, open laterally
1 Announcement dated 6 July 2017: Updated Mineral Resource for the High-Grade Kola Deposit
2 Announcement dated 9 February 2015: Elemental Minerals Announces Large Mineral Resource Expansion and Upgrade for the Dougou
Potash Deposit.
3 Announcement dated 17 February 2015: Results for the Dougou Potash Project Scoping Study
4 Announcement dated 20 October 2014: Elemental Minerals Announces Exceptional Results from Dougou-Yangala Drilling
5 Announcement dated 11 September 2017: Dougou Extension Prospect Sylvinite intersections up to 8.8 m thick within a zone of 8 by 5
km,pen laterally
Kore Potash's Mineral Resources
KOLA SYLVINITE DEPOSIT
Mineral Resource Contained KCl
Million Tonnes Grade KCl %
Category million tonnes
Measured 216 34.9 75
Indicated 292 35.7 104
Sub-Total
Measured + Indicated 508 35.4 180
Inferred 340 34.0 116
TOTAL 848 34.8 295
*The Mineral Resource Estimate for Carnallitite at Kola are not shown, refer to the Company's website
DOUGOU CARNALLITE DEPOSIT
Mineral Resource Contained KCl
Million Tonnes Grade KCl %
Category million tonnes
Measured 148 20.1 30
Indicated 920 20.7 190
Sub-Total
Measured + Indicated 1,068 20.6 220
Inferred 1,988 20.8 414
TOTAL 3,056 20.7 634
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: 31/07/2018 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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