Wrap Text
Review of Operations for the Quarter ended 30 September 2023
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")
12 October 2023
Review of Operations for the quarter ended 30 September 2023
Kore Potash (AIM: KP2, ASX: KP2, JSE:KP2), the potash development company with 97%-ownership of
the Kola Potash Project ("Kola" or the "Kola Project") and Dougou Extension Potash Project ("DX") in
the Sintoukola Basin, located in the Republic of Congo ("RoC"), provides its quarterly update for the
period ended 30 September 2023 (the "Quarter").
Quarterly Highlights
Projects
• Revised agreement signed with SEPCO Electric Power Construction Corporation ("SEPCO") to
provide the Company with an Engineering, Procurement and Construction ("EPC") contract
for the construction of Kola.
• Letter of support received from the Minister of State and Minister for Geology and Mining
Industry of the RoC (the "Ministry" or "Minister of Mines") in relation to the Company's
development of the Kola Project.
• PowerChina International Group Limited ("PowerChina") commenced work in the RoC to
support the provision of guarantees regarding an EPC contract for Kola.
Corporate
• On 24 July 2023, Wouter Pulinx was appointed as a non-executive director nominated by
Sociedad Química y Minera de Chile S.A ("SQM").
• Successful completion of US$1.0 million fundraise.
• The Company released its Half Year Report for the six months ended 30 June 2023 on 12
September 2023.
• The Company held a General Meeting ("GM") on 21 September 2023.
• As of 30 September 2023, the Company held US$1.1 million in cash.
Operational Activities
Kola EPC
Kore Potash signed a Memorandum of Understanding with the Summit Consortium in April 2021 for
the Optimisation of Kola, the provision of an EPC contract proposal and to provide a debt and royalty
financing proposal for the full construction cost of Kola.
The results of the Optimisation Study ("Study") announced on 27 June 2022 supported moving to the
next phase of Kola's development.
On 28 June 2022, the Company announced that it had signed a Heads of Agreement ("HoA") for the
construction of Kola with SEPCO.
Under the HoA, SEPCO undertook to continue negotiations with Kore Potash towards an EPC contract
for the construction of Kola. Importantly, the HoA recognises the outcomes of the Study, and
confirmed the capital cost of Kola, the construction period and related EPC contract terms.
Recognising the world-class scale of Kola, the length of the proposed construction period and the total
financing requirement, Kore Potash 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.
On 8 August 2023 Kore Potash entered into a revised agreement ("Agreement") with SEPCO to provide
the Company with an EPC contract for the construction of the Kola Project. Following completion of
SEPCO's Parent Company, PowerChina's, review of the Kola design and construction schedule one of
the agreed outcomes was that further engineering design works must be completed prior to
PowerChina and SEPCO jointly presenting an EPC proposal and EPC contract to the Company.
PowerChina has subcontracted five technical groups who have commenced additional design and
engineering works. Specific design areas include the underground mine, mineral processing jetty and
transhipment operations, energy transportation and storage, conveyor systems and material handling
(the "Works"). PowerChina has advised the Company that the Works will cost in excess of US$10
million to complete. Illustrating PowerChina's commitment to Kola, it has capped Kore Potash's
contribution at a maximum of US$5 million of these costs with the balance of the costs to be paid by
PowerChina.
An initial payment of US$1.0 million was made in August as required under the agreement and the
remainder, which is contingent upon the Company completing further fund raises and SEPCO's
delivery of the EPC contract, is planned to be paid in three tranches between 25 October 2023 and 12
months from the date that the Company signs the EPC contract.
PowerChina, SEPCO and the subcontractors are well progressed with the Works, having commenced
immediately following the direction from PowerChina that further work was required, and in advance
of reaching this Agreement with the Company on costs.
SEPCO has had personnel living in the RoC for the past 6 months who continue dialogue with potential
service providers, and who have conducted site visits to Kola collecting information to further enable
the Works. SEPCO has mobilised a larger team to Kola, for a period of up to eight weeks, and which is
collecting additional information on the planned service corridors, planned conveyor route, and
geomechanical information on foundation materials in the proposed processing plant and
infrastructure areas.
SEPCO has committed to a work schedule that provides for:
- Completion of all of the engineering design works before the end of December 2023.
- EPC contract offer to be made to the Company during January 2024.
- Kore Potash and SEPCO scheduled to sign the EPC contract before the end of January 2024.
PowerChina and SEPCO have confirmed that on completion of the Works they will have all of the
information required to issue an EPC contract to the Company. Importantly, PowerChina and SEPCO
have indicated that certain of the Works to be completed now would have formed part of the front
end design and engineering (FEED) works which would have been completed at the inception of the
Project, which will assist with reducing certain timelines during the construction phase.
Kola Financing
Kore Potash continues to work with the 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 Study were in line with the Consortium's requirements and supported
the ongoing financing discussions. The financing parties of the Consortium have again reinforced their
ongoing strong interest in financing Kola and await finalisation of the EPC contract terms.
The Consortium has advised that the financing proposal for the full construction cost of Kola will be
provided to the Company within six weeks of EPC terms being finalised.
Kore Potash continues to hold the view that the members of the 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 Potash's shareholders.
Congo Government Relations
The Minister of Mines wrote a letter to Kore Potash that pledges the Ministry and the Republic of
Congo's support for Kore's development of its projects at Kola and Dougou ("Projects").
The Minister acknowledged that some of the development objectives for the Projects, as outlined in
the Mining Convention, have not yet been met. He also assures the Ministry's steadfast support, in
the form of a moral guarantee, to assist in addressing remaining challenges to completing the
financing of Kola. The Minister reaffirmed the validity of the Company's mining tenement titles and
the Mining Convention which is the operating agreement between the Company and the Government.
He further conveyed a pledge of security reflecting the RoC's confidence in Kore Potash to support
ongoing dialogue and action towards the development of our projects in the RoC.
The Minister of Mines of the RoC showed further support for the Company's development of the Kola
Project during a visit to the Kola Project in September.
Kore Potash held a ceremony at the intended location of the Kola processing plant in recognition of
the extensive development work completed by Kore Potash to date. The ceremony also recognised
the commencement of work on the ground at the Kola site by SEPCO which is currently conducting
detailed surveys and foundation testing programmes in the plant site area.
The ceremony was held near the village of Yanga in the Kouilou province of the RoC. The Minster,
members of his Ministry and local dignitaries were in attendance along with the Chairman of Kore
Potash David Hathorn, Mr Warren Thompson from the Summit Consortium and SEPCO Vice President
Zhang Quan.
DX Potash Project
At present, the Company remains focused on completing the financing of Kola and moving forward to
the construction of Kola as soon as possible.
The Company is continuing to explore what strategic options are available for the DX project.
Corporate
On 24 July 2023, Wouter Pulinx was appointed as a non-executive director nominated by SQM.
The successful completion of a share subscription, which has raised US$ 0.8 million through the issue
of 124,384,000 new Ordinary Shares of US$0.001 each in the Company to certain eligible existing
shareholders at a price of 0.5 pence per Ordinary Share and the issue of convertible loans by the
Company with an aggregate value of US$ 0.2 million ("Convertible Loans") (collectively the
"Fundraise"), was completed on the 8 August 2023.
The Company released its Half Year Report for the six months ended 30 June 2023 on 12 September
2023.
At the Company's GM, held on 21 September 2023, all resolutions were duly passed on a poll by the
requisite majority.
The GM was held, inter alia, to approve the issue of 31,096,000 new Ordinary Shares of US$0.001 each
in the Company at 0.5 pence per Ordinary Share in line with the Fundraise.
David Hathorn, the Chairman of Kore Potash, participated in the Fundraise via two separate trusts, for
a total of 31,096,000 new Ordinary Shares for a total value of US$0.2 million. These shares were issued
under ASX listing rule 10.11.1, having received the relevant shareholder approvals at the GM which
extinguished the Convertible Loans.
As at 30 September 2023, the Company held US$1.1 million in cash.
There were no mining production or construction activities during the Quarter.
Quarterly cashflow report
In accordance with the ASX Listing Rules, the Company will also lodge its cashflow report for the
Quarter today. Included in those cashflows are non-executive directors' fees and the CEO's salary of
US$271,000 settled in cash.
The Company invested US$2,021,000 in exploration in the Quarter, which comprised US$1,983,000
related to the Kola Study and US$38,000 for the DX DFS Study. The Company ended the Quarter with
US$1.1 million in cash.
This announcement has been approved for release by the Board of Kore Potash.
Market Abuse Regulation
This announcement contains inside information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under
Article 17 of MAR.
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
Nick Elwes
Adam Baynes
SP Angel Corporate Finance – Nomad and Broker Tel: +44 (0) 20 7470 0470
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
Tenement Details and Ownership
The Company is incorporated and registered in England and Wales and wholly owns Kore Potash
Limited of Australia. Kore Potash Limited has a 97% shareholding in Sintoukola Potash SA ("SPSA") in
the RoC. SPSA has 100% ownership of Kola Potash Mining SA ("KPM"). KPM has 100% ownership of
the Kola Mining Lease on which the Kola Deposit is situated. The Kola Deposit is located within the
Kola Mining Lease. SPSA is also the 100% owner of the Dougou Mining Lease. The Dougou Mining lease
hosts the Dougou Deposit and the DX Deposit.
Under the existing Mining Convention, the RoC Government is entitled to 10% ownership in the Kola
and DX Projects. The transfer of this 10% awaits instructions from the Government and the Mineral
Resources and Ore Reserves are shown below in gross and 90% attributable bases.
Table 1: Schedule of mining tenements (Republic of Congo)
Project & Type Tenement Issued Company Interest Title Registered to
Kola Decree 2013-412 100% Kola Potash Mining S.A.
Mining of 9 August 2013 potassium rights only
Dougou Decree 2017-139 100% Sintoukola Potash S.A.
Mining of 9 May 2017 potassium rights only
Revised Decree No
2021-389 of 2
August 2021
Kore Potash Mineral Resources and Ore Reserves - Gross and according to future 90% interest (10%
by the RoC government)
KOLA SYLVINITE DEPOSIT
Gross Net Attributable (90% interest)
Mineral Resource Sylvinite Million Average Grade Contained KCl Sylvinite Million Average Grade Contained KCl
Category Tonnes KCl % million tonnes Tonnes KCl % million tonnes
Measured 216 34.9 75.4 194 34.9 67.8
Indicated 292 35.7 104.3 263 35.7 93.9
Sub-Total Measured
508 35.4 179.7 457 35.4 161.7
+ Indicated
Inferred 340 34.0 115.7 306 34.0 104.1
TOTAL 848 34.8 295.4 763 34.8 265.8
Gross Net Attributable (90% interest)
Ore Reserve Sylvinite Million Average Grade Contained KCl Sylvinite Million Average Grade Contained KCl
Category Tonnes KCl % million tonnes Tonnes KCl % million tonnes
Proved 62 32.1 19.8 56 32.1 17.9
Probable 91 32.8 29.7 82 32.8 26.7
TOTAL 152 32.5 49.5 137 32.5 44.6
Ore Reserves are not in addition to Mineral Resources but are derived from them by the application of modifying factors
DOUGOU EXTENSION SYLVINITE DEPOSIT (HWSS and TSS)
Gross Net Attributable (90% interest)
Mineral Resource Sylvinite Million Average Grade Contained KCl Sylvinite Million Average Grade Contained KCl
Category Tonnes KCl % million tonnes Tonnes KCl % million tonnes
Measured 20 32.4 6.5 18 32.4 5.9
Indicated 8 23.1 1.8 7 23.1 1.6
Sub-Total Measured
28 29.9 8.3 25 29.9 7.5
+ Indicated
Inferred 101 23.5 23.8 91 23.5 21.4
TOTAL 129 24.8 32.1 116 24.8 28.9
Gross Net Attributable (90% interest)
Ore Reserve Sylvinite Million Average Grade KCl Contained KCl Sylvinite Million Average Grade KCl Contained KCl
Category Tonnes % million tonnes Tonnes % million tonnes
Proved 6.1 32.5 2.0 5.5 32.5 1.8
Probable 3.2 41.8 1.3 2.9 41.8 1.2
TOTAL 9.3 35.7 3.3 8.4 35.7 3.0
Ore Reserves are not in addition to Mineral Resources but are derived from them by the application of modifying factors
DOUGOU CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
Mineral Resource Million Tonnes Average Grade KCl Contained KCl Million Tonnes Average Grade KCl Contained KCl
Category carnallite % million tonnes carnallite % million tonnes
Measured 148 20.1 29.7 133 20.1 26.8
Indicated 920 20.7 190.4 828 20.7 171.4
Sub-Total Measured
1,068 20.6 220.2 961 20.6 198.2
+ Indicated
Inferred 1,988 20.8 413.5 1,789 20.8 372.2
TOTAL 3,056 20.7 633.7 2,750 20.7 570.3
KOLA CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
Mineral Resource Million Tonnes Average Grade KCl Contained KCl Million Tonnes Average Grade KCl Contained KCl
Category carnallite % million tonnes carnallite % million tonnes
Measured 341 17.4 59.4 307 17.4 53.5
Indicated 441 18.7 82.6 397 18.7 74.4
Sub-Total Measured
783 18.1 142.0 705 18.1 127.8
+ Indicated
Inferred 1,266 18.7 236.4 1,140 18.7 212.8
TOTAL 2,049 18.5 378.5 1,844 18.5 340.6
Competent Persons Statements
All Mineral Resource and Ore Reserves are reported in accordance with the JORC Code (2012 edition).
Numbers are rounded to the appropriate decimal place. Rounding 'errors' may be reflected in the
"totals".
The Kola Mineral Resources were 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 Ore Reserves for
sylvinite at Kola was first stated on 29 January 2019 in an announcement titled "Kola Definitive
Feasibility Study" and was prepared by Met-Chem. The Competent Person for the estimate was Mr Mo
Molavi, member of good standing of Engineers and Geoscientists of British Columbia. The Ore Reserves
were reviewed when the changes to the underlying assumptions (as detailed in the 27 June 2022
announcement "Kola Project optimisation study outcomes") were made and Mr Molavi verified that
the Ore Reserves remained unchanged.
The Dougou carnallite Mineral Resources were reported on 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 and Ore Reserve Estimate were reported
in an announcement titled "Updated Dougou Extension (DX) PFS and Production Target" on 24 January
2023. Dr. Douglas F. Hambley, Ph.D., P.E., P.Eng., P.G of Agapito Associates Inc., for the Exploration
Results and Mineral Resources. Mr. Hambley is a licensed professional geologist in states of Illinois
(Member 196-000007) and Indiana (Member 2175), USA, and is an Honorary Registered Member
(HRM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 1299100RM), a
Recognized RPO included in a list that is posted on the ASX website from time to time and Dr. Michael
Hardy was the Competent Person for the Ore Reserves, and he is a registered member in good
standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an
RPO included in a list that is posted on the ASX website from time to time.
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 statements of 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.
Forward-Looking Statements
This release contains certain statements that are "forward-looking" with respect to the financial
condition, results of operations, projects and business of the Company and certain plans and objectives
of the management of the Company. Forward-looking statements include those containing words such
as: "anticipate", "believe", "expect," "forecast", "potential", "intends," "estimate," "will", "plan",
"could", "may", "project", "target", "likely" and similar expressions identify forward-looking
statements. By their very nature forward-looking statements are subject to known and unknown risks
and uncertainties and other factors which are subject to change without notice and may involve
significant elements of subjective judgement and assumptions as to future events which may or may
not be correct, which may cause the Company's 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. Neither the Company, nor any other person, gives any
representation, warranty, assurance or guarantee that the occurrence of the events expressed or
implied in any forward-looking statement will occur. Except as required by law, and only to the extent
so required, none of the Company, its subsidiaries or its or their directors, officers, employees, advisors
or agents or any other person shall in any way be liable to any person or body for any loss, claim,
demand, damages, costs, or expenses of whatever nature arising in any way out of, or in connection
with, the information contained in this document.
Date: 12-10-2023 08:00:00
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