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KORE POTASH PLC - Review of operations for the quarter ended 30 September 2019

Release Date: 21/10/2019 08:00
Code(s): KP2     PDF:  
 
Wrap Text
Review of operations for the quarter ended 30 September 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 30 SEPTEMBER 2019



Kore Potash, the potash exploration and development company whose f lagship asset is the 97% -owned
Sintoukola Potash Project (“Kola” or the “Project”), located within the Republic of Congo (“RoC”),
provides the f ollowing quarterly update, f or the period to 30 September 2019 (the “Quarter”).

Quarterly Highlights:

   •   Dougou Extension (“DX”) Pre-f easibility Study
          o Pre-f easibility study (PFS) on track to be completed in April 2020 within budget and
             with potentially improved f inancial outcomes.
          o Dissolution test work outcomes indicate improvements to scoping study assumptions
             on brine grades with potential to reduce the capital cost of the project.
          o 2D seismic survey campaign completed ahead of schedule with analysis of the data to
             date strengthening scoping study assumptions regarding location of potash
             mineralisation.
          o Drill rigs assembled on site ahead of expected commencement of 4-hole diamond
             drilling programme in early November

   •   Optimisation of Kola project
           o 5 engineering and construction companies, including European companies, provided
              pricing proposals against the Kola Bill of Quantities
           o Analysis of the pricing proposals continues, and initial assessment indicates capital
              cost savings compared to the previous EPC pricing proposal.
           o Discussions continued with the consortium of French engineering companies (“FC”) in
              relation to their proposal to reduce capital cost. Kore now awaits a new pricing
              proposal f rom the FC.


Corporate

   •   At 30 September 2019, the Company held USD 10.8 million cash at bank.



Operational activities

Dougou Extension Sylvinite Pre-feasibility Study
During the quarter, the Company commenced a Pre-f easibility Study (PFS) on the Dougou Extension
(DX) project. The Company reports the f ollowing progress:

   •   The DX PFS is on track f or completion in April 2020 within budget.
   •   Subject matter expert consultants have been engaged f or plant engineering, solution mining
       and drilling, natural gas virtual pipeline, and marine studies. These include Innovare
       Technologies Ltd as solution mining and drilling consultants, Agapito Associates as mine
       designers and competent persons f or Mineral Resources and Ore Reserves, Engcom
       Engineering and Computing Prof essionals as engineering services consultant, Change Energy
       Services as virtual gas pipeline consultant and PRDW, port and coastal consulting engineers.
   •   Dissolution test work to estimate the KCl dissolution rate was completed in August at Agapito’s
       laboratories in Grand Junction, USA using core samples f rom the earlier drilling campaigns in
       the DX areas. The dissolution test reports are expected to be received in October and the
       initial indications are that the results demonstrate a material improvement over the scoping
       study assumptions.
   •   The Scoping Study brine concentration was 151 g/l and the dissolution testing completed on
       the DX core indicates brine concentrations will exceed 160 g/l. There is potential f or f urther
       increases in brine grades. This creates potential to reduce the capital cost of the pumping and
       processing f acilities. Further work will be undertaken during the PFS to improve understanding
       of this opportunity.
   •   Geotechnical modelling of the planned caverns f ormed in recovering the potash f rom
       underground is progressing. The results of this modelling will inf orm decision making on
       optimum cavern sizes and overall extraction ratio that can be saf ely achieved. Initial
       indications are that the extraction ratio and cave dimensions can be increased over those
       assumed in the scoping study. This may result in an improvement in the lif e of the project.
   •   The 2D Seismic survey program was completed on 30 September, 2 weeks ahead of
       schedule and within the budgeted costs. The seismic survey was completed over 61
       km on 15 dif f erent lines. The seismic survey was perf ormed by DMT GmbH & Co. KG,
       of Germany using vibroseis vehicles. The layout of seismic survey lines is shown in
       Figure 1.
   •   Processing of the seismic data is expected to be completed in November. This work
       is being undertaken by DMT Petrologic GmbH & Co. KG of Germany.
   •   Preliminary observation of the data f rom 4 important lines of the seismic survey 1919,
       1909, 1908 and 1915 (Figure 1) indicates continuity of the evaporite stratigraphy in
       the area of the Mineral Resource consistent with the existing Mineral Resources
       model.
   •   The processed seismic survey inf ormation will be used to determine positioning of the
       planned in-f ill diamond drill-holes.

       Figure 1. Map showing the layout of the seismic lines at DX and the positions of
       existing drill-holes.

       A copy of this announcement including the diagrams and schematics ref erred to in this
       announcement are available on the Company’s website hosted at
       http://www.korepotash.com/wp-content/uploads/2019/10/Quarterly-Report-September-
       2019.pdf

   •   2 drill rigs were reassembled on site during September 2019 ahead of the planned
       commencement of drilling in November.
   •   An on-site vehicle has been modif ied into a specialised wire-line logging unit and all
       instruments have been tested prior to commencement of the drilling campaign



The Kola Potash Project

   •   Work continues to optimise the capital cost and construction schedule f or the Kola project
   •   The planned f irst phase of capital cost optimisation was to seek pricing proposals f rom multiple
       companies against the Kola Bill of Quantities covering the same scope as the EPC proposal
       received f rom the French Consortium.
   •   5 construction groups, including European companies, participated in a process to provide
       pricing against the Kola DFS Bill of Quantities. Initial analysis of the proposals indicates capital
       cost reductions in comparison to previous pricing . Detailed analysis of the proposals is
       scheduled f or completion by the end of October 2019.
   •   The Company additionally received pricing proposals f rom 6 companies f or the construction
       camp development, equipping and management. These proposals currently being reviewed to
       determine the potential f or capital cost savings against the existing cost estimate.
   •   The Company continued discussions with the FC to clarif y their earlier proposal to reduce capital
       costs. The FC proposal includes some changes in scope and insuf f icient inf ormation was
       presented to Kore to completely assess the f inancial impacts of the FC’s proposal. Kore now
       awaits a comprehensive proposal f rom the FC.
Environmental and social impact assessment for Kola (“ESIA”)
    •   Amendments to the Kola ESIA are planned to be submitted to the regulator in Q4 2019 f or their
        consideration f or approval.


Mining Convention and Research Convention
    •   The Company continues to engage with the RoC Government on the implementation of specific
        commitments contained within the Mining Convention. This includes the government’s approval
        f or the intra-group transf er of the Dougou Mining License f rom Sintoukola Potash S.A. to the
        operating entity Dougou Potash Mining S.A. and the transf er of a 10% shareholding in Kola
        Potash Mining S.A. and Dougou Potash Mining S.A. to the Government.
    •   The Company f urther 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 f ield-work exploration activities were undertaken during the period.

21 October 2019
JSE Sponsor: Rencap Securities (Pty) Limited


For f urther inf ormation, 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
 James Asensio
 Henry Fitzgerald-O’Connor


 Shore Capital - Joint Broker                      Tel: +44 (0) 20 7408 4050
 Jerry Keen
 Toby Gibbs
 James Thomas


Forward-Looking Statements
This report contains statements that are "f orward -looking". Generally, the words "expect," “potential”,
"intend," "estimate," "will" and similar expressions identif y f orward -looking statements. By their very
nature and whilst there is a reasonable basis f o r making such statements regarding the proposed
placement described herein; f orward -looking statements are subject to known and unknown risks and
uncertainties that may cause our actual results, perf ormance or achievements, to dif fer materially f rom
those expressed or implied in any of our f orward -looking statements, which are not guarantees of f uture
perf ormance. Statements in this report regarding the Company's business or proposed business, which
are not historical f acts, are "f orward looking" statements that involve risks and uncertainties, such as
resource estimates and statements that describe the Company's f uture plans, objectives or goals,
including words to the ef f ect that the Company or management expects a stated condition or result to
occur. Since f orward-looking statements address f uture events and conditions, by their very nature, they
involve inherent risks and uncertainties. Actual results in each case could dif f er materially f rom those
currently anticipated in such statements.
Investors are cautioned not to place undue reliance on f orward -looking statements, which speak only as
of the date they are made.

                                                     -ENDS-

Date: 21/10/2019 08:00:00
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