REG - Kore Potash PLC - Financial Results for Half Year Ended 30 June 2023
12/09/2023 07:00
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RNS Number : 0815M Kore Potash PLC 12 September 2023
12 September 2023
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 2023
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 2023 ("the Period").
The full financial report is available online at the Company's website at
https://korepotash.com/wp-content/uploads/2023/09/20230911-Half-Year-Interim-Report-2023.pdf
(https://korepotash.com/wp-content/uploads/2023/09/20230911-Half-Year-Interim-Report-2023.pdf)
The financial statements contained within this announcement should be read in
conjunction with the notes contained within the full financial report.
Highlights
· Discussions continue towards finalising terms for the Engineering,
Procurement and Construction ("EPC") contract at the Kola Project.
· PowerChina International Group Limited ("PowerChina") and SEPCO
Electric Power Construction Corporation ("SEPCO") have commenced work to
support the provision of guarantees regarding an EPC contract for Kola.
· Summit Consortium has confirmed that the financing proposal for the
full capital cost of Kola will be provided within six weeks of finalisation of
EPC contract terms.
· On 24 January 2023, the Company announced an update of the JORC
(2012) compliant Mineral Resource, Ore Reserve, Pre Feasibility Study ("PFS")
information and Production Target at the DX Project. The updated Mineral
Resource incorporates the most recent drilling results and interpretation of
the geophysical data.
· Cash and cash equivalents, at 30 June 2023 was USD 2,555,254.
· The exploration and evaluation assets at 30 June 2023 was USD
167,201,357, an increase of USD 4,472,163 from USD 162,729,194 at 31 December
2022. During the Period the Company capitalised USD 1,882,884 in exploration
and evaluation expenditure and the expenditure increased by USD 2,589,279 as a
result of the weakening of the USD against the currency of the RoC.
· Despite the on-going Russian/Ukraine conflict and increasing fuel
prices, the Group's operations have not been materially impacted during the
Period.
Kola Potash Project
Kore Potash signed a Memorandum of Understanding with the Summit Consortium in
April 2021 for the Optimisation of Kola, the provision of an EPC contract
proposal and to provide a debt and royalty financing proposal for the full
construction cost of Kola.
The results of the Optimisation Study announced on 27 June 2022 supported
moving to the next phase of Kola's development.
On 28 June 2022, the Company announced that it had signed a Head of Agreement
("HoA") for the construction of Kola with SEPCO.
Under the HoA, SEPCO undertook to continue negotiations with Kore Potash
towards an EPC contract for the construction of Kola. Importantly, the HoA
recognises the outcomes of the Optimisation Study, and confirmed the capital
cost of Kola, the construction period and related EPC contract terms.
Discussions with SEPCO to finalise key EPC terms continue.
Recognising the world-class scale of Kola, the length of the proposed
construction period and the total financing requirement, Kore Potash has
requested that SEPCO's parent company, PowerChina, provides the typically
required EPC contract guarantees, including performance and retention bonds
supporting the completion of construction and the operating performance of
Kola.
PowerChina is now actively involved in the process to finalise the EPC
contract terms. As part of this process, PowerChina is reviewing aspects of
the Kola design and the planned construction schedule and has had direct
communications with the management of Kore Potash.
PowerChina's review has generated a number of potential design improvements to
the Kola Project that identify potential opportunities to further reduce the
capital cost and the construction schedule. Discussions on incorporating these
design improvements into the EPC contract continue.
PowerChina has engaged a number of external experts to support its review of
the Kola design and they require completion of this review to support the
provision of the required EPC contract guarantees.
Kore Potash continues to work with the Summit Consortium to provide financing
for the full construction cost of Kola which is intended to be based on
royalty and debt finance.
The successful outcomes of the Optimisation Study were in line with the
Consortium's requirements and supported the ongoing financing discussions. The
financing parties of the Consortium have again reinforced their ongoing strong
interest in financing Kola and await finalisation of the EPC contract terms.
The Consortium has advised that the financing proposal for the full
construction cost of Kola will be provided to the Company within six weeks of
EPC terms being finalised.
Kore Potash continues to hold the view that the members of the Consortium have
the capability to provide the required financing to commit to the construction
of Kola and that pursuing this financing opportunity currently remains the
best strategy for Kore Potash's shareholders.
Key members of the Kore Potash Board and the Summit Consortium, including
SEPCO and PowerChina, met with the Ministry of Mines during the period. The
Ministry of Mines feedback from the visit was positive and that it improved
the Ministry's understanding of the financing process.
Dougou Extension ("DX") Sylvinite Defined Feasibility Study Phase 1
The DX Project update of the JORC (2012) compliant Mineral Resource, Ore
Reserve, PFS information and Production Target was announced on the 24 January
2023. The updated Mineral Resource incorporates the most recent drilling
results and interpretation of the geophysical data. A summary of the results
is presented below:
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 Muriate of Potash ("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 NPV10 (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 24.8% 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 updated information confirms that the DX Project is a financially
attractive, low capital cost project with a shorter construction period than
Kola.
At present, the Company remains focused on completing the financing of Kola
and moving forward to construction of Kola as soon as possible. The Company is
now exploring what strategic options are available for the DX project.
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/2023/09/20230911-Half-Year-Interim-Report-2023.pdf
(https://korepotash.com/wp-content/uploads/2023/09/20230911-Half-Year-Interim-Report-2023.pdf)
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE 6 MONTHS ENDED 30 JUNE 2023
6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
USD USD USD
Unaudited Unaudited Audited
Directors' remuneration (151,769) (198,521) (418,962)
Equity compensation benefits - (8,523) (9,412)
Salaries, employee benefits and consultancy expense (95,704) (207,766) (293,292)
Administration expenses (273,020) (222,798) (546,507)
Interest income 51,348 17,029 66,956
Interest and finance expenses (1,395) (2,182) (3,935)
Net realised and unrealised foreign exchange gain (loss)
5,557 (280,449) (308,801)
Loss before income tax expense (464,983) (903,210) (1,513,953)
Income tax income/(expense) - - -
Loss for the period (464,983) (903,210) (1,513,953)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Exchange differences gain/(loss) on translating
operations 2,540,490 (11,887,165) (8,660,408)
Other comprehensive profit/(loss) for the period 2,540,490 (11,887,165) (8,660,408)
Total comprehensive profit/(loss) for the period 2,075,507 (12,790,375) (10,174,361)
Loss attributable to:
Owners of the Company (464,474) (903,210) (1,513,822)
Non-controlling interest (509) - (131)
(464,983) (903,210) (1,513,953)
Total comprehensive profit/(loss) attributable to:
Owners of the Company 2,076,016 (12,790,375) (10,174,230)
Non-controlling interest (509) - (131)
2,075,507 (12,790,375) (10,174,361)
Loss per share
Basic and diluted loss per share (cents per share) (0.01) (0.03) (0.04)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023
30 June 2023 30 June 2022 31 Dec 2022
USD USD USD
Unaudited Unaudited Audited
ASSETS
Current Assets
Cash and cash equivalents 2,555,254 7,628,417 5,046,629
Trade and other receivables 140,479 145,458 200,251
Total Current Assets 2,695,733 7,773,875 5,246,880
Non-Current Assets
Trade and other receivables 39,218 99,562 38,597
Property, plant and equipment 373,633 433,385 385,103
Exploration and evaluation expenditure 167,201,357 157,518,638 162,729,194
Total Non-Current Assets 167,614,208 158,051,585 163,152,894
TOTAL ASSETS 170,309,941 165,825,460 168,399,774
LIABILITIES
Current Liabilities
Trade and other payables 572,417 803,064 749,469
Derivative financial liability 26 26 26
Total Current Liabilities 572,443 803,090 749,495
Non-Current Liabilities
Total Non-Current Liabilities - - -
TOTAL LIABILITIES 572,443 803,090 749,495
NET ASSETS 169,737,498 165,022,370 167,650,279
EQUITY
Issued share capital - Ordinary Shares 3,421,937 3,420,177 3,420,177
Reserves 223,948,269 218,347,816 221,586,467
Accumulated losses (57,069,485) (56,183,040) (56,793,651)
Equity attributable to the shareholders of
Kore Potash plc 170,300,721 165,584,953 168,212,993
Non-controlling interests (563,223) (562,583) (562,714)
TOTAL EQUITY 169,737,498 165,022,370 167,650,279
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED
30 JUNE 2023
Ordinary Shares Share Premium Reserve Merger Reserve Accumulated Option Reserve Foreign Currency Owners of the Parent Non- controlling Interest Total Equity
USD USD USD Losses USD Translation Reserve USD USD USD
USD USD
Balance as at 1 Jan 2023
3,420,177 44,537,309 203,738,800 (56,793,651) 734,259 (27,423,901) 168,212,993 (562,714) 167,650,279
Loss for the period
- - - (464,474) - - (464,474) (509) (464,983)
Other Comprehensive (loss)/gain
- - - - - 2,540,490 2,540,490 - 2,540,490
Total Comprehensive (loss)/gain
- - - (464,474) - 2,540,490 2,076,016 (509) 2,075,507
Transactions with owners:
Issue of Shares 1,760 - - - - - 1,760 - 1,760
Conversion of performance rights
- - - 188,640 (188,640) - - - -
Share Based payments - - - - 9,952 - 9,952 - 9,952
Balance at 30 June 2023 3,421,937 44,537,309 203,738,800 (57,069,485) 555,571 (24,883,411) 170,300,721 (563,223) 169,737,498
Ordinary Shares Share Premium Reserve Merger Reserve Accumulated Option Reserve Foreign Currency Owners of the Parent Non- controlling Interest Total Equity
USD USD USD Losses USD Translation Reserve USD USD USD
USD USD
Balance as at 1 Jan 2022
3,375,494 44,205,971 203,738,800 (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 Southt 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
Conversion 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 Losses 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 2022
3,375,494 44,205,971 203,738,800 (55,422,779) 708,486 (18,623,503) 177,982,470 (562,583) 177,419,887
Loss for the period:
- - - (1,513,822) - .- (1,513,822) (131) (1,513,953)
Other comprehensive (loss)/gain
- - - - - (8,660,408) (8,660,408) - (8,660,408)
Total comprehensive (loss)/gain
- - - (1,513,822) - (8,660,408) (10,174,230) (131) (10,174,361)
Kore Potash Ltd SA Divestment
- - - 138,501 - (139,989) (1,488) - (1,488)
Transactions with owners:
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 Dec 2022 3,420,177 44,537,309 203,738,800 (56,793,651) 734,259 (27,423,901) 168,212,993 (562,714) 167,650,279
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 6 MONTHS ENDED 30 JUNE 203
6 months ended 6 months ended Year ended
30 June 2023 30 June 2022 31 Dec 2022
USD USD USD
Unaudited Unaudited Audited
Cash Flows from Operating Activities
Payments to suppliers and employees (577,006) (697,416) (1,236,245)
Net cash flows (used in) operating activities (577,006) (697,416) (1,236,245)
Cash Flows from Investing Activities
Payments for plant and equipment - (658) (633)
Payments for exploration and evaluation (1,984,021) (2,497,533) (4,574,363)
Interest received 51,348 17,029 66,956
Net cash flows (used in) investing activities (1,932,673) (2,481,162) (4,508,040)
Cash Flows from Financing Activities
Proceeds from issue of shares 1,760 550 550
Net cash flows generated from
financing activities 1,760 550 550
Net decrease in cash and cash
Equivalents (2,507,919) (3,178,028) (5,743,735)
Cash and cash equivalents at beginning of
period 5,046,629 11,092,509 11,092,509
Foreign currency differences 16,544 (286,064) (302,145)
Cash and Cash Equivalents at Period End 2,555,254 7,628,417 5,046,629
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
Nick Elwes
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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