Financial Results for Year Ended 31 December 2022
31/03/2023 07:00
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RNS Number : 9135U Kore Potash PLC 31 March 2023
31 March 2023
Kore Potash Plc
("Kore Potash" or the "Company")
("Group" refers to Kore Potash Plc and its subsidiaries)
Financial Results for Year Ended 31 December 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 audited financial results and operational
highlights for the year ended 31 December 2022 (the "Period").
The full financial report including its Corporate Governance Statement is
available online at the Company's website at
https://korepotash.com/wp-content/uploads/2023/03/Kore_Potash_plc_Annual_Report_2022.pdf
(https://korepotash.com/wp-content/uploads/2023/03/Kore_Potash_plc_Annual_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
• On 1 April 2022, the Company announced it had received the
Optimisation Study on the Kola Project.
• The detailed review of the Study was completed, and the outcomes
of the Study announced to shareholders on 27 June 2022.
• On 28 June 2022, the Company announced it had signed a Head of
Agreement ("HoA") for the construction of Kola.
• On 19 October 2022, the Company announced receipt of
correspondence from the Minister of Mines of the RoC on 12 October 2022
expressing discontent with the progress towards construction of the Kola
Project and providing the Company 30 days within which to respond. The letter
was received following the arrest and subsequent release, without charge, of
two senior employees of the Company by the RoC police. Neither the employees
nor the Company have been informed of the reason for the arrests.
• The Company provided a response to the Minister on 11 November
2022. On 17 December 2022, the Company met in person with the Minister, and
the discussion included a further update on the progress towards financing
Kola. At the end of the meeting the Minister expressed his thanks for how the
Company responded to his most recent letter and assured the Company of his and
the RoC Government's ongoing support for Kore Potash and to develop the Kola
Project.
• Since this time the Company has held multiple meetings with the
Minister of Mines and is assured that the Company has and will continue to
have his full support and that the Company's tenements in the RoC remain in
good standing.
• Subsequent to the end of the period on the 24 January 2023, the
Company announced the updated Dougou Extension PFS and Production Target.
Brad Sampson, Chief Executive of Kore Potash, commented: "During 2022, the
Company continued to make tangible progress towards the financing of the Kola
Project.
Engagement with the Summit Consortium following the successful completion of
the Optimisation Study is progressing towards finalisation of construction
contract terms and the provision of financing for the full construction cost
of the Kola Project.
Global events continue to reinforce the importance of potash in the production
of food and the need for the development of new potash projects outside the
traditional northern hemisphere potash production regions.
Our potash projects stand out globally. With very high in situ quality,
significant resources and a beneficial location, we believe the Sintoukola
Basin is one of the most promising undeveloped potash regions in the world. It
has the potential to produce Muriate of Potash needed by farmers around the
world for generations."
Summary of financials
• During the Period, the Group's Total Comprehensive Loss was USD
10,174,361 (2021: Loss USD 13,470,876), and the Group experienced net cash
outflows from operating and investing activities of USD 5,744,285 (2021: USD
7,499,811 million). Cash and cash equivalents totalled USD 5,046,629 as at 31
December 2022 (2021: USD 11,092,509).
• Group net assets decreased in the year to USD 167,650,279 (2021:
USD 177,419,886). This was primarily driven by a USD 5,064,934 increase in
exploration expenditure capitalised offset by a USD 8,949,642 reduction in the
capitalised exploration costs due to the strengthening of the USD against the
currency of the RoC.
• The Directors prepared a cash flow forecast for the period ending
31 December 2024, which indicates that the Group will not have sufficient
liquidity to meet its working capital requirements to the end of the going
concern period (March 2024). Note 1 of the financial statements provides more
detail on the going concern statement.
• The company will be required to raise funds before Q4 2023 in
order to meet its current planned activities over the next 12 months. The
Directors have considered various mitigating actions, which
include raising additional capital to enable the Group to continue to fund
its working capital requirements. The Directors have identified a number of
potential funding options available to the Group.
Kola Potash Project
· The Company signed a non-binding Memorandum of Understanding with
Summit, on behalf of a consortium of investors and engineering firms on 6
April 2021, 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.
· The Summit Consortium includes:
o BRP Global, headquartered in Abu Dhabi, who will provide royalty financing
in conjunction with product offtake.
o SEPCO Electric Power Construction Corporation ("SEPCO"), an international
engineering and construction group headquartered in Jinan, China and with
offices in Dubai which is 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 seven of these in Africa, in addition to its construction
capability, SEPCO will also assist in arranging the debt financing: 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 around the world. ENFI's potash specific
experience includes design and construction of 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 USD 520 million to USD 1.83 billion on an EPC
basis compared to the Definitive Feasibility Study ("DFS") capital cost of USD
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 USD 360/tonne unchanged from the DFS):
§ Kola NPV(10) post tax improved to USD 1.623 billion
§ IRR improved to 20% on ungeared post tax basis
o At a potash price of USD 1000/t Muriate of Potash ("MoP") CFR Brazil (less
than potash price of approximately USD 1100/t MoP CFR Brazil when announced in
June 2022) the Kola financial metrics improve to:
§ NPV(10) post tax USD 9.354 billion
§ IRR of 49% on ungeared post tax basis
o Designed with a nameplate production capacity of 2.2Mtpa 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 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.
· On 28 June 2022, 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 Potash 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% KCI in
line with international standards.
o The capital cost to construct will be USD 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 USD 164 million, which represents 9% of the total capital cost.
o 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.
· On 10 October 2022, Kore Potash announced that SEPCO had delivered
the EPC proposal for Kola. The EPC proposal was approved for presentation to
Kore Potash by the Boards of SEPCO, and its parent company, Power China.
The EPC proposal reflects the capital cost and construction timeline reported
in the Optimisation Study and the terms agreed to in the HoA. The EPC proposal
includes an EPC Agreement which details the contractual terms in a format
congruent with the FIDIC Silver book (2nd Edition, 2017) conditions of
contract.
The contractual terms are being finalised prior to acceptance of the EPC. Kore
Potash and SEPCO are in dialogue to complete this process. The Company notes
that it may transpire that SEPCO will require further SEPCO and Power China
Board approvals prior to the finalisation of the contractual terms.
DX DFS
· Subsequent to the Period, the Company released its update on the DX
PFS and Production Target on 24 January 2023.The Company reported the
following highlights:
o Production Target of 15.5Mt sylvinite at a grade of 30.63 % KCl
demonstrates initial project life of 12 years at a production rate of 400,000
tpa MoP.
o Production Target based on Proven and Probable Ore Reserves and 13% of the
Inferred Mineral Resources that represents 30% of the life of project MoP
production.
o NPV(10) (real) of USD 275 million and 27% IRR on a real post tax basis at
life of project average granular MoP price of USD 450/t.
o Approximately 2.9 years post-tax payback period from first production.
o Proven and Probable Ore Reserve of 9.31 Mt sylvinite at an average grade
of 35.7% KCl.
o Mineral Resource of 129 Mt at an average grade of 24.9% KCl.
o Higher confidence in the distribution of Sylvinite within the Top Seams
and improved understanding of the Sylvinite/Carnallite boundary within the
Hanging Wall Seam.
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/2023/03/Kore_Potash_plc_Annual_Report_2022.pdf
(https://korepotash.com/wp-content/uploads/2023/03/Kore_Potash_plc_Annual_Report_2022.pdf)
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Parent Consolidated Entity
Dec 2022 Dec 2021 Dec 2022 Dec 2021
Continuing operations USD USD USD USD
Other Revenue 1,092,147 834,158 - -
Directors' remuneration (814,597) (743,353) (418,962) (440,853)
Equity compensation benefits (9,412) (34,596) (9,412) (34,596)
Salaries, employee benefits and consultancy expense (890,518) (1,113,966) (293,292) (687,623)
Credit loss provision - - - -
Administration expenses (542,146) (850,424) (546,507) (675,174)
Interest income 66,956 14,698 66,956 14,709
Interest and finance expenses (3,935) (4,365) (3,935) (4,708)
Net realised and unrealised
foreign exchange losses (308,801) (112,951) (308,801) (112,951)
Loss before income tax expense (1,410,306) (2,010,799) (1,513,953) (1,941,196)
Income tax - - - -
Loss for the year (1,410,306) (2,010,799) (1,513,953) (1,941,196)
Other comprehensive income/(loss)
Items that may be classified subsequent to profit or loss
Exchange differences on translating foreign operations - - (8,660,408) (11,529,680)
Other comprehensive income/(loss) for the year - - (8,660,408) (11,529,680)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (1,410,306) (2,010,799) (10,174,361) (13,470,876)
Loss attributable to:
Owners of the Company (1,410,306) (2,010,799) (1,513,822) (1,941,196)
Non-controlling interest - - (131) -
(1,410,306) (2,010,799) (1,513,953) (1,941,196)
Total comprehensive loss attributable to:
Owners of the Company (1,410,306) (2,010,799) (10,174,230) (13,470,876)
Non-controlling interest - - (131) -
(1,410,306) (2,010,799) (10,174,361) (13,470,876)
Basic and diluted loss per share (cents per share) (0.04) (0.06) (0.04) (0.06)
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Parent Consolidated Entity
Dec 2022 Dec 2021 Dec 2022 Dec 2021
USD USD USD USD
CURRENT ASSETS
Cash and cash equivalents 4,999,889 10,916,397 5,046,629 11,092,509
Trade and other receivables 112,272 88,836 200,251 197,996
TOTAL CURRENT ASSETS 5,112,161 11,005,233 5,246,880 11,290,505
NON CURRENT ASSETS
Trade and other receivables 158,444,734 153,515,625 38,597 107,577
Property, plant and equipment - - 385,103 482,530
Exploration and evaluation expenditure - - 162,729,194 166,613,902
Investment in subsidiary 68 69 - -
TOTAL NON CURRENT ASSETS 158,444,802 153,515,694 163,152,894 167,204,009
TOTAL ASSETS 163,556,963 164,520,927 168,399,774 178,494,514
CURRENT LIABILITIES
Trade and other payables 396,982 356,882 749,469 1,074,602
Derivative financial liability 26 26 26 26
TOTAL CURRENT LIABILITIES 397,008 356,908 749,495 1,074,628
TOTAL LIABILITIES 397,008 356,908 749,495 1,074,628
NET ASSETS 163,159,955 164,164,019 167,650,279 177,419,886
EQUITY
Contributed equity - Ordinary Shares 3,420,177 3,375,494 3,420,177 3,375,494
Reserves 172,999,244 172,642,133 221,586,467 230,029,754
Accumulated losses (13,259,466) (11,853,608) (56,793,651) (55,422,779)
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
163,159,955 164,164,019 168,212,993 177,982,469
Non-controlling interests - - (562,714) (562,583)
TOTAL EQUITY 163,159,955 164,164,019 167,650,279 177,419,886
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Consolidated Entity Ordinary Shares Share-Based Payments Reserve Share Premium Reserve Foreign Currency Translation Reserve Merger Reserve Accumulated Losses Equity Attributable to the Shareholders of Kore Potash plc Non-Controlling Interest Total
Equity
USD USD USD USD USD USD USD USD USD
Balance at 2,451,768 9,866,536 32,004,080 (7,093,823) 203,738,800 (62,743,176) 178,224,185 (562,583) 177,661,602
1 January 2021
Loss for the period - - - - - (1,941,196) (1,941,196) - (1,941,196)
Other comprehensive loss for the year - - - (11,529,680) - - (11,529,680) - (11,529,680)
Total comprehensive loss for the year - - - (11,529,680) - (1,941,196) (13,470,876) - (13,470,876)
Transactions with shareholders
Cancellation of options - (6,015,412) - - - 6,015,412 - - -
Conversion of performance rights 6,024 (446,583) 51,772 - - 446,583 57,796 57,796
Cancellation of performance rights - (2,799,598) - - - 2,799,598 - - -
Share issues 917,702 - 13,108,861 - - - 14,026,563 - 14,026,563
Share issue costs - - (958,742) - - - (958,742) - (958,742)
Share based payments - 103,543 - - - - 103,543 - 103,543
Balance at 31 December 2021 3,375,494 708,486 44,205,971 (18,623,503) 203,738,800 (55,422,779) 177,982,469 (562,583) 177,419,886
Loss for the period - - - - - (1,513,822) (1,513,822) (131) (1,513,953)
Other comprehensive loss for the year - - - (8,660,408) - - (8,660,408) - (8,660,408)
Total comprehensive (loss)/income for the year - - -
(8,660,408) - (1,513,822) (10,174,230) (131) (10,174,361)
Kore Potash ltd SA Divestment - - - (139,989) - 138,501 (1,488) - (1,488)
Transactions with shareholders
Conversion of performance rights - (4,449) - - - 4,449 - - -
Share issues 44,683 - 331,338 - - - 376,021 - 376,021
Share issue costs - 11,895 - - - - 11,895 - 11,895
Share based payments - 18,327 - - - - 18,327 - 18,327
Balance at 31 December 2022 3,420,177 734,259 44,537,309 (27,423,901) 203,738,800 (56,793,651) 168,212,994 (562,714) 167,650,280
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Parent Ordinary Shares Share Based Payments Reserve Share Premium Reserve Merger Reserve Reorganisation Accumulated Losses Total
Reserve Equity
USD USD USD USD USD USD USD
Balance at 01 January 2021 2,451,768 9,866,536 32,004,080 203,738,800 (76,011,124) (19,104,403) 152,945,657
Loss for the year - - - - - (2,010,799) (2,010,799)
Total comprehensive loss for the year - - - - - (2,010,799) (2,010,799)
Transactions with shareholders
Conversion of performance rights 6,024 (446,583) 51,772 - - 446,583 57,796
Cancellation of options - (6,015,412) - - - 6,015,412 -
Cancellation of performance rights - (2,799,598) - - - 2,799,598 -
Share issue 917,702 - 13,108,861 - - - 14,026,563
Share issue costs - - (958,742) - - - (958,742)
Share based payments - 103,543 - - - - 103,543
Balance at 31 December 2021 3,375,494 708,486 44,205,971 203,738,800 (76,011,124) (11,853,609) 164,164,018
Loss for the year - - - - - (1,410,306) (1,410,306)
Total comprehensive (loss)/income for the year - - - - - (1,410,306) (1,410,306)
Transactions with shareholders
Conversion of performance rights - (4,449) - - - 4,449 -
Share issue 44,683 - 331,338 - - - 376,021
Share issue costs - 11,895 - - - - 11,895
Share based payments - 18,327 - - - - 18,327
Balance at 31 December 2022 3,420,177 734,259 44,537,309 203,738,800 (76,011,124) (13,259,466) 163,159,955
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Parent Consolidated Entity
Dec 2022 Dec 2021 Dec 2022 Dec 2021
USD USD USD USD
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers (593,005) (1,297,463) (1,151,137) (1,491,849)
Payments to employees (538,184) (552,462) (85,108) (209,230)
Net cash (used in) operating activities (1,131,189) (1,849,925) (1,236,245) (1,701,079)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment - - (633) (2,216)
Payments for exploration activities - - (4,574,363) (5,811,225)
Amounts advanced to related parties (4,532,663) (5,683,153) - -
Interest received 66,956 14,698 66,956 14,709
Net cash (used in) investing activities (4,465,707) (5,668,455) (4,508,040) (5,798,732)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 550 14,026,563 550 14,026,563
Payment for share issue costs - (958,742) - (958,742)
Net cash provided by financing activities 550 13,067,821 550 13,067,821
Net (decrease)/increase in cash & cash equivalents held (5,596,346) 5,549,441 (5,743,735) 5,568,010
Cash and cash equivalents at beginning of financial year
10,916,397 5,443,551 11,092,509 5,555,000
Foreign currency differences (320,162) (76,595) (302,145) (30,501)
Cash and cash equivalents at end of financial year
4,999,889 10,916,397 5,046,629 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 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
Questco Corporate Advisory - JSE Sponsor Tel: +27 (11) 011 9205
Doné Hattingh
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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