Wrap Text
Review of operations for the quarter ended 31 March 2019
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 March 2019
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 31 March 2019 (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 Company received an Engineering, Procurement and Construction (“EPC”) proposal for
its Kola Project from the French Consortium (“FC”) of Engineering Companies on 23 March
2019.
- A Scoping Study for a low capital cost, high cash margin potash project at Dougou Extension
(“DX”) was completed and indicates that following a 2-year construction period DX can
produce 400 ktpa MoP for 17 years at an operating cost of US$ 83/t FOB.
- The Regulator reviewing the amended Kola environmental and social impact assessment
(the “ESIA”) requested the submission be reformatted into separate volumes. The re-
submission is planned to occur during Quarter 2 of 2019.
- At the end of the Quarter the Company held USD 4.0 million cash at bank.
Operational activities
The Kola Potash Project
- The Company completed its review of the Kola DFS and released a summary of results to
Shareholders on 29 January 2019.
- As part of the DFS, Ore Reserves were estimated 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.
- The Company received the EPC proposal from the FC on 23 March 2019 and the Company
immediately commenced discussions with the FC towards formation of an EPC contract.
- The Company commenced discussions with the FC to explore options to optimise the capital
cost and construction schedule for Kola.
Dougou Extension Sylvinite Scoping Study
- A Scoping Study on the potential for a low capital cost, high cash margin potash project at
the DX sylvinite deposit was completed.
- The Scoping Study considers the extraction of sylvinite from DX by a solution mining method
over an initial life of 17 years that depletes 43% of the Indicated Mineral Resources at DX.
- The full details of the Scoping Study were released on 26 April 2019 and highlights include:
- Attractive life-of-mine cost of sales, free on board (FOB) of approximately US$82.74/t
MoP
- Estimated base case initial capital cost of approximately US$327 million (real 2019) to
produce approximately 400 ktpa white granular MoP
- Estimated two-year construction period provides the company with near term
production options.
- Base case real ungeared IRR of approximately 19.3% and base case post-tax ungeared
NPV10 (real) of approximately US$221 million on an attributable basis at life-of-mine
average MoP price for granular product of US$360/t
- Average base case annual post construction, post-tax, free cash flow of approximately
US$74 million and approximately 4.25 years post-tax payback period from first
production
- Infrastructure overlaps with the Kola sylvinite and Dougou carnallite projects will have a
positive impact on the future development costs and construction timeframes of those
two projects
- The Company has commenced planning for a 2D seismic survey and a 4 hole diamond drill
hole programme and a series of technical studies that collectively are expected to satisfy the
requirements for a pre-feasibility study.
Environmental and social impact assessment for Kola (“ESIA”)
- In December 2018, the amended Kola ESIA was submitted to the regulator for their review,
prior to the Minister of Environment’s final approval.
- The regulator has indicated that the ESIA is acceptable technically and has requested the
Company to resubmit the document as separate volumes. The Company plans to re-submit
the for final approval in Q2 2019.
Mining Convention and Research Convention
- The Company continues to engage with the RoC Government on the implementation of
commitments contained within 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 transfer of a 10% shareholding in Kola Potash Mining
S.A. and Dougou Potash Mining S.A. to the State.
- The Company further progressed discussion with the Government on terms and conditions
for a mining research convention covering the Sintoukola 2 exploration license. This
convention is required to be negotiated in advance of any exploration activity.
Exploration activity
- No field-work exploration activities were undertaken during the period.
Cash Balances
- At 31 March 2019, the company held USD 4.002 million cash at bank.
A copy of this announcement including the diagrams and schematics referred to in this
announcement are available on the Company’s website at http://www.korepotash.com/wp-
content/uploads/2019/04/Quarterly-Report-March-2019.pdf
29 April 2019
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 bsampson@korepotash.com
Tavistock Communications Tel: +44 (0) 20 7920 3150
Jos Simson jos.simson@tavistock.co.uk
Edward Lee edward.lee@tavistock.co.uk
Canaccord Genuity – Nomad and Broker Tel: +44 (0) 20 7523 4600
Martin Davison MDavison@canaccordgenuity.com
James Asensio jasensio@canaccordgenuity.com
-ENDS-
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% holding in SPSA in the RoC. SPSA is the 100%
owner of Dougou Potash Mining S.A. which will hold the Dougou Mining Lease (Figure 2) upon the
transfer from SPSA to Dougou Potash Mining S.A. through the issue of a Presidential Decree. In
addition, SPSA were recently awarded the Sintoukola 2 Exploration Permit. The Kola Deposit is
located within the Kola Mining Lease. The Dougou Mining lease hosts the Dougou Deposit and the
Dougou Extension Deposit.
Table 1: Schedule of mining tenements (Republic of Congo)
Project & Type Tenement Company Interest Title Registered to
100% potassium rights Kola Potash Mining
Kola – Mining Decree 2013-412 only S.A.
of 9 August 2013
Dougou – Mining Decree 2017-139 100% potassium rights Sintoukola Potash S.A.
only
of 9 May 2017
Sintoukola 2 – Decree 2018-34 100% potassium rights Sintoukola Potash S.A.
Exploration only
of 9 February 2018
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 2). 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. The results of a Definitive Feasibility Study (“DFS”) were
announced on 29 January 2019, which determined Ore Reserves of 152.4 Mt with an average grade
of 32.5% KCl. The deposit is open laterally; an Exploration Target for the Southward extension of
sylvinite was announced on the 21 November 2018.
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. The deposit is open laterally; an
Exploration Target for the northward extension of sylvinite was announced on the 21 November
2018.
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 2: Kore’s Potash Mineral Resources and Ore Reserves, 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 (97%)
Contained Contained
Million Grade Million Grade
Mineral Resource Category KCl million KCl million
Tonnes KCl % Tonnes KCl %
tonnes 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
Gross Net Attributable (97%)
Contained Contained
Million Grade Million Grade
Ore Reserve Category KCl million KCl million
Tonnes KCl % Tonnes KCl %
tonnes 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
Ore Reserves are not in addition to Mineral Resources but are derived from them by the application of modifying
factors
DOUGOU EXTENSION SYLVINITE DEPOSIT
Gross Net Attributable (97%)
Contained Contained
Million Grade Million Grade
Mineral Resource Category KCl million KCl million
Tonnes KCl % Tonnes KCl %
tonnes 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 86
DOUGOU CARNALLITE DEPOSIT
Gross Net Attributable
Contained Contained
Million Grade Million Grade
Mineral Resource Category KCl million KCl million
Tonnes KCl % Tonnes KCl %
tonnes 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 Contained
Million Grade Million Grade
Mineral Resource Category KCl million KCl million
Tonnes KCl % Tonnes KCl %
tonnes 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
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 Ore Reserve Estimate for
sylvinite at Kola was first reported 29 January 2019 in an announcement titled ‘Kola Definitive
Feasibility Study’ and was prepared by Met-Chem; the Competent Person for the estimate is Mr.
Molavi, member of good standing of 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.
+ Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
KORE POTASH plc
ARBN Quarter ended (“current quarter”)
621 843 614 31 MARCH 2019
Consolidated statement of cash flows Current quarter Year to date
$US’000 (3 months)
$US’000
1. Cash flows from operating activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration and evaluation (926) (926)
(b) development - -
(c) production - -
(d) staff costs (550) (550)
(e) administration and corporate costs (678) (678)
1.3 Dividends received (see note 3) - -
1.4 Interest received 18 18
1.5 Interest and other costs of finance paid -
-
1.6 Income taxes paid (21) (21)
1.7 Research and development refunds - -
1.8 Other (provide details if material) - -
1.9 Net cash from / (used in) operating
(2,157) (2,157)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) property, plant and equipment (11) (11)
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.3 Cash flows from loans to other entities - -
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing
(11) (11)
activities
3. Cash flows from financing activities
3.1 Proceeds from issues of shares - -
3.2 Proceeds from issue of convertible notes - -
3.3 Proceeds from exercise of share options - -
3.4 Transaction costs related to issues of - -
shares, convertible notes or options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related to loans and - -
borrowings
3.8 Dividends paid - -
3.9 Other (provide details if material) - -
3.10 Net cash from / (used in) financing
- -
activities
4. Net increase / (decrease) in cash and cash
equivalents for the period
4.1 Cash and cash equivalents at beginning of
period 6,187 6,187
4.2 Net cash from / (used in) operating
(2,157) (2,157)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing
(11) (11)
activities (item 2.6 above)
4.4 Net cash from / (used in) financing
- -
activities (item 3.10 above
4.5 Effect of movement in exchange rates on
(17) (17)
cash held
4.6 Cash and cash equivalents at end of
4,002 4,002
period
5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $US’000 $US’000
at the end of the quarter (as shown in the
consolidated statement of cash flows) to
the related items in the accounts
5.1 Bank balances 4,002 6,187
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of
4,002 6,187
quarter (should equal item 4.6 above)
6. Payments to directors of the entity and their associates Current quarter
$US'000
6.1 Aggregate amount of payments to these parties included in
256
item 1.2
6.2 Aggregate amount of cash flow from loans to these parties -
included in item 2.3
6.3 Include below any explanation necessary to understand the transactions included in
items 6.1 and 6.2
All transactions included in item 6.1 are for payment of directors fees.
7. Payments to related entities of the entity and their associates Current quarter
$US'000
7.1 Aggregate amount of payments to these parties included in -
item 1.2
7.2 Aggregate amount of cash flow from loans to these parties -
included in item 2.3
7.3 Include below any explanation necessary to understand the transactions included in
items 7.1 and 7.2
8. Financing facilities available Total facility amount Amount drawn at
Add notes as necessary for an at quarter end quarter end
understanding of the position $US’000 $US’000
8.1 Loan facilities - -
8.2 Credit standby arrangements - -
8.3 Other (please specify) - -
8.4 Include below a description of each facility above, including the lender, interest rate and
whether it is secured or unsecured. If any additional facilities have been entered into or
are proposed to be entered into after quarter end, include details of those facilities as well.
9. Estimated cash outflows for next quarter $US’000
9.1 Exploration and evaluation 1,317
9.2 Development -
9.3 Production -
9.4 Staff costs 523
9.5 Administration and corporate costs 523
9.6 Other (provide details if material) -
9.7 Total estimated cash outflows 2,363
10. Changes in Tenement Nature of interest Interest at Interest
tenements reference beginning at end of
(items 2.1(b) and and of quarter quarter
2.2(b) above) location
10.1 Interests in mining - - - -
tenements and
petroleum tenements
lapsed, relinquished
or reduced
10.2 Interests in mining - - - -
tenements and
petroleum tenements
acquired or increased
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies
which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: ........(signed electronically) ........................... Date: April 2019
Joint Company Secretary
Print name: Henko Vos.
Notes
1. The quarterly report provides a basis for informing the market how the entity’s activities
have been financed for the past quarter and the effect on its cash position. An entity that wishes to
disclose additional information is encouraged to do so, in a note or notes included in or attached to
this report.
2. If this quarterly report has been prepared in accordance with Australian Accounting
Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral
Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has
been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing
Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash
flows from investing activities, depending on the accounting policy of the entity.
Date: 29/04/2019 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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