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KORE POTASH PLC - Review of operations for the quarter ended 31 December 2018

Release Date: 31/01/2019 11:00
Code(s): KP2
 
Wrap Text
Review of operations for the quarter ended 31 December 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 31 December 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 (“RoC”) provides the
following quarterly update, for the period to 31 December 2018 (the “Quarter”).

Highlights

        •    The Company completed its review of the Kola Definitive Feasibility Study (“DFS”) and released a
             summary of results to Shareholders on 29 January 2019.

        •    The DFS determined Proved and Probable Ore Reserves totalling 152 Mt with an average grade of
             32.5% KCl for the Kola Sylvinite Deposit, reported in accordance with the JORC Code (2012 edition).

        •    The Mining Convention covering the proposed staged development of the Kola and Dougou Mining
             Licenses has been gazetted into law following ratification by the Parliament of the RoC.

        •    The Company announced Exploration Targets for the potential extensions to the Kola and Dougou
             Extension sylvinite deposits.

        •    The amended Kola environmental and social impact assessment (the “ESIA”) was completed and
             submitted to the regulator for their review prior to submission to the Minister of Environment for
             approval.

        •    At the end of the Quarter the Company held USD 6.2 million cash at bank.

Operational Activities

        The Kola Potash Project

        •    The Company completed its review of the Kola Definitive Feasibility Study (“DFS”) and released a
             summary of results to Shareholders on 29 January 2019. As part of the DFS, Met-Chem, a division of
             DRA Americas Inc., (a subsidiary of the DRA Group) completed an Ore Reserve Estimate for the Kola
             sylvinite Deposit. The combined total Ore Reserves are 152 Mt of sylvinite grading 32.5% KCl (Table 1.),
             hosted within 3 layers (‘seams’). Details of the Ore Reserve estimate are provided in the market
             announcement dated 29 January 2019.



                                       Gross                                   Net Attributable (97%)
 Ore Reserve         Million       Grade        Contained KCl          Million     Grade        Contained KCl
 Category            Tonnes        KCl %        million tonnes         Tonnes      KCl %        million tonnes
 Proved                62           32.1              20                 60         32.1              19
 Probable              91           32.8              30                 88         32.8              29
 TOTAL                152           32.5              50                148         32.5              48
Table 1. Ore Reserves for the Kola Sylvinite Deposit, provided as gross and as 97% attributable according to Kore’s
shareholding.
•   The French Consortium of Engineering Companies who undertook the DFS (FC) are contracted to
    provide the Company an Engineering, Procurement and Construction (EPC) proposal, for the
    construction of Kola, within 3 months of the completion of the DFS. The FC have advised the Company
    that an EPC proposal will be submitted within the first quarter of 2019.

Mining Convention

•   The Mining Convention covering the proposed staged development of the Kola and Dougou Mining
    Licenses has been gazetted into law following ratification by the Parliament of the RoC.

•   The gazetting of the Mining Convention provides 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.

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.

•   In December, the amended ESIA was submitted to the regulator for their review, prior to the Minister
    of Environment’s final approval. The Company anticipates receipt of the approved amended ESIA in H1
    2019.

RoC regulatory requirements

•   On 30 August 2018, a new Declaration d’Utilité Publique (“DUP”) was gazetted. The DUP covering the
    entire Project land area (mine, over land conveyor, process plant and services corridors) provides the
    framework of compensation arrangements required under RoC laws due to Kore’s activity on the land
    area.

•   The Company continues to engage with the RoC Government on the implementation of some aspects
    of the the Mining Convention. This includes the intra-group transfer of the Dougou Mining License from
    Sintoukola Potash S.A. to the operating entity Dougou Potash Mining S.A. and the State’s shareholding
    entitlements in Kola Potash Mining S.A. and Dougou Potash Mining S.A.

Exploration activity

•   On 21 November 2018 Kore announced two Exploration Targets for sylvinite. An Exploration Target is
    not a Mineral Resource but a statement of exploration potential and in this case, was based on drilling
    and 2D seismic survey data and the Company’s understanding of the controls on mineralisation. The
    Exploration Targets were reported in accordance with the JORC Code (2012 edition) and are as follows:

        o    Kola South; the potential southward extension of the Kola deposit has an Exploration Target
             of 95 to 175 Mt with an average grade of between 34 and 42% KCl.
                  o   DX North; the potential northward extension of the Dougou Extension Deposit has an
                      Exploration Target of 320 to 600 Mt with an average grade of between 30 and 38% KCl.



        •    The potential quantity and grade of an Exploration Target is conceptual in nature and is an
             approximation. There has been insufficient exploration at Kola South and DX North to estimate Mineral
             Resources and it is uncertain if further exploration will result in the estimation of Mineral Resources.

        •    The Exploration Targets are immediately adjacent to the Company’s existing sylvinite Mineral
             Resources which total 1.08 Bt with an average grade of 35.5% KCl at the Kola and Dougou Extension
             Deposits.

        •    No field-work exploration activities were undertaken during the period.

        Cash Balances

        •    At 31 December 2018, the company held USD 6.2 million cash at bank.



31 January 2019
JSE Sponsor: Rencap Securities (Pty) Limited


                                                       ENDS
              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


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. 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).

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
                                                                                                      Contained
                                      Million      Grade       Contained KCl     Million    Grade
    Mineral Resource Category                                                                         KCl million
                                      Tonnes       KCl %       million tonnes    Tonnes     KCl %
                                                                                                      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
                                                                                                      Contained
                                      Million      Grade       Contained KCl     Million    Grade
    Mineral Resource Category                                                                         KCl million
                                      Tonnes       KCl %       million tonnes    Tonnes     KCl %
                                                                                                      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
                                                                                                      Contained
                                     Million       Grade       Contained KCl     Million    Grade
 Mineral Resource Category                                                                            KCl million
                                     Tonnes        KCl %       million tonnes    Tonnes     KCl %
                                                                                                      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
                                                                                                      Contained
                                     Million       Grade       Contained KCl     Million    Grade
 Mineral Resource Category                                                                            KCl million
                                     Tonnes        KCl %       million tonnes    Tonnes     KCl %
                                                                                                      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.

Competent Persons Statement

All information in this report that relates to the Exploration Targets for Kola South and DX North is based on
information compiled by Mr. Andrew Pedley, the Chief Geologist for Kore Potash and a full-time employee of the
Company. Mr Pedley is a registered scientist (Pr. Sci. Nat) with the South African Council for Natural Scientific
Professions (reg No. 400311/13) and is a member of the Geological Society of South Africa. Mr. Pedley has sufficient
experience that is relevant to the style of mineralisation and type of Deposit under consideration and to the activity
he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the “Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves” (the JORC Code). Mr. Pedley consents to the
inclusion in this report of the matters based on his information in the form and context in which it appears.

The information relating to previous 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 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 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.
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.

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