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KORE POTASH PLC - Mining Convention passed into Law in the Republic of Congo

Release Date: 07/12/2018 10:50
Code(s): KP2     PDF:  
Wrap Text
Mining Convention passed into Law in the 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
(“Kore Potash” or the “Company”)

Kore Potash plc

Mining Convention passed into Law in the Republic of Congo

Kore Potash plc, the potash development company whose flagship asset is the 97%-owned Sintoukola Potash
Project (“Project”), is pleased to announce that the Mining Convention covering the proposed staged
development of the Kola and Dougou Mining Licences has been gazetted into law following ratification by the
Parliament of the Republic of the Congo (“RoC”).


    •  The gazetting of the Mining Convention is a critical milestone for the Company, providing security of
        title and the right to develop and operate the Kola mining project as well as the adjacent Dougou and
        Dougou Extension deposits.

    •  The Mining Convention concludes the framework envisaged in the 25-year renewable Kola and
        Dougou Mining Licences granted in August 2013 and May 2017, respectively.

    •  The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the
        development and operation of Kola and Dougou Mining Licenses, which amongst other items include
        import duty and VAT exemptions and agreed tax rates during mine operations.

    •  The Mining Convention provides strengthened legal protection of the Company’s investments in the
        RoC through the settlement of disputes by international arbitration.

Brad Sampson, CEO of Kore, commented:

“The finalisation of the Mining Convention creates certainty on the legal and fiscal regime within which Kore
Potash will operate its potash projects in the Republic of the Congo. Furthermore, it demonstrates the
Government of the Republic of Congo’s alignment to realise the potential of the Congo potash basin and the
commitment to the development of the Kola Project.

This is an exciting milestone which has been reached at an important time, as Kore Potash works to complete
its review of the Kola Definitive Feasibility Study.”

“The recent growth in the sylvinite mineral resources and the definition of exploration targets highlights the
potential scale and strategic importance of the Sintoukola area. With the Mining Convention in place the
Company is one step closer to having all necessary permits and studies in place to commence development.”,
he added.

The Mining Convention, signed between the RoC Government (‘Government’) and Kore Potash on 8 June
2017, was approved by the RoC Parliament during third quarter 2018, gazetted into Law on 29 November 2018
and printed on 6th December 2018.

The Mining Convention encompasses the areas of the Kola Mining License and the Dougou Mining License as
shown in Figure 1.

Figure 1: Map showing the location of the Project and Mining Convention area

A version of the announcement containing a map showing the location of the Project and Mining Convention
area (figure 1) can be viewed at

Summary of key terms of the Mining Convention

    •  Concessions to corporate tax rate during the initial 10 years:
             o first 5 years – 0%;
             o years 6-10 – 7.5%; and
             o rest of mine life – 15%

    •   Concessional corporate tax rate may be renewed in conjunction with investment in expanded
        production capacity.

    •  Exemption from withholding taxes including interest, dividends and capital gains during the term of the
        mining convention.

    •  Exemption from VAT, import duty and export duty (for surplus construction material) during
        construction, applicable to Kore Potash and all contractors.

    •  Guarantees that the Government will facilitate and support implementation of the Project and to permit
        export of the final product through the use of a dedicated jetty.

    •   Guarantees that Kore Potash and all its subcontractors may employ foreign workers.

    •  Guarantees to permit creation of securities over all or part of the share capital of Kore Potash’s RoC
        subsidiaries and the Kola and Dougou Mining Licenses.

    •   Settlement of any disputes through international arbitration.

    •  Stability of legal, fiscal, tax and customs regimes during the entire term of the Mining Convention and
        any extensions
    •  The Government will be granted a 10% equity interest in Kola Mining SA and Dougou Mining SA on a
        free-carry basis for the initial phase of projects at Kola or Dougou. Post the initial phases, the
        Government is required to contribute to any capital expansion programme or dilute.

    •  The Government may appoint one director to the board of each of Kola Mining SA and Dougou Mining

    •   A mining royalty, of 3% of the Ex-Mine Market Value.

    •   The Mining Convention has a term which covers the life of the mining permits including any

                                               – ENDS –

                                                                                                                                 Martin Davison / James
           Brad Sampson                               Jos Simson / Edward Lee                      Asensio
                                                                  Tavistock                                                Canaccord Genuity
           Chief Executive Officer                 (UK media enquiries)                            (Nomad and Broker)
           Tel: +27 11 469 9144                     Tel: +44 (0) 207 920 3150                   Tel: +44 (0) 20 7523 4600

7 December 2018

JSE Sponsor: Rencap Securities (Pty) Limited

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
Potash Project (“Sintoukola”) comprises the Kola Sylvinite Deposit, Dougou Extension Sylvinite Deposit and the
Dougou Carnallite Deposit. These deposits are within the Kola and Dougou Mining Licenses. Sintoukola 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 Mt
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 (announcement dated 7 December 2017).
Kola is shallow relative to operating 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 (announcement dated 20 August 2018). The Mineral Resource includes 67
Mt grading 60.1 % KCl. Dougou Extension is located 15 km southwest of Kola. A large zone that is 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 hosted by 35-40 metres of carnallitite within 4 flat-lying seams at a depth of between 400
and 600 metres (announcement dated 9 February 2015). A Scoping Study indicated that a Life of Mine
operating cost of US$68 per tonne MoP was achievable (announcement dated 17 February 2015).

Forward-Looking Statements

This 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 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 Mineral 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.

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