RCS - Kanga Potash - Kanga Potash granted MOP production licence

Baker Steel Resources TrustAnnouncement

20/07/2022 08:15

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RNS Number : 0413T  Kanga Potash  20 July 2022

 

Production licence granted for development of thickest potash seams ever
drilled

 

12bn tonne resource in the Republic of Congo (Brazzaville) expected to be
world's lowest cost MOP producer

 

 

London, Brazzaville, 20 July 2022: Kanga Potash ("KP"), a world class,
low-cost potash project developer operating in the Republic of Congo ("ROC"),
has received approval for its exploitation (mining and production) licence.
With the previously secured surface rights and Letter of Conformity under its
environmental and social impact assessment ("ESIA"), this gives the Company
all the necessary regulatory consents as it enters the pre-construction
development phase. The Company's mining convention, the agreement under which
KP will implement and operate its Kanga asset, has now reached its final stage
in the approval process, with ratification by the ROC parliament the only
pending matter for final approval.

 

Exploration drilling in 2017 has shown potash seams with a mineable thickness
in excess of 210m at av. 68% carnallite grade (KCl 18.2% equivalent) at depths
between 300m and 1,100m. This confirmed that the licence contains one of the
world's thickest combined potash seams ever drilled.

 

The Kanga licence area covers 320km(2) and is located 32km north of the ROC's
economic hub of Pointe Noire on the Atlantic coast. The Kanga mining area and
processing plant are located in close proximity to each other, offering unique
logistical advantages compared to competitors. Due to the super thick seams,
the solution mining area will only comprise a small footprint of c. 3-4km(2)
over the planned Life of Mine. The plant site located on the coast is ready
for the construction of a planned process facility which will also include an
owner-operated transhipment jetty. The ROC's deep-sea port of Port Autonome de
Pointe Noire (PAPN) will mainly be utilised for the import of plant equipment
and material during construction and consumables during future operations. The
Company will use an existing valve station connection via an approved,
dedicated c. 33km long natural gas pipeline to access long-term, competitively
priced natural gas from one of the ROC's major O&G producers.

 

WSP (Canada), with ROC consultancy BUTEO, completed an ESIA to Equator
Principles and IFC performance standards, which was approved in March 2021.
Processing water will be generated entirely from evaporate condensate using
sea water. In addition, there will be no relocation of communities required
and no impact on local wildlife or other water sources. As Kanga applies
environmentally-friendly solution mining technology, no tailings (unlike in
conventional mines) will be left on surface.

 

NOVOPRO PROJECTS INC., a leading Canadian engineering firm which focuses on
the development of potash projects, completed a Definitive Feasibility Study
("DFS") on the Kanga project in September 2020, which resulted in a forecast
CAPEX of US$457m for annual MOP production of 600,000 tonnes and a world
leading, all-in FOB OPEX of US$66 per tonne. These fundamentals, alongside the
logistical advantages available to it, make the Kanga project one of the most
competitive MOP projects globally. OPEX efficiencies can also be achieved due
to the ultra-thick seams at the deposit, where only a small number of caverns
need to be operated over the Life of Mine. This has the benefit of
significantly reducing sustaining capital requirements. KP's NI-43-101
compliant resource/reserve statement and solution mining concept was completed
by ERCOSPLAN (Germany), a world leader in evaporite deposit geology and
extraction technologies.

 

Due to the ultra-thick seams, the Life of Mine is in excess of 30 years and
the modular nature of KP's plant design ensures there are options for
production to be increased to above 2.4m tpa, as and when market conditions
allow. A higher level of production would further reduce the project OPEX and
the Life of Mine can also be increased as KP undertakes further drilling to
prove up additional resources.

 

In addition to the Kanga licence, the adjacent Loango licence is of equivalent
size, bringing the combined size of both licences to c. 25bn tonnes of
carnallite resources. Loango contains a continuation of the thick seams found
at Kanga and it gives KP exclusive control over the entire known extent of
onshore thick potash seams in the ROC.

 

KP has secured two Letters of Intent for MOP off-take, from a reputable
trading company and a Fortune 500 company for 100% of designated production.
In the coming months, during the Front-End Engineering Design stage, KP will
continue to engage in off-take discussions with some of the major fertiliser
companies in order to finalise the most appropriate off-take strategy.

 

KP has received MoUs from pre-qualified EPC contractors for a highly leveraged
finance solution with the backing of Export Credit Agencies to fund up to 85%
of the required CAPEX via debt subject to meeting local content
requirements.  All these EPCs have demonstrated a solid track record of
project implementation experience in Africa.

 

Kanga Potash is currently being advised by Vermilion Partners and Natixis on
future funding options as it approaches the final investment decision stage
for the project.

 

Stéphane Rigny (Executive Chairman) commented:

 

"It is vital that the world develops new fertiliser resources to meet the
existential need to feed a growing world population. The Kanga Potash project
in the ROC is well placed to be a key provider of potash to the growing world
market due to its massive tier one resource in close proximity to the coast,
which ensures market-leading economic outputs for the project.

 

"The ongoing support of the ROC Government has been a critical factor in
project development to date and we have always been clear about our commitment
to local communities in the ROC and to high environmental standards; both
pre-requisites for any quality modern mining project."

 

Achim Strauss (CEO) commented:

 

"Demand for fertilisers and pricing looks likely to remain strong for some
time, but as developers of a long-term, low-cost project, our focus is on the
multi-decade drivers of demand. We see these as robust, led by the increase in
global population and desire of the world to reduce the carbon impact of
fertiliser production."

 

Dr. Mathurin Enama Mengong (ROC Country Manager) commented:

 

"In addition, we have been very selective in ensuring we only work with
high-quality local and international contractors. These partnerships will be
critical as we move towards production following the award of the exploitation
licence."

 

Enquiries:

 Yellow Jersey PR  Kanga@yellowjerseypr.com

 Tom Randell       Tel: +44 (0) 20 3004 9512

 Henry Wilkinson

 Laurie Gellhorn

 

 

Background on Kanga Potash's shareholders:

 

AMED Funds (Luxemburg)

AMED Funds is a private equity group focused on developing Tier 1 mining
assets with a geographical focus on Sub-Saharan Africa. AMED Funds have 13
mining assets in the portfolio at various stages of development (from
exploration to production) and across multiple commodities (incl. copper,
gold, bauxite, fluorspar, heavy mineral sands, iron ore, fertilisers and
building materials).

 

SARMIN Mining Inc. (Barbados)

SARMIN Mining Inc. is a Barbados based private equity investment company
focusing on the development of high value-added resources, infrastructure and
energy projects in Africa.

 

Baker Steel Resources Trust Limited (Guernsey)

Baker Steel Resources Trust Limited is a LSE-listed investment company,
investing predominantly in unlisted companies and specialist listed
opportunities in the natural resources sector.

 

Background on Kanga Potash's consultancies and advisors:

 

Kanga has retained renowned consultancies that are familiar with potash and
related technologies, ESIA processes, legal matters, etc. and that have been
working in the ROC since the early 2000s.

 

NOVOPRO

·    Appointed as consultant for Kanga project's Feasibility Studies.

·    NOVOPRO is a project-based company specialising in developing,
engineering, and managing projects and related technologies as applied to the
metallurgical, mining, and mineral processing industries. With a thorough
experience in design development, as well as operational experience, NOVOPRO
ensures that projects being managed are executed successfully.

·    Through years of experience, engineers at NOVOPRO have acquired the
knowledge and expertise necessary to effectively carry out potash-related
projects across all phases.   Experience has provided NOVOPRO with detailed
design capabilities as related to solution mining, conversion, flotation,
crystallisation, drying, compaction, storage and shipping.

ERCOSPLAN

·    Active worldwide as potash and rock salt producers, as investors in
new mineral salt projects and as independent experts for mining and
environmental authorities, financial institutions and supervisory bodies of
international financial trading houses, as well as for national or
international arbitration courts.

·    Provided the geological supervision and prepared the geological
drilling reports summarising the geological data and interpretations for
Kanga. Also, responsible for Kanga's mine plan, in cooperation with NOVOPRO
and the NI 43-101 compliant resource report.

Curtis, Mallet-Prevost, Colt & Mosle LLP ("Curtis")

·    Global law firm Curtis was appointed in June 2021 to advise KP on key
project development, offtake, construction and fund-raising agreements.

·    Vastly experienced in representing companies across Africa, including
on the development of African natural resource projects, combined with raising
equity and debt on international markets.

 

Notes to Editors

 

Kanga Potash is developing the thickest sequence of mineable potash seams ever
drilled in the world. The unique Tier 1 carnallite project is located on the
coast of the Republic of Congo close to competitively priced natural gas and
with good road access and planned port facilities. It therefore has the
shortest and most cost-effective shipping time to Brazilian and African
markets.

 

The Kanga project has sufficient drilled reserves to support production of
2.4m tpa MOP for at least 30 years. It has indicated and inferred resource of
over c. 12bn tonnes carnallite (with and addition c. 13bn tonnes located on
the wholly owned, adjacent Loango permit) with considerable opportunity to
expand as and when market conditions allow.

 

A Definitive Feasibility study was completed in September 2020 and the project
is moving to pre-construction phase, with modular options between 400k tpa and
2.4m tpa capacity, to be implemented by world class EPC contractors.

 

Further information on Kanga Potash can be found on the Company's website:
https://www.kangapotash.com (https://www.kangapotash.com)

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