Financial Results for Half Year Ended 30 June 2022
13/09/2022 07:00
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RNS Number : 2387Z Kore Potash PLC 13 September 2022
13 September 2022
Kore Potash Plc
("Kore Potash" or the "Company")
(The "Group" refers to Kore Potash Plc and its subsidiaries)
Financial Results for Half Year Ended 30 June 2022
Kore Potash, the potash development company with 97%-ownership of the Kola and
DX Potash Projects in the Sintoukola Basin, located within the Republic of
Congo ("RoC"), today reports its unaudited financial results and operational
highlights for the half year ended 30 June 2022 ("the Period").
The full financial report is available online at the Company's website at
https://korepotash.com/wp-content/uploads/2022/09/Kore-Half-Year-Interim-Report-2022.pdf
(https://korepotash.com/wp-content/uploads/2022/09/Kore-Half-Year-Interim-Report-2022.pdf)
The financial statements contained within this announcement should be read in
conjunction with the notes contained within the full financial report.
Highlights
· The process to potentially finance the construction of Kola
progressed in line with the Memorandum of Understanding ("MoU") signed with
the Summit Consortium in April 2021.
· Receipt of the Optimisation Study on the Kola Project was
announced to shareholders on 1 April 2022.
· Kore Potash completed its detailed review of the Optimisation
Study and announced the outcomes of the Study to shareholders on 27 June 2022.
· On 28 June 2022, the Company announced it had signed a Heads of
Agreement ("HoA") for the construction of Kola.
· Cash and cash equivalents, at 30 June 2022 was USD 7,628,417.
· The exploration and evaluation asset at 30 June 2022 was USD
157,518,638, a decrease of USD 9,095,267 from USD 166,613,902 at 31 December
2021. During the Period the Company capitalised USD 2,921,600 in exploration
and evaluation expenditure and the expenditure decreased by USD 12,016,864 as
a result of the strengthening of the USD against the currency of the RoC.
· Despite the on-going Russian/Ukraine conflict, the Covid-19
pandemic and increasing fuel prices, the Group's operations have not been
materially impacted by these during the Period.
Brad Sampson, Chief Executive of Kore Potash, commented:
"We have made good progress during the first half of 2022, having taken
receipt of the Kola Optimisation Study and shared the outcomes with the
market, including the US$520 million reduction in the capital cost of Kola and
a reduction in the expected construction timeline to 40 months. We are also
proud to have signed a Heads of Agreement for Kola's construction, advancing
the Kola project at pace despite the difficult circumstances facing the global
economy.
"Recent geopolitical and extreme weather events, which have led to food
security concerns and a dramatic increase in the potash price, only reinforce
the need for the development of new low-cost potash production from high
quality potash deposits located close to customers, such as our projects in
the Sintoukola basin. The progress towards financing our Kola Project is
exciting and we look forward to receiving the financing proposal."
Kola Potash Project
· The Company signed a non-binding MoU with Summit Africa Limited, on
behalf of a consortium of investors and engineering firms, to arrange the
total financing required for the construction of Kola in the presence of the
Minister of Mines of the RoC and his key staff in Brazzaville.
· As detailed in the MoU, the Summit Consortium includes:
o BRP Global, headquartered in Abu Dhabi, which will provide royalty
financing;
o SEPCO Electric Power Construction Corporation ("SEPCO"), an international
engineering and construction group headquartered in Jinan, China and with
offices in Dubai which s a wholly owned subsidiary of Power Construction
Corporation of China ("POWER CHINA"). SEPCO will be the Engineering
Procurement and Construction ("EPC") contractor for Kola within the Summit
Consortium. SEPCO has significant construction experience globally across a
range of industries, including power, oil and gas chemical, energy-reduction
and environmental protection and infrastructure projects. SEPCO has completed
major construction projects in 25 countries, including 44 EPC contracts in 11
countries, with 7 of these in Africa. In addition to its construction
capability, SEPCO will also assist in arranging the debt financing for Kola;
and
o China ENFI Engineering Corporation ("ENFI"), subcontracted by SEPCO and
headquartered in Beijing, is a significant engineering group with specific
mining, processing, and potash experience. ENFI is a mining technology leader
in China and has provided technical services for the design and construction
of more than 400 mining operations worldwide. ENFI's potash specific
experience includes designing and constructing an underground potash mine in
southeast Asia.
· During the period the Summit Consortium completed the Optimisation
Study with the successful outcomes:
o Capital cost reduced by US$520 million to US$1.83 billion on an EPC basis
compared to the Definitive Feasibility Study ("DFS") capital cost of US$2.35
billion on an equivalent EPC basis.
o Construction period reduced to 40 months from the DFS construction period
of 46 months.
o Key financial metrics improved on DFS outcomes (at potash pricing
averaging US$360/tonne unchanged from the DFS):
§ Kola net present value ("NPV") NPV10 post tax improved to US$1.623 billion
§ Internal Rate of Return ("IRR") improved to 20% on ungeared post tax basis
o At a potash price of US$1000/t Muriate of Potash ("MoP") CFR Brazil (less
than current potash price of approximately US$1100/t MoP CFR Brazil) the Kola
financial metrics improve to:
§ NPV10 post tax US$9.354 billion
§ IRR of 49% on ungeared post tax basis
o Designed with a nameplate production capacity of 2.2 Million tonnes per
annnum ("Mtpa") of MoP.
o MoP production scheduled over an initial 31 year project life.
o Designed as a conventional mechanised underground potash mine with shallow
shaft access. Ore from underground is transported to the process plant via an
overland conveyor approximately 25 kilometres ("km") long. After processing,
the MoP product is conveyor transported 11 km to the marine export facility.
MoP is conveyed from the storage area onto barges via the dedicated barge
loading jetty and then trans-shipped into ocean going vessels for export.
· Kore Potash signed a HoA for the construction in the presence of the
Minister of State and Minister of Mining Industry and Geology of the RoC, Mr
Pierre Oba.
The HoA confirms the timeline for SEPCO to complete their discussions with
Kore Potash ahead of presenting the Company an EPC contract proposal for Kola.
It also provides additional clarity on matters that SEPCO are required to
finalise in advance of presenting Kore with the construction contract
proposal.
The HoA provides for:
o Kola to be designed and constructed as a conventional underground potash
mine and processing plant producing up to 2.2 Mtpa of granular MoP over an
initial 31 year life.
o The granular MoP produced will be at a minimum quality of 95.3% Potassium
Chloride ("KCI") in line with international standards.
o The capital cost to construct will be US$1.83 billion and the construction
period will be 40 months.
o During the preconstruction engineering design phase, the HoA provides
SEPCO with an opportunity to adjust the costs related to the underground mine
portion of the works. SEPCO's current capital cost is based in part upon
information collected during the DFS Study phase, some of which SEPCO
continues to review. Should the final agreed quantities of materials and
labour or the underground construction period differ materially from the
baseline, SEPCO will be able to adjust proportionately. The underground
portion of the works (excluding equipment and infrastructure) is currently
estimated as US$164 million, which represents 9% of the total capital cost.
· SEPCO will also be able to adjust the capital cost if the Chinese RMB
or Congolese FCFA currency exchange rates to the US dollar vary materially
prior to commencement of the works. In such circumstance only the cost of
affected works or components may be adjusted.
Next Steps
· The results of the Study support moving to the next phase of the Kola
development. Therefore, the Summit Consortium has advised that SEPCO will
continue negotiations with Kore Potash with a view to finalising all EPC terms
based on FIDIC Silver book 2017 and present the complete EPC contract proposal
for the construction of Kola. The EPC contract proposal will be based on the
capital cost and construction schedule from the Study.
· The Summit Consortium has advised that the strongly positive outcomes
of the Study continue to support their financing of Kola and it intends to
provide the financing proposal for the construction cost of Kola after the
Company's receipt of the EPC proposal and agreement on key EPC terms.
DX DFS
· Following the completion of the drilling at the DX Potash Project by
the Company earlier in 2021, the Company's geological consultants developed an
updated geological model for the DX deposit.
The new geological model, completed in 2021, incorporated all information from
the drilling programme completed in 2021. It improves confidence in the
geological modelling of the DX deposit and improves the Company's
understanding of the Sylvinite / Carnallite boundaries in the Top Seams and
Hanging wall seams.
There has been no update of the DX Mineral Resources or Ore Reserves.
Next Steps
· The Company is assessing the most appropriate next steps for
developing the DX deposit and intends to update shareholders further once
these steps have been confirmed
The financial statements below should be read in conjunction with the notes
contained within the full financial report which is available online at the
Company's website at
https://korepotash.com/wp-content/uploads/2022/09/Kore-Half-Year-Interim-Report-2022.pdf
(https://korepotash.com/wp-content/uploads/2022/09/Kore-Half-Year-Interim-Report-2022.pdf)
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE 6 MONTHS ENDED 30 JUNE 2022
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 Dec 2021
USD USD USD
Unaudited Unaudited Audited
Directors' remuneration (198,521) (347,603) (440,853)
Equity compensation benefits (8,523) (47,010) (34,596)
Salaries, employee benefits and consultancy expense (207,766) (505,250) (687,623)
Administration expenses (222,798) (419,190) (675,174)
Interest income 17,029 9,803 14,709
Interest and finance expenses (2,182) (2,455) (4,708)
Net realised and unrealised foreign exchange loss (280,449) 21,265 (112,951)
Loss before income tax expense (903,210) (1,290,440) (1,941,196)
Income tax income/(expense) - - -
Loss for the period (903,210) (1,290,440) (1,941,196)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Exchange differences gain/(loss) on translating
operations (11,887,165) (5,477,438) (11,529,680)
Other comprehensive profit/(loss) for the period (11,887,165) (5,477,438) (11,529,680)
Total comprehensive profit/(loss) for the period (12,790,375) (6,767,878) (13,470,876)
Loss attributable to:
Owners of the Company (903,210) (1,289,516) (1,941,196)
Non-controlling interest - (924) -
(903,210) (1,290,440) (1,941,196)
Total comprehensive profit/(loss) attributable to:
Owners of the Company (12,790,375) (6,766,954) (13,470,876)
Non-controlling interest - (924) -
(12,790,375) (6,767,878) (13,470,876)
Loss per share
Basic and diluted loss per share (cents per share) (0.03) (0.05) (0.06)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022
30 June 2022 30 June 2021 31 Dec 2021
USD USD USD
Unaudited Unaudited Audited
ASSETS
Current Assets
Cash and cash equivalents 7,628,417 14,163,074 11,092,509
Trade and other receivables 145,458 120,960 197,996
Total Current Assets 7,773,875 14,284,034 11,290,505
Non-Current Assets
Trade and other receivables 99,562 96,005 107,577
Property, plant and equipment 433,385 516,026 482,530
Exploration and evaluation expenditure 157,518,638 170,592,485 166,613,902
Total Non-Current Assets 158,051,585 171,204,516 167,204,009
TOTAL ASSETS 165,825,460 185,488,550 178,494,514
LIABILITIES
Current Liabilities
Trade and other payables 803,064 1,373,099 1,074,602
Derivative financial liability 26 26 26
Total Current Liabilities 803,090 1,373,125 1,074,628
Non-Current Liabilities
Total Non-Current Liabilities - - -
TOTAL LIABILITIES 803,090 1,373,125 1,074,628
NET ASSETS 165,022,370 184,115,425 177,419,886
EQUITY
Issued share capital - Ordinary Shares 3,420,177 3,375,494 3,375,494
Reserves 218,347,816 236,078,936 230,029,754
Accumulated losses (56,183,040) (54,775,497) (55,422,779)
Equity attributable to the shareholders of Kore Potash plc
165,584,953 184,678,933 177,982,469
Non-controlling interests (562,583) (563,508) (562,583)
TOTAL EQUITY 165,022,370 184,115,425 177,419,886
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED
30 JUNE 2022
Ordinary Shares Share Premium Reserve Merger Reserve Accumulated Option Reserve Foreign Currency Owners of the Parent Non- controlling Interest Total Equity
Losses Translation Reserve
USD USD USD USD USD USD USD USD USD
3,375,494 44,205,971 203,738,800
Balance as at 1 Jan 2022 (55,422,779) 708,486 (18,623,503) 177,982,470 (562,583) 177,419,887
Loss for the period - - - (903,210) - - (903,210) - (903,210)
Other Comprehensive (loss)/gain - - - - - (11,887,165) (11,887,165) - (11,887,165)
Total Comprehensive (loss)/gain - - - (903,210) - (11,887,165) (12,790,375) - (12,790,375)
Kore Potash Ltd South Africa wound down - - - 138,500 - (139,989) (1,489) - (1,489)
Transactions with owners:
Issue of Shares 44,683 331,338 - - - - 376,021 - 376,021
Cancellation of performance rights - - - 4,449 (4,449) - - - -
Share Based payments - - - - 18,327 - 18,327 - 18,327
Balance at 30 June 2022 3,420,177 44,537,309 203,738,800 (56,183,040) 722,364 (30,650,657) 165,584,953 (562,583) 165,022,370
Ordinary Shares Share Premium Reserve Merger Reserve Accumulated Option Reserve Foreign Currency Owners of the Parent Non- controlling Interest Total Equity
Losses Translation Reserve
USD USD USD USD USD USD USD USD USD
(562,583) 177,661,602
Balance at 1 Jan 2021 2,451,768 32,004,080 203,738,800 (62,743,176) 9,866,536 (7,093,823) 178,224,185
Loss for the period:
Other comprehensive (loss)/gain
- - - (1,289,516) - - (1,289,516) (924) (1,290,440)
Total comprehensive (loss)/gain - - - - - (5,477,438) (5,477,438) - (5,477,438)
- - - (1,289,516) - (5,477,438) (6,766,954) (924) (6,767,878)
Transactions with owners:
Issue of Shares 917,702 13,106,895 - - - - 14,024,597 - 14,024,596
Share Issue expenses - (931,462) - - - - (931,462) - (931,462)
Cancellation of Options - - - 6,011,014 (6,011,014) - - - -
Conversion of performance rights 6,024 53,738 - 446,583 (446,583) - 59,762 - 59,762
Cancellation of performance rights - - - 2,799,598 (2,799,598) - - - -
Share based payments - - - - 68,805 - 68,805 - 68,805
Balance at 30 June 2021 3,375,494 44,233,251 203,738,800 (54,775,497) 678,146 (12,571,261) 184,678,933 (563,507) 184,115,425
Ordinary Shares Share Premium Reserve Merger Reserve Accumulated Option Reserve Foreign Currency Owners of the Parent Non- controlling Interest Total Equity
Losses Translation Reserve
USD USD USD USD USD USD USD USD USD
Balance at 1 Jan 2021 2,451,768 32,004,080 203,738,800 (62,743,176) 9,866,536 (7,093,823) 178,224,185 (562,583) 177,661,602
Loss for the period:
Other comprehensive (loss)/gain
- - - (1,941,196) - - (1,941,196) - (1,941,196)
Total comprehensive (loss)/gain - - - - - (11,529,680) (11,529,680) - (11,529,680)
- - - (1,941,196) - (11,529,680) (13,470,876) - (13,470,876)
Transactions with owners:
Issue of Shares 917,702 13,108,861 - - - - 14,026,563 - 14,026,563
Share Issue expense - (958,742) - - - - (958,742) - (958,742)
Cancellation of Options - - - 6,015,412 (6,015,412) - - - -
Conversion of performance rights 6,024 51,772 - 446,583 (446,583) - 57,796 - 57,796
Cancellation of performance rights - - - 2,799,598 (2,799,598) - - - -
Share based payments - - - - 103,543 - 103,543 - 103,543
Balance at 31 Dec 2021 3,375,494 44,205,971 203,738,800 (55,422,779) 708,486 (18,623,503) 177,982,469 (562,583) 177,419,886
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 6 MONTHS ENDED 30 JUNE 2022
6 months ended 6 months ended Year ended
30 June 2022 30 June 2021 31 Dec 2021
USD USD USD
Unaudited Unaudited Audited
Cash Flows from Operating Activities
Payments to suppliers and employees (697,416) (1,036,777) (1,701,079)
Net cash flows used in operating activities (697,416) (1,036,777) (1,701,079)
Cash Flows from Investing Activities
Payments for plant and equipment (658) (22) (2,216)
Payments for exploration and evaluation (2,497,533) (3,491,856) (5,811,225)
Interest received 17,029 9,803 14,709
Net cash flows used in investing activities (2,481,162) (3,482,075) (5,798,732)
Cash Flows from Financing Activities
Payment for share issue costs - (931,462) (958,742)
Proceeds from issue of shares 550 14,024,596 14,026,563
Net cash flows generated from
financing activities 550 13,093,134 13,067,821
Net (decrease)/increase in cash and cash
Equivalents (3,178,028) 8,574,282 5,568,010
Cash and cash equivalents at beginning of
period 11,092,509 5,555,000 5,555,000
Foreign currency differences (286,064) 33,792 (30,501)
Cash and Cash Equivalents at Period End 7,628,417 14,163,074 11,092,509
Market Abuse Regulation
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
This announcement has been approved for release by the Board of Kore Potash.
END
For further information, please visit www.korepotash.com
(http://www.korepotash.com) or contact:
· Kore Potash Tel: +27 84 603 6238
· Brad Sampson - CEO
· Tavistock Communications Tel: +44 (0) 20 7920 3150
· Emily Moss
· Adam Baynes
· SP Angel Corporate Finance - Nomad and Joint Broker Tel: +44 (0) 20 7470 0470
· Ewan Leggat
· Charlie Bouverat
· Shore Capital - Joint Broker Tel: +44 (0) 20 7408 4050
· Toby Gibbs
· James Thomas
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.
In particular, statements in this release regarding the Company's business or
proposed business, which are not historical facts, are "forward-looking"
statements that involve risks and uncertainties, such as Mineral Resource
estimates market prices of potash, capital and operating costs, changes in
project parameters as plans continue to be evaluated, continued availability
of capital and financing and general economic, market or business conditions,
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. Shareholders are cautioned not to
place undue reliance on forward-looking statements, which speak only as of the
date they are made. The forward-looking statements are based on information
available to the Company as at the date of this release. Except as required by
law or regulation (including the ASX Listing Rules), the Company is under no
obligation to provide any additional or updated information whether as a
result of new information, future events, or results or otherwise.
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