Wrap Text
Review of Operations for the quarter ended 30 September 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”)
REVIEW OF OPERATIONS
FOR THE QUARTER ENDED 30 SEPTEMBER 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”),
provides the following quarterly update, for the period to 30 September 2018 (the “Quarter”).
Highlights
- Kola Definitive Feasibility Study (“DFS”) is at an advanced stage. On 29 October 2018, the Company
received 15 volumes of the DFS documentation from the consortium of French engineering
companies (“the French Consortium” or “FC”). Although the remaining volume is being finalised,
the Company now has sufficient information to commence its formal review.
- The Company declared a maiden sylvinite Mineral Resource Estimate for the Dougou Extension
Sylvinite Deposit on 20 August 2018.
- A Licence for the company to use an Offshore Area for the transhipment of potash and the
discharge of waste brine has been authorised by the Minister of Transport, Civil Aviation and
Merchant Marine of the RoC and was issued to the company on 6 September 2018.
- Amendments to the Kola environmental and social impact assessment (the “ESIA”) have been
made reflecting project design changes since the ESIA was approved. Work on a restructured ESIA
continues and when completed it will be reviewed by the regulator before submission to the
Minister of Environment for approval.
- The Company awaits feedback from the Ministry of Mines and Geology on whether further action
is required by the Company to finalise the Mining Convention for the Kola project. The Convention
has been approved by Cabinet and reviewed by the RoC Parliament.
- At the end of the Quarter the Company held USD 11.7 million cash at bank.
Brad Sampson, Chief Executive Officer of Kore Potash, commented:
“Completion of the DFS is a critical step towards unlocking the potential of the Sintoukola Project
area. The Company looks forward to finalising the review of the DFS and sharing the outcomes with
Shareholders.
“The Kola deposit is a globally significant Potash deposit and we expect the DFS to forecast operating
costs that demonstrate the potential for production at Kola to be disruptive in the Potash market
and generate significant cash flows for multiple generations.
Corporate activities
- Appointment of St James’s Corporate Services Limited (“SJCS”), a specialist company secretarial
and corporate administration services provider, as interim joint company secretary with effect
from 1 October 2018. SJCS joins current Joint Company Secretary, Henko Vos (based in Perth,
Western Australia). The Board has received and accepted the resignation of Francesca Wilson as
Joint Company Secretary of the Company with effect from 30 September 2018.
Operational activities
The Kola Definitive Feasibility Study
- The Company’s activities are focused on the development of the 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.
- On 29 October the FC completed transmission to the Company of 15 of the 16 DFS volumes. The
Company anticipates receipt of the final volume shortly.
- The Company now has sufficient information to commence its internal review of the DFS and the
results of the review will be shared with the Board and then shareholders.
Power and Gas
- A non-binding Memorandum of Understanding (MoU) for the potential supply of power was signed
between Kola Potash Mining S.A. and Centrale Electrique du Congo (CEC). The MoU, signed during
the quarter, confirms the power price for the Project’s economic assessment.
- A non-binding term sheet for potential gas supply was signed in the quarter between ENI, New
Age, SNPC (a joint venture which owns the offshore gas concession Marine XII) and Kola Potash
Mining S.A. The gas will be used for the drying operations and the term sheet confirms the gas
price for the Project’s economic assessment.
Environmental and social impact assessment (“ESIA”)
- The Kola ESIA was performed during 2012 and approved on 10 October 2013 following the issuance
of the certificate of environmental compliance by the Minister of Environment of the RoC. This
constituted a key regulatory requirement to be granted the Kola Mining License.
- The Kola DFS design has incorporated a number of value-adding design changes since the approval
of the ESIA and the Company had undertaken to amend the ESIA accordingly.
- The amended ESIA was submitted to the Director General of the office of the Minister of
Environment and public consultations were held with Interested and Affected Parties on the
amendments.
- Additional environmental and socio-economic data collection for the gas pipeline corridor was
carried out during the quarter and some restructuring of the ESIA is required following a request
from the regulator. A social impact assessment of the villages adjacent to the gas pipeline and
powerlines has been conducted to improve the baseline data on these villages for the ESIA report.
- When completed the restructured ESIA will be resubmitted to the regulator for their review, prior
to the Minister of Environment’s final approval.
- Marine field work and laboratory analysis to confirm brine disposal assessments were conducted
and ecotoxicological analysis on the waste brine was concluded. These studies support the
disposal of brine into the ocean.
- An impact assessment for plantation areas potentially affected by the Project’s gas pipeline,
powerline and roads was compiled and submitted to the regulator for approval.
- A Resettlement Action Plan (“RAP”) for the Project area and a second framework RAP for the
services corridor (for gas and power conveyance) have been prepared.
- The ESIA for the Dougou Mining License was approved by the Minister of Environment of the RoC
on 13 July 2018. The ESIA approval is granted for a 12 month period and is renewable annually
until construction of the Project commences.
Workstreams initiated with RoC stakeholders and authorities
- On 16 October 2018, the Company received a letter of comfort from the Ministry of Energy and
Hydraulic of the RoC confirming the Company’s exclusive rights to operating the power
transmission line when financed and built by the Company for the mining project.
- On 12 September 2018, the Company announced final approval from the Minister of Transport,
Civil Aviation and Merchant Marine for the use of the preferred trans-shipment zone. This confirms
the design assumption on the transhipment arrangement in accordance with the DFS design and
costing.
- On 13 August 2018, a new Declaration d’Utilité Publique (“DUP”) covering the entire Project land
area (mine, over land conveyor, process plant and services corridors) was signed by the Ministry
of Land Affairs and Public Domain. The DUP, which has not yet been gazetted, will define any
compensation arrangements required due to Kore’s activity on the land area.
RoC regulatory requirements
- The Mining Convention (approved by the cabinet on 8 June 2017) has been reviewed by
commissions of the two chambers of the RoC Parliament and the Company awaits feedback on
whether any further actions are required before the Mining Convention is approved by the
President.
- Government approval has been requested for the intra-group transfer of the Dougou Mining
License from Sintoukola Potash S.A. to the operating entity Dougou Potash Mining S.A.
Exploration activity
- No field-work exploration activities were undertaken during the period.
- Based on results from drilling in 2017 and earlier, and an interpretation of historic seismic data,
the Company declared a maiden sylvinite Mineral Resource Estimate for the Dougou Extension
Sylvinite Deposit on 20 August 2018. The combined Inferred and Indicated sylvinite Mineral
Resource Estimate is 232 Mt grading 38.1% KCl (Table 1), reported according to JORC 2012. Added
to the Kola Sylvinite Deposit, this new deposit brings the Company’s total sylvinite Mineral
Resources to over 1 billion tonnes.
Cash Balances
- At 30 September 2018, the company had USD 11.7 million cash at bank.
30 October 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
Renaissance Capital – 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 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 and carnallite Deposits, the Dougou Extension sylvinite
Deposit and the Dougou carnallite Deposit (Table 1). These deposits are within the Kola and Dougou
Mining Licenses. The Sintoukola project also includes the Sintoukola 2 Exploration License.
Sintoukola is 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. Sintoukola has the potential to be among the
world’s lowest-cost potash producers and its location near the coast offers a transport cost advantage
to global fertilizer markets.
The Kola sylvinite Deposit has a Measured and Indicated sylvinite Mineral Resource Estimate of 508
million tonnes grading 35.4 % KCl. A Definitive Feasibility Study (“DFS”) is being conducted by a
consortium of French engineering and construction companies. The deposit is ‘open’ laterally; drill-
holes completed in 2017 intersected high-grade sylvinite several km southeast of the Deposit. It is
shallow relative to most potash mines; the proposed shaft bottom will be 270 m below surface.
The Dougou Extension sylvinite Deposit contains a total sylvinite Mineral Resource Estimate of 232 Mt
grading 38.1% KCl, hosted by two seams. The Mineral Resource includes 67 Mt grading 60.1 % KCl.
Dougou Extension is located 15 km southwest of Kola. A large zone that is considered prospective for
sylvinite extends a further 25 km northwards, within the Dougou Mining License and the ‘Sintoukola
2’ Exploration License.
The Kola and Dougou Extension sylvinite Deposits are considered high grade relative to most potash
deposits globally and have the advantage of having very low content of insoluble material, less than
0.3% which provides a further processing advantage.
The Dougou carnallite Deposit has 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. A Scoping Study was completed in February 2015. This Study
indicated that a Life of Mine operating cost of US$68 per tonne MoP was achievable.
- Muriate of Potash (MoP) is the saleable form of potassium chloride (KCl), comprising of a
minimum 95% KCl.
- Sylvinite is a rock type comprised predominantly of the potash mineral sylvite (KCl) and halite
(NaCl).
- Carnallitite is a rock type comprised predominantly of the potash mineral carnallite
(KMgCl3·6H2O) and halite (NaCl).
Table 1: Kore’s Potash Mineral Resources, provided as Gross and Net Attributable (to Kore’s 97%
holding), prepared and reported according to the JORC Code, 2012 edition.
SYLVINITE DEPOSITS
KOLA SYLVINITE DEPOSIT
Gross Net Attributable
Million Grade KCl Contained KCl Million Grade Contained KCl
Mineral Resource Category
Tonnes % million tonnes Tonnes KCl % million tonnes
Measured 216 34.9 75 209 34.9 73
Indicated 292 35.7 104 283 35.7 101
Sub-Total Measured + Indicated 508 35.4 180 492 35.4 174
Inferred 340 34.0 116 330 34.0 112
TOTAL 848 34.8 295 822 34.8 286
DOUGOU EXTENSION SYLVINITE DEPOSIT
Gross Net Attributable
Million Grade KCl Contained KCl Million Grade Contained KCl
Mineral Resource Category
Tonnes % million tonnes Tonnes KCl % million tonnes
Measured - - - - - -
Indicated 111 37.2 41 108 37.2 40
Sub-Total Measured + Indicated 111 37.2 41 108 37.2 40
Inferred 121 38.9 47 117 38.9 46
TOTAL 232 38.1 88 225 38.1 85
TOTAL SYLVINITE, KOLA & DOUGOU EXTENSION DEPOSITS
COMBINED
Measured + Indicated + Inferred 1,080 35.5 384 1,048 35.5 372
CARNALLITE DEPOSITS
DOUGOU CARNALLITE DEPOSIT
Gross Net Attributable
Million Grade KCl Contained KCl Million Grade Contained KCl
Mineral Resource Category
Tonnes % million tonnes Tonnes KCl % million tonnes
Measured 148 20.1 30 144 20.1 29
Indicated 920 20.7 190 892 20.7 185
Sub-Total Measured + Indicated 1,068 20.6 220 1,036 20.6 214
Inferred 1,988 20.8 414 1,928 20.8 401
TOTAL 3,056 20.7 634 2,964 20.7 615
KOLA CARNALLITE DEPOSIT
Gross Net Attributable
Million Grade KCl Contained KCl Million Grade Contained KCl
Mineral Resource Category
Tonnes % million tonnes Tonnes KCl % million tonnes
Measured 341 17.4 59 331 17.4 58
Indicated 441 18.7 83 428 18.7 80
Sub-Total Measured + Indicated 783 18.1 142 760 18.1 138
Inferred 1,266 18.7 236 1,228 18.7 229
TOTAL 2,049 18.5 378 1,988 18.5 367
Note: Table entries are rounded to the appropriate significant figure.
Forward-Looking Statements
This report 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 report 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 in this report is based on, or extracted from previous reports referred to herein, and available
to view on the Company’s website www.korepotash.com The Kola Mineral Resource Estimate was
reported 6 July 2017 in an announcement titled ‘Updated Mineral Resource for the High Grade Kola
Deposit’. It was prepared by Competent Person Mr. Garth Kirkham, P.Geo., of Met-Chem division of
DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional
Engineers and Geoscientists of British Columbia. The Dougou carnallite Mineral Resource Estimate was
reported 9 February 2015 in an announcement titled ‘Elemental Minerals Announces Large Mineral
Resource Expansion and Upgrade for the Dougou Potash Deposit’. It was prepared by Competent
Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of
ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the
European Federation of Geologists. The Dougou Extension sylvinite Mineral Resource Estimate was
reported 20 August 2018 in an announcement titled ‘Maiden Sylvinite Mineral Resource at Dougou
Extension’. It was prepared by Competent Person Mr. Andrew Pedley a full-time employee of Kore
Potash, a registered professional natural scientist with the South African Council for Natural Scientific
Professions and member of the Geological Society of South Africa. 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.
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