Wrap Text
Review of Operations for the Quarter ended 30 June 2020
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 June 2020
Kore Potash, the potash exploration and development company whose flagship asset is the 97%-
owned Sintoukola Potash Project (“Sintoukola” or the “Project”), located within the Republic of Congo
(“RoC”), provides the following quarterly update, for the period to 30 June 2020 (the “Quarter”).
Quarterly Highlights:
• The Dougou Extension (“DX”) Pre-feasibility Study (“PFS”) results were published on 13 May
2020 with the following highlights:
o Annual average EBITDA of US$118 million
o A Maiden Sylvinite Ore Reserves of 17.7 Mt at a grade of 41.7% KCl
o Nameplate production target of 400,000 tpa MoP over an initial 18-year life based on
Probable Ore Reserves.
o Real ungeared post tax IRR of approximately 22.9% and NPV10 (real) of approximately
US$319 million on an attributable basis at life-of-mine average MoP price for granular
product of US$422/t MoP (Argus Media’s price forecast for DX Project’s target
markets)
o Initial pre-production capital cost of approximately US$286 million (real 2019),
including contingency
o Free on Board (“FOB”) Pointe Noire costs of US$86.61/t MoP
o Annual average EBITDA of US$118 million.
• The Company continued to engage with the RoC Government on the implementation of
specific commitments contained within the Mining Convention.
Corporate Highlights
• At 30 June 2020, the Company held USD 1.84 million cash at bank.
• The Company is engaging with its major shareholders as it finalises the work programme and
financing plans for the DX DFS and anticipates finalising the planning and commencing activity
in the quarter ahead
• The Company held its AGM on 26 June 2020.
Brad Sampson, Chief Executive Officer of Kore Potash, commented:
“The DX Pre-feasibility Study identified the strong cash generation potential of the DX project and
confirmed its low capital cost and low technical risk.
We are excited to be progressing to a Definitive Feasibility Study (“DFS”) for the DX project and
anticipate the work programme for the DFS to be finalised to enable work to commence in the quarter
ahead.
Operational activities
Dougou Extension Sylvinite Pre-feasibility Study
During the Quarter, the Company released its PFS on the DX project. The Company reported the
following highlights:
Strong Financial Outcomes
• Nameplate production target of 400,000 tpa MoP over an initial 18-year life based on
Probable Ore Reserves.
• Average annual EBITDA of US$118 million.
• Average annual post construction, post-tax, free cash flow of approximately US$95 million.
• Approximately 4.3 years post-tax payback period from first production.
• Real ungeared post tax IRR of approximately 22.9% and NPV10 (real) of approximately
US$319 million on an attributable basis at life-of-mine average MoP price for granular
product of US$422/t MoP (Argus Media’s price forecast for DX Project’s target markets).
Low capital cost and short construction period improve financing options
• Initial pre-production capital cost of approximately US$286 million (real 2019), including
contingency.
• Short construction period of 21 months.
Competitive costs to supply MoP to target markets
• Low average mine gate operating costs of US$65.26/t MoP.
• Free on board (FOB Pointe Noire) costs of US$86.61/t MoP
• Average cost of MoP delivered to target markets of approximately US$114.61/t MoP.
High quality Ore Reserves and Mineral Resources
• Sylvinite Ore Reserves of 17.7 Mt at a grade of 41.7% KCl.
• Grade of the Ore Reserves is in the top quartile of all operating potash mines and potash
development projects globally.
• Total sylvinite Mineral Resources of 145 Mt at a grade of 39.7% KCl.
Further upside potential
• Ore Reserves tonnage represent 22% of the Indicated Mineral Resources tonnage.
• Inferred Mineral Resources of 66 Mt at a grade of 40.4% KCl not included in the study.
• Additional exploration drilling and/ or seismic surveys in the future may support
classification of portions of the additional Mineral Resources of 127.3 tonnes at 39.4% KCl
as Ore Reserves.
Next steps
Planning for the DFS is expected to be finalised to enable commencement of the work programme in
the Quarter ahead.
There were no mining production or construction activities during the Quarter.
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 for
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 Government.
Quarterly cashflow report
In accordance with the ASX Listing Rules, the Company will also today lodge its cashflow report for the
quarter ended 30 June 2020. Included in those cashflows is CEO salary of approximately
USD124,000 settled in cash. The Company also settled outstanding directors’ fees for the quarter
ended March 2020 through the issue of 7,770,939 ordinary shares, as announced on 7 April 2020.
The Company invested USD2,026 million in exploration in the Quarter and ended the Quarter with
USD 1.84 million of cash at bank.
This announcement has been approved for release by the Board.
ENDS
30 July 2020
JSE Sponsor: Rencap Securities (Pty) Limited
The full announcement is available on the JSE’s website at
https://senspdf.jse.co.za/documents/2020/jse/isse/kp2e/qupdjune20.pdf
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
James Asensio
Henry Fitzgerald-O’Connor
Shore Capital – Joint Broker Tel: +44 (0) 20 7408 4050
Jerry Keen
Toby Gibbs
James Thomas
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 Dougou Extension sylvinite Deposit, the Kola sylvinite and
carnallite Deposits, and the Dougou carnallite Deposit. These deposits are within the Dougou and Kola
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 Dougou Extension sylvinite Deposit contains a total sylvinite Mineral Resource Estimate of 145 Mt
grading 39.7% KCl, hosted by two seams. The results of a Pre- Feasibility Study (“PFS”) were announced
on 13 May 2020, which determined Ore Reserves of 17.7 Mt with an average grade of 41.7% 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 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 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 and Kola 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.
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 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 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
Sintoukola2 Decree 2018-34 100% Sintoukola Potash S.A.
Exploration of 9 February 2018 potassium rights only
* these remain unchanged from the quarter ended 31 March 2020.
Kore’s Potash Mineral Resource and Ore Reserves - Gross and according to future 90% interest (10% by the
RoC government)
KOLA SYLVINITE DEPOSIT
Gross Net Attributable (90% interest)
Contained KCl Contained KCl
Mineral Resource Sylvinite Million Average Grade Sylvinite Million Average Grade
million million
Category Tonnes KCl % Tonnes KCl %
tonnes 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)
Contained KCl Contained KCl
Sylvinite Million Average Grade Sylvinite Million Average Grade
Ore Reserve Category million million
Tonnes KCl % Tonnes KCl %
tonnes 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)
Contained KCl Contained KCl
Mineral Resource Sylvinite Million Average Grade Sylvinite Million Average Grade
million million
Category Tonnes KCl % Tonnes KCl %
tonnes tonnes
Measured - - - - - -
Indicated 79 39.1 30.8 71 39.1 27.7
Sub-Total Measured +
79 39.1 30.8 71 39.1 27.7
Indicated
Inferred 66 40.4 26.7 59 40.4 24.0
TOTAL 145 39.7 57.5 130 39.7 51.8
Gross Net Attributable (90% interest)
Contained KCl Contained KCl
Sylvinite Million Average Grade Sylvinite Million Average Grade
Ore Reserve Category million million
Tonnes KCl % Tonnes KCl %
tonnes tonnes
Proved - - - - - -
Probable 17.7 41.7 7.4 16 41.7 6.6
TOTAL 17.7 41.7 7.4 16 41.7 6.6
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)
Contained KCl Contained KCl
Mineral Resource Million Tonnes Average Grade Million Tonnes Average Grade
million million
Category carnallite KCl % carnallite KCl %
tonnes 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 1789 20.8 372.2
TOTAL 3,056 20.7 633.7 2750 20.7 570.3
KOLA CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
Contained KCl Contained KCl
Mineral Resource Million Tonnes Average Grade Million Tonnes Average Grade
million million
Category carnallite KCl % carnallite KCl %
tonnes 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 1140 18.7 212.8
TOTAL 2,049 18.5 378.5 1844 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 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 is reported herein. Ms. Vanessa Santos, P.Geo. of Agapito
Associates Inc., for the Exploration Results and Mineral Resources. Ms. Santos is a licensed professional geologist in South Carolina
(Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration,
Inc. (SME, Member 04058318). 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 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.
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
Kore Potash Plc
ABN Quarter ended (“current quarter”)
621 843 614 30 June 2020
Consolidated statement of cash flows Current quarter Year to date
$US’000 (6 months)
$US’000
1. Cash flows from operating activities
1.1 Receipts from customers
1.2 Payments for
(a) exploration & evaluation (if expensed) - -
(b) development - -
(c) production - -
(d) staff costs (431) (1,303)
(e) administration and corporate costs (361) (1,030)
1.3 Dividends received (see note 3) - -
1.4 Interest received 3 27
1.5 Interest and other costs of finance paid 1 1
1.6 Income taxes refunded - 1
1.7 Government grants and tax incentives - -
1.8 Other (provide details if material) - -
1.9 Net cash from / (used in) operating (788) (2,304)
activities
2. Cash flows from investing activities
2.1 Payments to acquire:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - (1)
(d) exploration & evaluation (if capitalised) (2,026) (3,373)
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal of:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) other non-current assets - -
2.3 Cash flows from loans to other entities - -
Consolidated statement of cash flows Current quarter Year to date
$US’000 (6 months)
$US’000
2.4 Dividends received (see note 3) - -
2.5 Other (provide details if material) - -
2.6 Net cash from / (used in) investing (2,026) (3,374)
activities
3. Cash flows from financing activities
3.1 Proceeds from performance shares
(excluding convertible debt securities) - 1
3.2 Proceeds from issue of convertible debt - -
securities
3.3 Proceeds from exercise of options - -
3.4 Transaction costs related to issues of equity
securities or convertible debt securities
- -
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 - 1
activities
4. Net increase / (decrease) in cash and
cash equivalents for the period
4.1 Cash and cash equivalents at beginning of 4,680 7,584
period
4.2 Net cash from / (used in) operating (788) (2,304)
activities (item 1.9 above)
4.3 Net cash from / (used in) investing activities (2,026) (3,374)
(item 2.6 above)
4.4 Net cash from / (used in) financing activities - 1
(item 3.10 above)
4.5 Effect of movement in exchange rates on (25) (66)
cash held
4.6 Cash and cash equivalents at end of 1,841 1,841
period
5. Reconciliation of cash and cash Current quarter Previous quarter
equivalents $A’000 $A’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 1,841 4,680
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
5.5 Cash and cash equivalents at end of 1,841 4,680
quarter (should equal item 4.6 above)
6. Payments to related parties of the entity and their Current quarter
associates $US'000
6.1 Aggregate amount of payments to related parties and their 124
associates included in item 1
6.2 Aggregate amount of payments to related parties and their -
associates included in item 2
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of,
and an explanation for, such payments
7. Financing facilities Total facility Amount drawn at
Note: the term “facility’ includes all forms of financing amount at quarter quarter end
arrangements available to the entity.
end $US’000
Add notes as necessary for an understanding of the $US’000
sources of finance available to the entity.
7.1 Loan facilities
7.2 Credit standby arrangements
7.3 Other (please specify)
7.4 Total financing facilities
7.5 Unused financing facilities available at quarter end -
7.6 Include in the box below a description of each facility above, including the lender, interest
rate, maturity date and whether it is secured or unsecured. If any additional financing
facilities have been entered into or are proposed to be entered into after quarter end,
include a note providing details of those facilities as well.
8. Estimated cash available for future operating activities $US’000
8.1 Net cash from / (used in) operating activities (Item 1.9) 788
8.2 Capitalised exploration & evaluation (Item 2.1(d)) 2,026
8.3 Total relevant outgoings (Item 8.1 + Item 8.2) 2,814
8.4 Cash and cash equivalents at quarter end (Item 4.6) 1,841
8.5 Unused finance facilities available at quarter end (Item 7.5) -
8.6 Total available funding (Item 8.4 + Item 8.5) 1,841
8.7 Estimated quarters of funding available (Item 8.6 divided by 0.65
Item 8.3)
8.8 If Item 8.7 is less than 2 quarters, please provide answers to the following questions:
1. Does the entity expect that it will continue to have the current level of net operating
cash flows for the time being and, if not, why not?
Answer:
Anticipated level of operating cash outflows is lower due to completion of DX PFS study in
the second quarter of 2020. The entity then expects it has more than 2 quarters of funding
available.
2. Has the entity taken any steps, or does it propose to take any steps, to raise further
cash to fund its operations and, if so, what are those steps and how likely does it
believe that they will be successful?
Answer:
Yes, the entity is planning to raise additional capital in H3 2020 to enable to continue to fund
its exploration and development programme and fulfil its working capital requirements. The
directors have identified a number of funding options available. The directors note the entity
has a history of successfully raising capital on the AIM and JSE, and in the past on the ASX.
However, factors beyond the entity's control, including pandemic diseases such as COVID-
19 (coronavirus), which affect the stock markets, may in turn have a negative impact on any
fund raising.
3. Does the entity expect to be able to continue its operations and to meet its business
objectives and, if so, on what basis?
Answer:
Yes. The entity expects to continue its operations and to meet its business objectives in the
coming quarters. Please see Answer 2 above for more details.
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.
Date: 30 July 2020.................................................................................
Authorised by: By the Board
(Name of body or officer authorising release – see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the
entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An
entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is
encouraged to do so.
2. If this quarterly cash flow 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 cash flow 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.
4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”.
If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the
[name of board committee – eg Audit and Risk Committee]”. If it has been authorised for release to the market by a
disclosure committee, you can insert here: “By the Disclosure Committee”.
5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out
as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles
and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the
financial records of the entity have been properly maintained, that this report complies with the appropriate accounting
standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control which is operating effectively.
Date: 30-07-2020 08:00:00
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