REG - Kore Potash PLC - Kola Project Optimised DFS update
27/02/2025 08:45
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RNS Number : 6894Y Kore Potash PLC 27 February 2025
27 February 2025
Kore Potash Plc
("Kore Potash" or the "Company")
Kola Project Optimised DFS update
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"), is pleased to provide an update in relation to the optimised
Kola Definitive Feasibility Study ("Optimised DFS") for the Kola Project
("Kola" or "Kola Project") further to the announcement regarding the signing
of the Engineering, Procurement and Construction contract ("EPC") for the Kola
Project with PowerChina International Group Limited ("PowerChina") on 20
November 2024.
Prior to signing an EPC agreement, two studies have been completed by the
Company: the Kola Definitive Feasibility Study ("DFS") in January 2019 and the
Kola Project Optimisation Study ("Optimisation Study") in June 2022, details
of both of which have been released to AIM, JSE and ASX on 29 January 2019 and
28 June 2022 respectively. Following signing of the EPC contract, the Company
undertook an exercise to optimise the DFS to account for the EPC contract,
including updating the Kola production schedule and the forecast financial
information. The Company has now completed its review of the Optimised DFS,
with the results summarised herein by way of update.
The results of the Optimised DFS incorporate the most current information
available to the Company, and have been updated from the DFS and Optimisation
Study to ensure compliance with the latest applicable listing rule
requirements and other regulatory policies of the Australian Stock Exchange
Limited, and therefore should be considered as superseding the results of both
the DFS and the earlier Optimisation Study.
Unlike the DFS and the Optimisation Study, the Optimised DFS is based on a
production period which utilizes all Proved and Probable Ore Reserves and only
6% of Inferred Minerals Resources, giving a Life of Mine ("LoM") of 23 years.
Kore Potash considers there is strong potential for the mine plan on which
this Optimised DFS is based to be extended beyond 23 years by upgrading a
portion of the 340 Mt of Inferred Mineral Resources to Measured or Indicated
Resources through further exploration during the 23 years of operations.
Highlights of the Optimised DFS
· Capital cost of US$2.07 billion (nominal basis) on a signed fixed price EPC
basis, including owner's costs.
· Assumed construction start date of 1 January 2026, with construction period of
43 months.
· Kola designed with a nameplate capacity of 2.2 million tonnes per annum
("Mtpa") of Muriate of Potash ("MoP").
· Average MoP production per year of 2.2 Mtpa of MoP for total MoP production of
50Mt over a 23-year life of mine.
· Average cost of MoP delivered to Brazil is US$128/t. Based on an independent
MoP market study commissioned by the Company, management considers Kore Potash
is projected to become one of the lowest cost producers in the global
agricultural market to Brazil.
· Average annual EBITDA is approximately US$733 million. Kore Potash is
projected to continue to enjoy a very high average EBITDA margin of 74%.
· Key financial metrics, at MoP CFR Brazil pricing averaging US$449/tonne and on
a 90% attributable basis (reflecting Kore's future holding of 90% and the RoC
government 10%):
o - Kola NPV(10%) (real) post-tax US$1.7 billion
o - IRR 18% (real) on ungeared post-tax basis
· Kola is designed as a conventional mechanised underground potash mine with
shallow shaft access. Ore from underground is transported to the processing
plant via an approximately 25.5 km long overland conveyor. After processing,
the finished product is conveyed 8.5 km to the marine export facility. MoP is
transferred from the storage area onto barges via a dedicated barge loading
jetty before being transhipped into ocean-going vessels for export.
Cautionary Statement:
The production target (and the forecast financial information derived from
this production target) includes all of Kore Potash's reported Ore Reserve
estimates, together with a proportion of Inferred Mineral Resources. The
production target includes relative portions of ore by category of Proved and
Probable Ore Reserves (94%) and Inferred Mineral Resources (6%). The Company
is satisfied that the proportion of Inferred Mineral Resources is not the
determining factor in project viability as the project demonstrates positive
economic outcomes with the Inferred Mineral Resources excluded. There is a low
level of geological confidence associated with Inferred Mineral Resources and
there is no certainty that further exploration work will result in the
determination of Indicated Mineral Resources or that the production targets
will be realised.
The forecast financial information derived from the production target uses
Argus Media Marketing's forecast annual MoP CFR Brazil prices to 2047 and then
an incremental increase of US$2/t annually post 2047, which annual prices
imply an average MoP CFR Brazil price of US$449/t over the 23 years of
scheduled production in the Optimised DFS. As discussed in section 12 (Potash
Marketing), Kore Potash has concluded it has a reasonable basis for the use of
those prices, but there is no guarantee that such prices will be realised and
lower product pricing will significantly affect the financial performance of
the Kola Project. Refer to the sensitivity analysis in section 14 (Economic
Evaluation) for further details, together with the Forward Looking Statements
notice below.
To achieve the range of outcomes indicated in the Optimised DFS, the Optimised
DFS estimates that funding in the order of US$2.07 billion (nominal basis) in
construction capital will be required. Shareholders and investors should be
aware that there is no certainty that Kore Potash will be able to raise the
required funding when needed and it is possible that such funding may only be
available on terms that may be highly dilutive or otherwise adversely affect
Kore Potash shareholders' exposure to the Kola Project economics. Whilst the
Company has made progress towards financing the development of the Kola
Project as discussed further in section 15 (Project Funding) of Appendix A,
those arrangements are currently non-binding and therefore there is currently
no certainty that the Company will be able to raise the funds required to
develop the Kola Project, or if funding is available, the terms of such
funding.
Andre Baya, Chief Executive Officer of Kore Potash, commented:
"The Kola Project is of global significance as the security of the world's
food supply is at the mercy of global disruptions to fertilizer supply. Recent
geopolitical events have highlighted this risk as potash production is
concentrated among a small number of companies and countries.
Furthermore, to reduce the carbon footprint of our industry, new potash
producers need to be geographically closer to end users with reduced freight
cost and environmental impact. In that sense, Kola's location is ideal to
supply environmentally-friendly potash to meet the growing demand of the
Brazilian market.
As our operating cost, inclusive of freight, is of USD 128.19/MT (CFR Brazil),
we can vie for a higher profit margin than any existing potash mine worldwide
when it comes to serving our target market. With an NPV10 of USD 1.7 Billion
for our production target, the Kola project reaches an enticing IRR of 18%.
The execution of the Kola EPC contract with PowerChina now moves Kore Potash
one gigantic step closer to production and we eagerly await financial close to
start construction."
Kola Project Optimised DFS update, EPC
On 6 April 2021, Kore Potash announced the signing of a non-binding Memorandum
of Understanding ("MoU") with the Summit Consortium ("Summit") to arrange the
full financing required for the construction of the Kola Project.
The Optimisation Study, which represented the first part of the financing
process, was undertaken by SEPCO Electric Power Construction Corporation
("SEPCO"). PowerChina is SEPCO's parent company. The key goals of the
Optimisation Study were to improve Kola's value through reductions in capital
costs and by shortening the construction schedule.
During the Optimisation Study, SEPCO employed two key subcontractors: China
ENFI Engineering Corporation to review the mining, processing, and
infrastructure aspects of the Project, and CCCC-FHDI Engineering Co Limited to
optimise the marine facilities.
The optimisations continued in 2023 and 2024 and included in-country work to
better define geotechnical conditions. These works culminated in signing a
US$1.929 billion fixed-cost EPC agreement on 19 November 2024. The EPC
included refined cost estimates with a knowledge of conditions at each
construction location. The Company worked with certain potential suppliers and
vendors to refine the Kola Project requirements and obtained pricing updates
where necessary.
A summary of the key Kola Project parameters and assumptions adopted in the
Optimised DFS update post signing EPC agreement are summarised in Table 1
below.
Table 1: Key Project Parameters and Assumptions
Result Unit Production Target
Total MOP production Mt 50
Initial project life Years 23
Average scheduled mining rate Mtpa ore 7.0
KCl recovery in process plant % KCl 89.9%
Average MOP production per year Mtpa 2.20 Mtpa
Capital Cost EPC basis (real)* US$ billion 2.01
Sustaining capital US$/t MOP 13.06
Construction schedule months 43
Steady state operating cost (Mine gate) US$/t MOP 74.94
Operating cost (CFR Brazil) US$/t MOP 128.19
Forecast average MoP granular price (CFR Brazil)** US$/t MOP 449
Post tax, real un-geared NPV(10%) US$ million 1,675
Post tax, real un-geared IRR % 18%
Average EBITDA per annum real US$ million 733
Average EBITDA margin % 74%
Notes:
* The US$2.01 billion capital cost (real) includes US$141 million for Kore's
owner's costs during the EPC phase.
** US$449/t is Argus Media Group's forecast real average future potash CFR
Brazil prices over the project life. Further details in Item 12 Potash
Marketing below.
Key assumptions related to the ore reserves, production schedules and
financial evaluation of the project have been updated in Appendix B of this
announcement.
Ore Reserves and Mineral Resources
The Kola Potash Ore Reserves (Table 2) are based on the Kola Sylvinite Mineral
Resources (Table 3) as confirmed on 27 Feb 2025. Further detail on the Ore
Reserve Estimate is provided in Appendix B: Summary of Information required
according to ASX Listing Rule 5.9.1 and Appendix C: JORC 2012 - Table 1,
Section 4 Ore Reserves. All of the Ore Reserves and Mineral Resources reported
here for Kola are Sylvinite.
Table 2: Kola Sylvinite Ore Reserves
Classification Ore Reserves KCl grade Mg Insolubles
(Mt) (% KCl) (% Mg) (% Insol.)
Proved 61.8 32.1 0.11 0.15
Probable 90.6 32.8 0.10 0.15
Total Ore Reserves 152.4 32.5 0.10 0.15
Table 3: Kola Sylvinite Mineral Resources (inclusive of Ore Reserves) *
Classification Million Tonnes KCl Mg Insoluble
(Mt) (% KCl) (% Mg) (% Insol.)
Total Measured 215.7 35.0 0.08 0.13
Total Indicated 292.0 35.7 0.06 0.14
Total Inferred 340.0 34.0 0.08 0.25
Total Mineral Resources 847.7 34.9 0.08 0.18
* The Kola Mineral Resource Estimate was confirmed on 27 Feb 2025 in an
announcement titled "Confirmation of Mineral Resource for Kola Deposit".
Production targets and forecast financial information derived from
production targets
This release contains information that constitutes a production target for the
Kola Project (and forecast financial information derived from that production
target) for the purposes of the ASX Listing Rules.
Ore Reserve and Mineral Resource estimates underpinning the production target
for the Kola Project referred to in this release were prepared by, or under
the supervision of, a Competent Person in accordance with the JORC Code, 2012
Edition. Competent Person's statements are set out on page 6. Details of those
Ore Reserves and Mineral Resources are set out in this announcement
(including, in relation to the Ore Reserves, the details in Appendix B and
Appendix C).
The production target includes relative portions of ore by category of Proved
and Probable Ore Reserves (94%) and Inferred Mineral Resources (6%).
The material assumptions applied in the estimation of the production target
for the Kola Project project and forecast financial information derived from
those production target are set out in the summaries of the study outcomes
accompanying this announcement.
The Company is satisfied that in each case, the proportion of Inferred Mineral
Resources is not the determining factor in project viability as the project
demonstrates positive economic outcomes with the Inferred Mineral Resources
excluded. There is a low level of geological confidence associated with
Inferred Mineral Resources and there is no certainty that further exploration
work will result in the determination of Indicated Mineral Resources or that
the production target will be realised.
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.
For further information, please visit www.korepotash.com
(http://www.korepotash.com/) or contact:
Kore Potash
Andre Baya, CEO
Andrey Maruta, CFO Tel: +44 (0) 20 3963 1776
Tavistock Communications
Emily Moss Tel: +44 (0) 20 7920 3150
Nick Elwes
Josephine Clerkin
SP Angel Corporate Finance - Nomad and Broker Tel: +44 (0) 20 7470 0470
Ewan Leggat
Charlie Bouverat
Grant Barker
Shore Capital - Joint Broker Tel: +44 (0) 20 7408 4050
Toby Gibbs
James Thomas
Questco Corporate Advisory - JSE Sponsor Tel: +27 63 482 3802
Doné Hattingh
END
Competent Persons Statement
The estimated Ore Reserves and Mineral Resources underpinning the production
target have been prepared by a competent person in accordance with the
requirements of the 2012 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012
Edition).
The information relating to Exploration Results and Mineral Resources in this
announcement is based on, or extracted from previous reports referred to
herein, and available to view on the Company's website https://korepotash.com
(https://korepotash.com) . The Kola Mineral Resource Estimate was confirmed on
27 Feb 2025 in an announcement titled "Confirmation of Mineral Resource for
Kola Deposit". 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 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.
The information in this announcement that relates to Mineral Resources is
based on information compiled or reviewed by, Garth Kirkham, P.Geo., who has
read and understood the requirements of the JORC Code, 2012 Edition. Mr.
Kirkham is a Competent Person as defined by the JORC Code, 2012 Edition,
having a minimum of five years of experience that is relevant to the style of
mineralization and type of deposit described in this announcement, and to the
activity for which he is accepting responsibility. Mr. Kirkham is member in
good standing of Engineers and Geoscientists of British Columbia (Registration
Number 30043) which is an ASX-Recognized Professional Organization (RPO). Mr.
Kirkham is a consultant engaged by Kore Potash Plc to review the documentation
for Kola Deposit, on which this announcement is based, for the period ended 29
October 2018. Mr. Kirkham has verified that this announcement is based on and
fairly and accurately reflects in the form and context in which it appears,
the information in the supporting documentation relating to preparation of the
review of the Mineral Resources.
The information in this announcement that relates to Ore Reserves is based on
information compiled or reviewed by, Mo Molavi, P. Eng., who has read and
understood the requirements of the JORC Code, 2012 Edition. Mr. Molavi is a
Competent Person as defined by the JORC Code, 2012 Edition, having a minimum
of five years of experience that is relevant to the style of mineralization
and type of deposit described in this announcement, and to the activity for
which he is accepting responsibility. Mr. Molavi is member good standing of
Engineers and Geoscientists of British Columbia (Registration Number 37594)
which is an ASX-Recognized Professional Organization (RPO). Mr. Molavi is a
consultant engaged by Kore Potash Plc to review the documentation for Kola
Deposit, on which this announcement is based, for the period ended 29 October
2018. Mr. Molavi has verified that this announcement is based on and fairly
and accurately reflects in the form and context in which it appears, the
information in the supporting documentation relating to preparation of the
review of the Ore Reserves.
Forward-Looking Statements
This announcement 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. There are a number of risks, both specific
to Kore Potash, and of a general nature, which may affect the future operating
and financial performance of Kore Potash, and the value of an investment in
Kore Potash including and not limited to title risk, renewal risk, economic
conditions, stock market fluctuations, commodity demand and price movements,
timing of access to infrastructure, environmental risks, regulatory risks,
operational risks, reliance on key personnel, Ore Reserve estimations, local
communities risks, foreign currency fluctuations, and mining development,
construction and commissioning risks.
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 announcement 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.
Summary information
Kore Potash plc has prepared this announcement. This document contains general
background information about Kore Potash plc current at the date of this
announcement. It does not constitute or form part of any offer or invitation
to purchase, otherwise acquire, issue, subscribe for, sell or otherwise
dispose of any securities, nor any solicitation of any offer to purchase,
otherwise acquire, issue, subscribe for, sell, or otherwise dispose of any
securities. The announcement is in summary form and does not purport to be
all-inclusive or complete. It should be read in conjunction with the Company's
other periodic and continuous disclosure announcements, which are available to
view on the Company's website https://korepotash.com (https://korepotash.com)
.
The announcement, publication or distribution of this announcement in certain
jurisdictions may be restricted by law, and therefore, persons in such
jurisdictions into which this announcement is released, published or
distributed should inform themselves about and observe such restrictions.
Not financial advice
This document is for information purposes only and is not financial product or
investment advice, nor a recommendation to acquire securities in Kore Potash
plc. It has been prepared without considering the objectives, financial
situation or needs of individuals. Before making any investment decision,
prospective investors should consider the appropriateness of the information
having regard to their own objectives, financial situation and needs and seek
legal and taxation advice appropriate to their jurisdiction.
Appendix A: Summary of Kola Project Optimised DFS update - December 2024
1. Project Introduction:
Kore Potash is a mineral exploration and development company that is
incorporated in the United Kingdom and listed on the AIM (a sub-market of the
London Stock Exchange, as KP2), the Australian Securities Exchange (ASX, as
KP2), the Johannesburg Stock Exchange (JSE, as KP2) and A2X Proprietory
Limited (an independent stock exchange in South Africa, A2X, as KP2) Markets.
The primary asset of Kore is the Kola Project located in the RoC, held by the
97%-owned Sintoukola Potash SA ("SPSA"). SPSA has 100% ownership of the Kola
Mining Lease, on which the Kola Project is located.
The Kola Project is situated in the Kouilou Province of the RoC, within 40 km
of the Atlantic Coast and approximately 70 km north of the port city of Pointe
Noire.
The Kola DFS considers the mining of the Kola Sylvinite, and the production of
approximately 2.2 Mtpa of MoP and its export to its target markets and
considers all associated infrastructure. It delivers an economic model based
on life of project of 23 years that is based upon 23 production years
exploiting Ore Reserves of 152.4 Mt and 9.7 Mt of Inferred Mineral Resource.
In 2017, Kore commissioned a consortium of French companies ("FC") to conduct
a DFS for the Kola Project. The FC included: Technip France ("TPF"), Vinci
Construction Grands Projets ("VCGP"), Egis International ("EGIS") and Louis
Dreyfus Armateurs ("LDA").
Met-Chem DRA Global ("MTC") and AMC Consulting ("AMC") were appointed by the
FC as their specialist subconsultants.
Kore directly contracted with MTC for the Mineral Resource Estimate ("MRE"),
and SRK Consulting (UK) Limited ("SRK") for undertaking the Environmental and
Social Impact Assessment ("ESIA").
The Kola DFS was finalised in January, 2019.
On 6 April 2021, Kore Potash announced the signing of a non-binding MoU with
Summit to arrange the full financing required for the construction of the Kola
Project.
The Optimisation Study, which represented the first part of the financing
process, has been undertaken by SEPCO. PowerChina is SEPCO's parent company.
The key goals of the Optimisation Study were to improve the value of Kola
through reductions in the capital cost and by shortening the construction
schedule.
During the Optimisation Study, SEPCO employed two key sub-contractors, China
ENFI Engineering Corporation to review the mining, processing and
infrastructure aspects of the Project and CCCC-FHDI Engineering Co Limited to
consider the optimisation of the marine facilities.
A Deepening Design Study phase was conducted in 2023 and included in-country
work to better define geotechnical conditions. The Deepening Design Study also
refined cost estimates with a knowledge of conditions at each construction
location. These works culminated in signing a US$1.929 billion fixed-cost EPC
agreement on 19 November 2024. The Company worked with certain potential
suppliers and vendors to refine the Kola Project requirements and obtained
pricing updates where necessary.
Prior to 2019, Kore directly contracted with MTC for the Mineral Resource
Estimate, and SRK for undertaking an ESIA. The ESIA received a 25-year
approval from the Congolese Environmental authorities and while still valid,
it will require a minor amendment linked to the change of location of the
Process plant. The MRE has remained unchanged and has been incorporated into
the Optimisation Study update together with the ESIA recommendations.
Figure 1 shows the Location Map for the Optimised Kola Project
Figure 1: Location Map showing Optimised Kola Project
2. Mineral Resource
The Kola Mineral Resources are summarised in Table 4 below.
The total Measured and Indicated Mineral Resources are 508 Mt with an average
grade of 35.4% KCl and provides the basis for the Ore Reserve statement.
Sections 1 to 3 of the JORC 2012 Table 1 Checklist of Assessment and Reporting
Criteria for that Mineral Resource estimate remain unchanged as confirmed to
shareholders on 27 Feb 2025, and can be found in Appendix D.
The Company confirms there has been no material change to those Mineral
Resources. The Company advises that the Mineral Resources are inclusive of
Mineral Resources to which modifying factors have been applied to be reported
as Ore Reserves.
In accordance with JORC 2012, the Competent Persons ("CP") for the Kola MRE
is:
o Mr. Kirkham P. Geo of MTC. Mr Kirkham is a member of good standing of
the Association of Professional Engineers and Geoscientists of British
Columbia.
Table 4 July 2017 Kola Mineral Resources for Sylvinite
July 2017 - Kola Deposit Potash Mineral Resources - SYLVINITE
Million Tonnes KCl Mg Insoluble
Mt % % %
Hanging wall Seam Measured ‒ ‒ ‒ ‒
Indicated 29.6 58.5 0.05 0.16
Inferred 18.2 55.1 0.05 0.16
Total Mineral Resources 47.8 57.2 0.02 0.16
Upper Seam Measured 153.7 36.7 0.04 0.14
Indicated 169.9 34.6 0.04 0.14
Inferred 220.7 34.3 0.04 0.15
Total Mineral Resources 544.3 35.1 0.04 0.14
Lower Seam Measured 62.0 30.7 0.19 0.12
Indicated 92.5 30.5 0.13 0.13
Inferred 59.9 30.5 0.08 0.11
Total Mineral Resources 214.4 30.6 0.13 0.12
Footwall Seam Measured ‒ ‒ ‒ ‒
Indicated ‒ ‒ ‒ ‒
Inferred 41.2 28.5 0.33 1.03
Total Mineral Resources 41.2 28.5 0.33 1.03
Total Measured + Indicated 507.7 35.4 0.07 0.14
Total Inferred 340.0 34.0 0.08 0.25
Total Mineral Resources 847.7 34.9 0.08 0.18
3. Ore Reserves
The Kola Ore Reserves are summarised in Table 5 below.
The Kola Sylvinite Ore Reserves are 152.4 Mt with average grade of 32.5% KCl.
Section 4 of the JORC 2012 Table 1 as reported to shareholders on 29 January
2019 has been updated based on the Optimised DFS and is included in this
announcement in Attachment C.
The original statement of Ore Reserves was prepared by Met-Chem DRA Global and
was reported in accordance with JORC 2012.
In conjunction with the Optimised DFS the Ore Reserves have been reviewed and
restated in accordance with JORC 2012 by the CP for the Kola Ore Reserves:
o Mr. Molavi P. Eng. of AMC, for the Reserve Review ("RR"). Mr Molavi is a
member of good standing of the Association of Professional Engineers and
Geoscientists of British Columbia.
There is no change to the Kola Sylvinite Ore Reserves from those previously
reported.
Table 5: Kola Sylvinite Ore Reserves
Seam Classification Ore Reserves Tonnage KCl Mg Insolubles
(Mt) (%KCl) (%Mg) (%Insol)
Upper Seam Sylvinite Proved 47.3 33.43 0.08 0.15
Probable 58.7 31.83 0.06 0.15
Total 106.0 32.54 0.07 0.15
Lower Seam Sylvinite Proved 14.5 27.88 0.20 0.13
Probable 23.4 28.35 0.08 0.14
Total 37.9 28.17 0.13 0.14
Hanging Wall Seam Sylvinite Proved
Probable 8.4 52.09 0.47 0.19
Total 8.4 52.09 0.47 0.19
TOTAL Proved 61.8 32.13 0.11 0.15
Probable 90.6 32.81 0.10 0.15
Total Ore Reserves 152.4 32.54 0.10 0.15
All Sylvinite in the Measured and Indicated Resource category was considered
for Ore Reserve conversion because of the sharp grade boundaries of the
Sylvinite seams and the fact that the economic Cut- off Grade ("CoG") is below
the Mineral Resources CoG of 10% KCl.
Table 6. Kore's Sylvinite Mineral Resources and Ore Reserves
KOLA SYLVINITE DEPOSIT
Gross Net Attributable (90%)
Mineral Resource Category Million Tonnes Grade KCl % Contained KCl million tonnes Million Tonnes Grade KCl % Contained KCl million tonnes
Measured 216 34.9 75 194 34.9 68
Indicated 292 35.7 104 263 35.7 94
Sub-Total Measured + Indicated 508 35.4 180 457 35.4 162
Inferred 340 34.0 116 306 34.0 104
TOTAL 848 34.8 295 763 34.8 266
Gross Net Attributable (90%)
Ore Reserve Category Million Tonnes Grade KCl % Contained KCl million tonnes Million Tonnes Grade KCl % Contained KCl million tonnes
Proved 62 32.1 20 56 34.9 19
Probable 91 32.8 30 82 35.7 29
TOTAL 152 32.5 50 137 35.4 49
Table provided as Gross and Net Attributable (reflecting Kore's future holding
of 90% and the RoC government 10%), prepared and reported according to the
JORC Code, 2012 edition. Table entries are rounded to the appropriate
significant figure.
Ore Reserves are not in addition to Mineral Resources but are derived from
them by the application of modifying factors.
4. Mining
The Kola mine design utilised in the Optimised DFS remains materially
unchanged from the design used in the DFS and is described below:
The Kola orebody is planned to be mined using conventional underground
mechanised methods, extracting the ore within 'panels', using Continuous Miner
("CM") machines of the drum-cutting type. This is the most widely used method
of potash mining world-wide and is considered a low-risk method. The mine
design adopts a relatively typical layout including panels, comprised of rooms
and pillars. Pillars are the support rock left in place to provide stable
ground support during the operation of the mine.
The mine design is based on a minimum mining height of 2.5 m with mining being
undertaken by a CM which is capable of mining seam heights of between 2.5 m
and 6 m. Each panel is accessed by 4 entries. Each entry is 8m wide and 3m to
6m high depending on the seam height. The rooms are mined in a chevron pattern
at an angle of 65 degrees from the middle entry, each with a length of
approximately 150 m.
Key geotechnical parameters evaluated in the mine design were:
o support interval between potash seams to be minimum of 3 m thick,
o 8 m wide pillar between consecutive production rooms (of 8 m each)
o 50 m wide pillar between Production Panels and between the side of the
Production Panel and the Main Haulage
o minimum thickness of 10 m to 15 m of the Salt Member between the mine
openings and the floor of the overlying Anhydrite Member (referred to as the
'salt back')
o stand-off distance of 20 m from any exploration holes
o stand-off distance of between 30 m - 60 m from significant geological
anomalies
o pillar of 300 m in radius around Shafts
Mine access is provided by two vertical Shafts, each 8 m in diameter. The
shafts will be sunk near the center of the orebody. To provide access to the
underground, the Intake Shaft will be equipped with a hoist and cage system
for transportation of persons and material. The Exhaust Shaft will be equipped
with a Pocket Lift conveyor system to continuously convey the mined-out ore to
the surface. Both shafts are approximately 270 m deep.
Mining equipment selected for the Kola Project Mine includes a fleet of 7
electrically powered continuous miners. Ore haulage from the CMs to the feeder
breaker apron feeder will be done using electrically-powered Shuttle Cars,
with a rated payload of 30 t and a 250 m power supply cable.
Underground conveyor belts will be used for ore transportation to the shaft.
The belt conveyors are distributed in the haulages and into the working panels
near the CM working face. The ore will be placed on the belts from feeder
breakers that are fed by the Shuttle Cars. Belt conveyors will carry the ore
loaded by the feeder breakers to the ore bins. The ore is then conveyed from
the ore bins to the vertical conveyor (Pocket Lift) system located in the
Exhaust Shaft.
5. Life of Project schedule
The LoM production schedule reported in the Optimised DFS is as summarized
below.
The project LoM production schedule, including tonnes of ROM, tonnes of MoP
product, and the average KCl grade of the Run-Of-Mine ("ROM") material, is
summarized in Figure 2.
The Life of Ore Reserves for the Kola Project is estimated at 23 years, and
full-scale production averaging approximately 2.1 million tonnes per annum of
MoP from Ore Reserves occurs for approximately 21 years post commissioning and
ramp up. During the exploitation of Ore Reserves, 9.7 Mt of Inferred Mineral
Resources are scheduled to be mined and processed. This represents
approximately 6.0% of the total amount of ROM material processed in the first
23 years. This portion of the Inferred Mineral Resources is at the periphery
of the Mineral Resources envelope and immediately adjacent to the Ore Reserves
and logically would be extracted in conjunction with the adjacent Ore
Reserves.
In preparing the production target and economic evaluation, each of the
modifying factors was considered and applied and the Company considers there
are reasonable grounds for the inclusion of Inferred Mineral Resources in the
production target for the Kola Project.
There is a low level of geological confidence associated with Inferred Mineral
Resources and there is no certainty that further exploration work will result
in the determination of Indicated Mineral Resources or that the production
target itself will be realized.
The Ore Reserves (Proved and Probable) and Inferred Mineral Resources
underpinning the production target have been prepared by a competent person in
accordance with the requirements of JORC 2012. Details of those Ore Reserves
and Mineral Resources are set out in this announcement (including, in relation
to the Ore Reserves, the details in Appendix B and Appendix C).
No Exploration Target material has been included in the economic evaluation
for the Kola Project.
Figure 2 - Life-of-Mine Production Summary of the Kola Mine
Kore Potash believes there is a strong potential for the LoM Production to be
extended beyond 23 years by upgrading a portion of the 340Mt of Inferred
Mineral Resources to Measured or Indicated resource, through further
exploration during operations.
6. Hydrogeology
The DFS hydrogeological investigations have been used in the Optimised DFS and
there are no changes to the information or assumptions related to
hydrogeology. The hydrogeology test work that was carried out, is summarised
below:
1. Identify sources of fresh water supply for construction and operations.
These tests concluded that process plant area water supply is available at
required rate of 150 m(3)/hr utilising 5 wells at a depth of 120 m. Similarly,
the required water supply at the mine site of 30 m(3)/hr can be supplied via 2
wells sunk to 120 m depth. Hydrogeological modelling indicates that extraction
of these quantities of water over the project life will not adversely impact
the aquifers and minor drawdown in the aquifers is expected over the life of
the project.
2. Understand the risk that aquifer system poses to mining operations and
how to mitigate this risk.
The risk of water ingress to the mining areas is a common risk in almost all
salt and potash mines. These mines are typically overlain by water-bearing
sediments. At operating potash mines in Canada and Europe, the hydrogeological
risk is considered higher in areas of disturbance of the stratigraphy,
referred to as geological or subsidence anomalies. At Kola, a detailed
understanding of the aquifers overlying the evaporite rocks, as well as of the
aquitards (or barriers to water flow), has been developed over a number of
years. The conclusions drawn following hydrogeological testing were:
o A problematic water ingress is considered a low probability as no linear
faults have been identified and all potential subsidence features can be
accurately delineated using (proposed 50 m spaced line) 3D seismic surveying,
to add to the existing 186 km of seismic survey data over the Deposit.
o No mining or shaft sinking is planned within areas of subsidence. In
addition, horizontal 'cover drilling' and ground penetrating radar ("GPR")
will be employed as forward-looking actions to improve understanding of ground
conditions in advance of mining and further mitigate the risk of intersecting
a structure or area of disturbance.
o The mine design incorporates a 10-15 m minimum 'salt-back' barrier between
the mining area and the anhydrite aquitard, effectively reinforcing the
anhydrite member aquitard layer.
3. Understand the impacts of groundwater composition and the aquifers on
the shaft
sinking operation.
The results of this testing confirmed:
o That ground freezing during shaft sinking will not be impacted by
hydraulic flow or high salinity in the deep aquifer. In fact, low
permeability, and low total dissolve solids ("TDS") and salinity in both
aquifers is to be expected, supporting the planned freeze-hole spacing and
comparatively low energy consumption for the ground freezing operation.
o The presence of a thick Anhydrite Member (12 m) overlying the salt member
which acts as an aquitard and reduces risk of water inflow into the salt
member.
7. Metallurgy and Process
Ore from underground is transported to the process plant via an overland
conveyor approximately 24 kilometers long.
A conventional potash flotation plant with a maximum designed production of
2.2 million tonnes per annum of MoP has been designed for the Kola Project. As
a result of the low Insolubles content, no separate process circuit is
required to remove Insoluble material.
The final MoP product is then transported 11 km by conveyor belt from process
plant to the marine export facility at the coast.
A schematic of the full process to extract ore and produce MoP product is
shown in Figure 3.
Figure 3: Process flow from mine to ship
The design strategy adopted delivers a Process Plant designed to produce 2.2
Mtpa of MoP at a KCl grade of 95.3 %w and that will accommodate the variety of
ROM feedstock characteristics expected to be encountered during the Life of
the project.
The optimised process design references the DFS metallurgical test work in
2017 and 2018. The description of the test work used in the Optimised DFS is
summarised below.
Characterisation tests were performed on pure seam samples (USS, LSS and HWS)
expected to be mined as part of the mine schedule. Composite samples of
multiple seams, prepared to be as representative as possible of the expected
range of Run of Mine Ore characteristics foreseen in the mine schedule, were
prepared from the seam samples.
The insoluble content of the samples was less than 0.5%w and close to 0.1%w in
the composite from the USS and LSS. The characterisation of both the composite
samples and the pure seam samples established that the KCl content in the
composite was 32.2%w.
A process plant KCl recovery rate of 89.9% has been used in the economic
evaluation.
8. Marine Facilities
The marine facility used in the Optimised DFS was based on the DFS design. A
summary of the design is given below.
A trans-shipment arrangement has been designed whereby MoP for export is
loaded from a dedicated Jetty into self-propelled shuttle Barges (two units),
which then travel to the Ocean-Going Vessels ("OGVs") anchored 11 nautical
miles (20 km) offshore at a dedicated transshipment zone. The MoP is
transferred from the Barges to the OGVs using a Floating Crane Transhipper
Unit ("FCTU").
Transshipping was selected over direct ship loading from the export jetty. The
ocean depth along the coastline is shallow and it was not considered feasible
to construct the length of jetty required to facilitate direct ship loading.
To ensure sufficient year-round operational availability of the Jetty, a
breakwater structure has been designed to shelter the berthing area for Barge
loading operations.
The Jetty has been widened to accommodate both a Seawater Intake ("SWI") and a
Seawater Outfall ("SWO") system.
9. Residue and Brine Disposal
The Kola Project's process residue is combined into a single waste stream
composed of the NaCl (the brine from product and salt de-brining - bulk of the
effluent) and the residue stream which originates from the insoluble
de-brining circuit within the Process Plant. The residue is collected in
onshore dissolution/dilution tanks and then discharged at sea via the SWO pipe
and diffuser. The discharge stream's dispersion characteristics comply with
the applicable environmental criteria.
Ecotoxicological test work of the expected discharge confirms that the
discharge at sea of the combined salt and insoluble tails stream does not
place undue stress on the marine environment.
No onshore tails storage facility is therefore required for the Kola Project.
10. General Infrastructure
There have been no material changes to the mining, processing, export and
marine facility locations since the Optimisation Study in 2022.
a. Mine Site - Infrastructure
The Mine Site is located near the village of Koutou and the current KP2
Exploration Camp. It is 24 km north and inland of the Project Process Plant
Site.
The sites can be accessed from Pointe Noire through the existing National Road
(Route Nationale) RN5 which crossses Madingo Kayes and then by driving into
RN6 as from Kilounga village.
The Mine Site surface facilities and infrastructure provides access and
support facilities for the Underground Mining operations.
No permanent living accommodation is planned at the Mine Site for the
Operational phase of the Project.
b. Process Plant Site - Infrastructure
The Process Plant Site is located 11 km inland from the marine facilities,
next to the village of Tchizalamou, approximately 60 km northwest of Pointe
Noire. ROM ore is transferred from the Mine Site via the Overland Long
Conveyor ("OLC").
The Process Plant Site facilities and infrastructure produces granular MoP,
which is transferred to the Marine Facilities for export. The main
administration, control and support functions (Maintenance, Storage,
Logistics, Training, etc.) are also located within the Process Plant Site.
c. Mining Complex & Off-Site - Infrastructure
The operation of the Kola Project's Mine and Process Plant sites are supported
by ancillary sites (Accommodation Camp and Solid Waste Management Centre) and
interconnecting infrastructures (Roads, Power, Water and Gas supply, and
Communications).
The permanent accommodation camp will be located approximately 3 km from the
Process Plant and will accommodate up to 950 people.
d. Power
Operational electrical power is guaranteed from the RoC national grid. This
would require a 57 km long 220 kV transmission line to be built from the Mongo
Kamba II substation, situated north of Pointe Noire, to the Process Plant. The
power demand is estimated to be 25 MVA at the Mine Site and 50 MVA at the
Process Plant.
To reduce the Kola Project's environmental footprint, the Company initiated
discussions with a new local oil and gas producer in RoC. This potential new
supplier's project includes both gas and electricity. As a result of
preliminary negotiations, the Company received competitive rates, which were
used in the revised economics.
e. Natural Gas
Initially, the natural gas needed for product drying was to be supplied by a
73-kilometer pipeline from the M'Boundi gas treatment plant. However, a recent
marketing decision by this potential supplier has reduced availability in the
country, as the supplier now plans to export at higher prices.
In the above context, the new local oil and gas producer (cited in the Power
paragraph above) stepped in to propose gas from the oilfield they are
developing. This potential supplier plans to start production before Kola
does.
f. Water
Raw water will be supplied from wells located at the Mine Site (2 wells), the
process plant site (5 wells) and at the Accommodation Camp (4 wells).
11. Environmental and Social Impact Assessment
The ESIA was prepared managed by SRK Consulting (UK) Limited's environmental
and social (E&S) team. SRK partnered with "Cabinet Management & Etudes
Environnementales S.A.R.L." ("CM2E"), which acted as the Congolese-registered
consultancy.
The Kola ESIA, initially approved on 10 October 2013, was amended to reflect
the design changes made to the Kola Project as part of the DFS and has been
amended to include the service corridors for a gas pipeline and overhead power
line. The application and terms of reference for amending the ESIA were
approved on 12 April 2018 by the Minister of Tourism and Environment.
The ESIA for the Kola Mining License was approved on 31 March 2020 granting a
25-year approval.
The change of location of the process plant, accommodation camp and some other
minor OLC track changes which occurred prior to the 2022 Optimization Study
require an ESIA update which shall be effected in the first half of the 2025
calendar year.
There have also been conflicting reports as to whether part of the
transshipment route between the proposed jetty and the offshore transshipment
location being converted into a marine reserve. If confirmed during the ESIA
update, this might require a small diversion of the route to be taken by
barges transporting the finished product to ocean-going vessels.
The Company shall carry out their construction operations In compliance with
the environmental and social management plan as part of the approved ESIA and
will be subject to Regulator's environmental management compliance audits.
12. Potash Marketing
Kore's potash marketing strategy recognises the supply opportunities arising
from MoP market growth in Brazil, the project's proximity to Brazil and
African markets and the cost competitiveness of the Kola Project. The DFS,
Optimisation Study and Optimised DFS demonstrate that the Kola project can
deliver MoP into Brazilian and ports on the west coast of Africa at lower cost
than all other international suppliers. Figure 4 shows a comparison of
delivered MoP costs to Brazil.
Figure 4 - Brazil delivered MoP cost comparison
Source: August 2024 Argus Media Marketing Report. Kore Potash CFR Cost Brazil
calculated per Table 8.
In August 2024, the Company commissioned a MoP market study and specification
marketing report ("Argus Media Marketing Report") from one of the leading
global consultancy firms, Argus Media Group. According to this report, Kore
Potash is ideally located for exports to Brazil from an inland and seaborne
freight perspective. The Argus Media Marketing Report indicates that the
Company has the shortest distance to the Paranagua port in Brazil and that, in
2023, 59% of Brazil MoP imports entered via three key ports: Santos, Paranagua
and Rio Grande. The total estimated approximate 4,600km transportation
distance from the Kola mine is the shortest distance among all key exporting
mines globally to Paranagua, Brazil. While Canpotex is the largest exporter to
Brazil in the year 2023 and K+S fifth largest importer in 2023 via Vancouver,
Canada, to Paranagua, port total transportation distance is approximately
12,000km, which is almost triple the distance from the Kola Project mine.
The design of the processing plant allows Kore to produce red MoP granular for
the Brazil market.
Potash market research specialist Argus Media provided the Company with
historical and forecast pricing trends for the MoP CFR Brazil benchmarks over
the period up to 2047 (see Figure 5 below). The Argus Media Marketing Report's
estimates are provided in MoP CFR Brazil Real US$/t 2023 values for calendar
years 2024 to 2047. The Company considers that it is reasonable to apply Argus
Media's estimates over that period given Argus Media is independent and
reputable international market research group which has deep knowledge of the
current potash market and its trends. After 2047, prices are indexed by the
Company using a US$2/t incremental annual increase to the 2047 price as in the
Argus Media Marketing Report. As a result, the estimated forecast average
granular MoP price is US$449/t (see Appendix A, section 12) for the life of
the mine operations (with the US$449/t being the simple average of the
forecast price in each year of production over the 23 years of scheduled
production, where the forecast price in each year to 2047 is that in the Argus
Media Marketing Report and for each year after 2047, is the forecast 2047
price with a US$2/t incremental annual increase applied in each year, as
discussed above).
It should be noted that current red granular MoP CFR Brazil prices are around
c.US$300/t, which is less than the average of the granular MoP prices used in
the Optimised DFS (being US$449/t). There is no guarantee that the forecast
annual granular MoP prices used in the Optimised DFS will be realised and
lower realised prices will adversely affect the financial performance of the
Kola Project as demonstrated in the sensitivity analysis in section 14(b)
below. The price at which Kola Project NPV(10%) is greater than zero is flat
c.US$271/t MoP CFR for the life of the mine operations. Please also refer to
the Cautionary Statement on page 3 of this announcement.
Figure 5 - Historical and forecast MoP CFR Brazil Real US$/t 2023. Extract
from Argus Media Marketing Report
As stated in the Argus Media Marketing Report MoP prices are currently
reaching their lowest levels over the past 5 years. Short-term pricing in the
next 12 months is based on the current market developments, such as weather
events, planned or unplanned plant outages and market participant sentiment.
Argus Media sees limited upside in medium-term (5 - 7 years) as the market
reaches floor around the year 2028 with the ramp-up of BHP's Jansen project in
Canada. The potash market is facing transition to supply surplus with
recovering Russian and Belarusian and new capacity in Canada and Laos. Argus
Media believes that the long-term price of MoP is dictated by the industry's
Long-Run Marginal Cost ("LRMC") for adding new potash supply.
Total LRMC is the sum of:
· Mine capital costs, adjusted for location and the weighted average
cost of capital, amortised over the mine's life span;
· Mine operating costs, including fuel, labour, materials, sustaining
capital and royalties; and
· Value-in-use considerations, crediting or debiting total cost to
consider access to target markets.
The LRMC base year is then inflated by Argus Media over the forecast period to
provide their long-term price forecast. Each LRMC element is inflated using
the appropriate inflator from Argus Media's forecasts of fuel, energy and
macro inflators. The LRMC is a long-term trend forecast, meaning Argus Media
expects short-term oscillations around the calculated LRMC, driven by factors
such as weather and supply disruptions that cannot be predicted this far in
advance. Russian MoP development is no longer included in the LRMC set. As the
war in Ukraine continues, Argus Media assumes the impact on Russia as a
destination for investment will be more prolonged and this is reflected in a
higher-risk premium. Argus Media's view is that incremental tonnage from
Canada and Israel are expected to dictate long-run LRMC.
13. Capital and Operating Costs
a. Capital Cost
The pre-production capital cost for the Kola Project is now estimated at
US$2.07 billion (nominal basis), which includes a fixed price EPC contract of
US$1.929 billion and US$141 million owner's costs. The breakdown of the EPC
capital cost is presented in Table 7 below.
The EPC fixed price is of significant benefit to the Company, as it minimises
the risk of cost overruns. Of the total Contract Price, approximately US$708.9
million is allocated for building transportation links and utility pipelines,
which will make the Kola Project self-reliant without depending on state
infrastructure except for the RoC national grid. The Company considers this to
be a significant advantage compared to other potash projects worldwide. To
accelerate progress during the financing process, Kore Potash and PowerChina
have committed to an Early Works Agreement ("EWA"), which forms part of the
EPC and is targeted to be completed by the end of June 2025.
The owner's costs during the 43-month construction period are projected to be
approximately US$141 million. The EPC also includes provisions for penalties
in the event of delayed completion and non-compliance to performance metrics.
Table 7 - Breakdown of Contract Price
Description Amount (US$ million)
Underground Works (shafts and mine face preparation) 319.7
Processing plant and auxiliary facilities 609.6
Surface over land belt conveyor transportation (OLC)* 229.3
Marine Works* 223.1
Roads* 111.3
Utilities (electricity overhead line & gas pipeline) * 145.2
Administration facilities 58.9
General items 231.9
Total 1,929.0
* Total US$708.9 million for transportation and related utilities.
Sustaining Capital Costs of US$924 million have been included in the financial
analysis, which is equivalent to US$13.06/t MoP and disclosed in Table 8
below.
Sustaining capital costs cover expenditures required to ensure the operation
can sustain the production at nameplate capacity. These costs include overhaul
parts and labour, replacement of equipment, maintenance of infrastructures
(road, jetty etc.), shut down costs, additional continuous miner and
additional underground conveyor costs, and the inspection and maintenance of
the trans-shipment vessels
b. Operating Cost
The Operating Costs are expressed in US dollars on a real basis and are based
on average annual production of 2.2 Mtpa of MoP over the life of mine. All
costs have been prepared on an owner operated basis and are shown in Table 8.
Table 8 - Summary of Operating Costs
Cost Category Real costs
(US$/t MOP)
Opex
Mining Cost 25.17
Process Cost 29.08
Other Cost 20.69
Mine Gate Operating Costs 74.94
Sustaining Capex 13.06
Product Realisation Charges and Allowances 4.08
Royalties 11.74
Ex Works Cost 103.81
Logistics to FOB point 5.81
Ocean Shipping 18.58
CFR Cost (Landed in Brazil) 128.19
14. Economic Evaluation
a. Summary Economics
The economic evaluation delivers a post-tax NPV(10%) (real 2024) of US$1.7
billion and a real ungeared IRR of 18% on a 90% attributable basis. The
evaluation is based on a forecast average MoP granular price of US$449/t MoP
CFR Brazil (real 2024) as outlined in section 12 above.
The key assumptions underpinning the economic evaluation are as follows:
· Construction start date: 1 January 2026.
· 23-year project life from first production based on depletion of
Ore Reserves.
· 2.2 Mtpa average production of MoP.
· Granulated MoP represents 100 % of total MOP production and
sales.
· All cashflows are on a real 2024 basis
· NPVs are ungeared and calculated after-tax applying a real
discount rate of 10%.
· NPVs are calculated at a base date of 1 January 2026 prior to the
potential dates for commencement of project construction
· Fiscal regime assumptions are aligned with the recently finalised
Mining Convention:
o Corporate tax of 15% of taxable profit with concessions for the first 10
years of production (0% for the first 5 years and 7.5% for years 6 - 10).
o Mining royalty of 3% of the Ex-Mine Market Value (defined as the value
of the Product (determined by the export market price obtained for the Product
when sold) less the cost of all Mining and Processing Operations, all costs of
Transport (including any demurrage), and all insurance costs).
o Exemption from withholding taxes during the term of the Mining
Convention.
o Exemption from VAT and import duty during construction; and
o Congo Government receives 10% of the shares in KPM which owns the Kola
Project.
The forecast project cash flow on a 90% attributable basis for 23 years of
production is illustrated in Figure 6.
Figure 6 - Project Cash Flow Forecast (real 2024) on a 90% Attributable Basis
b. Sensitivity Analysis
Kola Project returns have been calculated on a real 10% post-tax unleveraged
basis with the key financial results and assumptions provided in Table 1.
Figure 7 below shows the sensitivity to the four variables that have the most
impact on the real post-tax NPV(10%) and 90% attributable basis (reflecting
Kore's future holding of 90% and the RoC government 10%) of the project, in
descending order of most sensitive to least sensitive. No capital cost
sensitivities were included as the EPC is a fixed price contract. The
financial outcomes of the project are most sensitive to changes in revenue
and, therefore, future MoP prices as well as KCl recovery in the process
plant.
Figure 7 - NPV real 10% post-tax US$'000 movement sensitivities*.
* KCl recovery sensitivities are in incremental steps of 5%, 10% and 15%
increases or decreases relative to the base of 89.9%; increases are: +5% =
94.9%, +10% = 99.9%, +15% = 100% maximum. All other sensitives are % changes
on the base number.
15. Project Funding
As announced on 6 April 2021, a non-binding memorandum of understanding was
signed with Summit to arrange the full financing required for the construction
of the Kola Project ("Summit MOU").
In line with this memorandum of understanding, following signing the EPC,
Summit is expected to deliver a non-binding financing term sheet within three
months. This term sheet will be subject to the completion of detailed and
definitive legal documentation.
The Company confirms its confidence in the Summit Consortium as a financier
for the construction of the Kola Project. This confidence is based on the
Company having worked with the Summit Consortium for the past 10 years and
their track record in assisting with financing for Kore Potash including
sourcing the approximately US$40 million equity investment provided by the
Oman Investment Authority ("OIA") and Sociedad Quimica y Minera de Chile S.A.
("SQM") in 2016. OIA and SQM are among top three largest shareholders of the
Company who together hold 27.58% in the issued share capital of the Company.
The material terms of the Summit MOU were set out in the 6 April 2021
announcement and are reaffirmed as follows:
· The Summit MOU outlines a roadmap to optimise the capital design to
fully finance and construct Kola via a mix of debt and royalty financing.
· Under the proposed financing arrangements, the RoC Government will
retain their 10% shareholding in Kola.
· Under the Summit's proposed financing structure, the Company will not
contribute to the capital needed to build the Kola Project and will retain a
90% equity interest in Kola.
The Company retains the right not to accept any finance proposal presented by
Summit and there is no guarantee that any proposal or legally binding
agreement will be forthcoming. The Company provides no assurance to
shareholders that the Summit Consortium will provide the financing required on
terms which are acceptable to the Company. If the Summit Consortium does not
provide an acceptable financing package leading to binding legal documents,
the Company will need to explore other debt, equity and structured finance
alternatives having regard to then prevailing capital market conditions.
The Company expects any financing provided by the Summit Consortium to be
subject to the Summit Consortium being granted full security over the Kola
Project, however (as noted above) the full terms of any financing proposal
from the Summit Consortium (including any security package) will be subject to
further discussions.
As previously announced on 30 January 2025 the Summit Consortium was expected
to deliver this financial proposal by the end of February 2025. Due to delay
in publication of the Kola Project Optimised DFS update the new expected
delivery date of the financial proposal is now before the end of March 2025.
The Company confirms the Summit Consortium is not a related party of the
Company.
Further details about the financing arrangements will be notified to the
market in accordance with the Company's continuous disclosure obligations
Appendix B: Summary of Information required under ASX Listing Rule 5.9.1 (Ore
Reserves), Listing Rule 5.16.1 (production target) and Listing Rule 5.17.1
(forecast financial information derived from a production target).
Pursuant to ASX Listing Rules 5.9.1, 5.16.1 and 5.17.1, and in addition to the
information contained in the body of this release, the Company provides the
following summary information.
Kola Project Ore Reserves and related production target and forecast financial
information derived from the production target
Summary of Material Assumptions
Material assumptions relating to the Kola Project are summarised below:
· Production life - LoM of 23 years at an average annual production
of 2.2 Mtpa MoP production. The production life fully depletes Ore Reserves
and incorporates a portion of Inferred Mineral Resource into the production
target.
· Product pricing - Potash market research specialist Argus Media
provided the Company with historical and forecast pricing trends for the MoP
CFR Brazil benchmarks over the period up to 2047 (see Figure 5 above). Kola's
proposed mine life covers the period from 2029 through to 2052 (23 years). The
Argus Media Marketing Report's estimates are provided in MoP CFR Brazil Real
US$/t 2023 values for calendar years 2024 to 2047. After 2047, prices are
indexed by the Company using a US$2/t incremental annual increase to the 2047
price as in the Argus Media Marketing Report. As a result, the estimated
forecast average red granular MoP price is US$449/t for the life of the mine
operations. For more details on product pricing refer to Section 12.
· MoP Product - The process design is based on a single product
type, Red Granular MOP. (The MoP produced will comprise at least 95.3% KCl,
with a maximum of 0.2% Mg and 0.3% Insolubles).
· Project duration - A project execution duration of 43 months was
specified in the EPC contract.
· Project Capital - The total nominal Project Capital of US$2.07
billion includes both EPC costs and owner's cost.
· Working capital assumptions - Working capital based on 30 days
Debtors and Creditors, 60 days Stores.
· Operating cost - mine gate operating cost of US$74.94/t and CFR
cost of US$128.19/t were reported in the Kola Project Optimised DFS update.
· Shipping costs - LoM Shipping costs (trans-shipment and sea
freight) of US$24.38 /MoP t were based on updated ocean freight quotations
received in 2024.
· Fiscal parameters - The mining convention between the Company and
the Republic of Congo specifies the fiscal parameters summarised below:
o Company tax rate (15%),
o Initial tax rates (5 years at 0% + 5 years at 7.5%)
o Royalties (3% of revenue) (Mining Convention)
o Government free carry (10%) (Mining Convention)
o Other minor duties and taxes (Mining Convention)
Criteria for Mineral Resource and Ore Reserve Classification
The criteria for Mineral Resource and Ore Reserve Classification remain
unchanged from the DFS.
The Ore Reserve estimate is based on the Kola Sylvinite Indicated and Measured
Mineral Resources reported by Met-Chem DRA in accordance with the JORC Code
(2012 edition) and confirmed by the Company on 27 Feb 2025.
Drill-hole and seismic data were relied upon in the geological modelling and
grade estimation. Across the deposit the reliability of the geological and
grade data is high. Grade variation is small within each domain reflecting the
continuity of the depositional environment and 'all or nothing' style of
Sylvinite formation.
Drill hole data spacing determines confidence in the interpretation of the
seam continuity and therefore confidence and classification; the further away
from seismic and drill-hole data the lower the confidence in the Mineral
Resource classification. In the assigning confidence category, all relevant
factors were considered, and the final assignment reflects the Competent
Person's view of the deposit.
Table B1: Summary of Criteria used for the Classification of the Kola Mineral
Resource
Drill-hole required Seismic data required Classification extent
Measured Average of 1 km spacing Within area of close spaced 2010/2011 seismic data (100 - 200 m spacing) Not beyond the seismic requirement
Indicated 1-1.5 km spacing 1 to 2.5 km spaced 2010/2011 seismic data and 1 to 2 km spaced oil industry Maximum of 1.5 km beyond the seismic data requirement if sufficient drill-hole
seismic data support
Inferred Few holes, none more than 2 km from another 1-3 km spaced oil industry seismic data Seismic data required and maximum of 3.5 km from drill-holes
The Measured and Indicated Mineral Resources for sylvinite are hosted by 3
layers (or 'seams') which are from uppermost; the Hanging Wall Seam (HWS), the
Upper Seam (US) and the Lower Seam (LS), each separated by rock-salt (a
rock-type typically comprised of >95% halite).
Magnesium and insoluble content are considered deleterious but are present in
only very small amounts in the ore (average of 0.07% and 0.14%respectively).
The Mineral Resource Estimate was delivered to the Ore Reserve consultants in
the form of a standard block model, blocks having dimensions 250 x 250 x 1 m,
each block having a KCl grade, a density, and magnesium and insoluble content.
The Mineral Resources are inclusive of the Ore Reserves i.e. the Ore Reserves
are the mineable part of the Mineral Resources after the application of
technical, economic and other modifying factors.
Areas of potential structural disturbance, referred to as geological anomalies
were excluded from the Measured and Indicated Mineral Resource. They were
identified from seismic data as is standard in potash mining districts
elsewhere.
A 10% CoG was used in the Mineral Resource Estimate.
Mining Method and assumptions
The mining method and assumptions remain unchanged from the DFS.
Mining factors and assumptions have been derived from the historical
information available for mature potash mines, and the current best mining
practices. The Kola orebody will be mined using conventional underground
("UG") mining method consisting of room and pillar in a 'chevron' (or
herringbone) pattern, with Continuous Miners ("CM") mining machines of the
drum-cutting type.
Most of the mining will be on one level only where only the US will be
extracted. In some areas, both the US and the LS will be mined, in which case
the LS will only be mined after the US. In other areas only the HWS will be
mined.
In determining the Ore Reserves, a minimum mining height of 2.5 m was selected
based on capability of the selected CM which is also capable of mining up to
6 m. Areas of the Mineral Resource with a seam height of less than 2.5 m were
excluded from the Ore Reserves.
The mine design is typical of potash mines, having 4 entries for accessing
panels. Each drive will typically be 8 m wide and 3 m to 6 m high depending on
the seam height. The typical configuration for the chevron pattern is an angle
of 65 degrees from the middle entry, and length of 150 m approximately.
The Mine design relies on geotechnical modelling, carried out in FLAC 3D
software. The modelling was based on geotechnical test-work carried out on
representative core samples from the sylvinite seams and host rocks (rock-salt
and lesser carnallitite). The geotechnical modelling established that the mine
design is stable over the LoM and includes the following geotechnical
parameters:
· Where both the US and LS seams are to be mined, the support
interval between the US and LS must be at least 3 m thick.
· An 8 m wide pillar between two consecutive production rooms (of 8
m each).
· A 50 m wide pillar between two production panels. Similarly, a 50
m wide pillar will be left in place between the side of the production panel
and the main haulage access drift.
· The interval of rock-salt between the mine openings and the floor
of the overlying anhydrite member is referred to as the 'salt back'. This is
typically over 30 m but is less in some areas. The DFS design allows that it
may be a minimum of 15 m unless the Anhydrite Member is well developed where
it may be 10 m. This is based on the results of the geotechnical model.
· A stand-off distance of 20 m radius from the exploration holes.
· A stand-off distance of 30 m radius from class 2 geological
anomalies and 60 m radius from class 3 geological anomalies.
· A pillar of 300 m in radius around the exhaust and intake shafts.
Based on the selected CMs, it is anticipated that a good cutting selectivity
would be achieved, and that a maximum of 0.2 m of dilution material above
and/or below the potash seam is likely. Carnallitite is present in the floor
of the seam in some areas. The roof is always of rock-salt.
On average, the dilution material is equivalent to approximately 10% of the
tonnage of the Ore Reserves. Dilution material was assigned a grade of 3% KCl
if rock-salt and 0% KCl if Carnallitite.
Based on the configuration of the proposed mining layout, and the anticipated
fleet of mining equipment, it is assumed that the mining recovery in the
different extraction chambers will be 90% on average (i.e. mining losses will
be 10%). This considers the mining action which will lead to some losses such
as material being excavated and left in the production chamber, or mineralized
material left in the floor or roof, etc.
The Global extraction ratio is 30% (25% in the LS, 33% in the US and 28% in
the HWS). This is after the removal from Ore Reserves of all pillars (pillars
around the geological anomalies, the barrier pillars, the shaft pillar, the
pillars between chevrons and main access drifts), the stand-off distance
around boreholes, mining losses and the exclusion of sylvinite <2.5 m
thick.
Two vertical shafts, each of 8 m internal diameter, will be sunk at a central
location in the Ore Reserves, to provide access to the underground. The intake
shaft will be equipped with a hoist and cage system for transportation of
persons and material, while the exhaust shaft will be equipped with a vertical
conveyor system to convey the mined-out ore to the surface. Both shafts are
approximately 270 m deep.
Ore haulage from the CMs to the feeder breaker apron feeder will be done using
electrically-powered Shuttle Cars.
Underground conveyor belts will be used for ore transportation in all the
areas of the mine. The belts are distributed in the mains and submains and
ultimately in the working panels near the CM working face. The ore will be
placed on the belts from the feeder breakers that were fed by the shuttle
cars.
The belt conveyors will carry the ore loaded by the feeder breakers to the ore
bins. Then the ore is conveyed from the ore bins to the Pocket Lift system
located in the exhaust shaft.
Processing Method and Assumptions
The changes to the processing method and assumptions arising from the
Optimisation Study are as follows.
· The product will be granular MoP K60, comprising at least 95.3%
KCl. The Optimisation Study design allows for the production of a single
product, red granular MOP.
· The process flow sheets were optimised to produce a maximum of
2.2 Mtpa of MoP, at 95.3% KCl purity, with a minimum KCl recovery of 89.9% of
the KCl content in the ROM fed to the Process Plant.
· Eight key areas of process design were changed in the
Optimisation Study
o The crushing circuit was changed from 3 stage crushing to 2 stage crushing
o The mixing tanks post crushing were replaced with a combination of screens
and tanks
o The scrubbing capacity has been reduced
o The thickening capacity has been increased
o Column cells have been replaced with floatation cells
o Re-grind flows have been re-routed
o Tailings centrifuges has been replaced with a belt filters
o Compaction circuit has been simplified
A conventional flotation process will be utilised for potash concentration.
This method is well established and is the most widely used method in the
potash industry.
The metallurgical test work campaigns were based on representative core
samples of the three seams, collected from the exploration drill hole cores.
They comprised US (114.5 kg), LS (102.0 kg) and HWS (10.3 kg). All test work
was carried out at the Saskatchewan Research Council ("SRC") laboratory in
Saskatoon, Canada.
Two metallurgical test work campaigns were conducted during the DFS in 2017
and 2018. The main philosophy of the first DFS test work campaign was to
prepare representative test feedstocks for each seam, confirm KCl liberation,
characterize the feedstock, perform flotation tests, optimize the operating
conditions, optimize reagent consumption for optimum KCl recovery and grade
performance, perform a sensitivity test on flotation.
The objective of the second test work campaign was to optimize the flotation
process and improve the plant recovery from the initial flow sheet. The
results of this second test work campaign demonstrated that the new flotation
process performed above the project performance minimum target.
Magnesium and insoluble material are considered deleterious. The extremely low
content of these materials in the ore mean that their removal is relatively
straightforward. Insoluble material is removed by attrition scrubbing and
magnesium removed by brine purge.
Cut-off Grades
The cut off grades remain consistent with the original DFS Ore Reserves.
A CoG of 10% KCl has been calculated within the process to state Ore Reserves.
The CoG calculation included all operating costs associated with the
extraction, processing and marketing of ore material. The cut-offs are based
on a MoP price of US$250 per tonne of MoP. Inputs to the calculation of CoG
included:
o Mining costs
o Metallurgical recoveries
o Processing costs
o Shipping costs
o General and administrative costs
All sylvinite of the Measured and Indicated Resource is above 9.9% KCl (the
Ore Reserve calculated CoG), therefore all the Measured and Indicated
Sylvinite Resources have been considered for the Ore Reserve Estimate by
application of the other modifying factors.
The uniformly very low content of deleterious elements (magnesium and
insoluble material) meant that these did not require consideration in the CoG
determination.
Cost Estimation Methodology
Capital Cost:
· The pre-production nominal capital cost for the Kola Project is
now estimated at US$2.07 billion, which includes a fixed price EPC contract of
US$1.929 billion and US$141 million owner's costs.
Operating Cost:
· Operating Cost covering the Life of Mine (23 years) was estimated
in US dollars and reported in the Kola DFS in 2019. They include costs for
Electric power, Fuel, Gas, Labour, Maintenance parts, Operating Consumables,
General and Administration costs and Contract for Employee Facilities.
· These 2019 Operating Costs were all revised to reflect current
conditions, as follows:
o Exchange rates (vs US$) for Euro, British Pound, Canadian Dollar, South
African Rand, and Congolese Franc (Central African Franc) were updated;
o Production split was updated to 100% red granular MOP;
o Plant KCl recovery was reduced from 91.9% to 89.9%;
o Plant operating hours were updated according to PC's assumption of 7,920
h/y;
o Electricity costs were updated according to current budgetary pricing;
o Natural gas costs were updated according to current budgetary pricing;
o Labour costs were escalated a flat 10%, in consultation with third-party
labour experts;
o All other operating costs were escalated a flat 25% to simulate US CPI.
· Transshipment costs were supplied by an experienced marine
broker.
· Ocean Freight Transportation estimate produced were based on work
done by the marine brokers.
· Mine Closure cost is estimated in accordance with the Conceptual
Rehabilitation and Closure Plan developed by SRK Consulting during the DFS,
assuming a Mine Closure duration of 24 months (2 years).
· For the purpose of Operating Cost and Sustaining Capital, the
quantities of equipment, materials and works were directly assessed from the
Material Take-off prepared within the framework of the Kola DFS.
· State mineral royalties of 3% of Net Revenue were applied
· Measured Mineral Resources were used for the estimation of the
Proved Ore Reserves. Indicated Mineral Resources were used for the estimation
of Probable Ore Reserves.
· The conversion of Measured and Indicated Mineral Resource to
Proved and Probable Ore Reserve reflects the Competent Person's view of the
deposit.
· 40.6% of the Ore Reserves are classified in the Proved category
and 59.4% of the Ore Reserves are classified in the Probable category
Material Modifying Factors
· Status of Environmental Approvals
The Kola ESIA, initially approved on 10 October 2013, was amended to reflect
the design changes made to the Kola Project as part of the DFS and has been
amended to include the service corridors for a gas pipeline and overhead power
line. The application and terms of reference for amending the ESIA were
approved on 12 April 2018 by the Minister of Tourism and Environment.
The ESIA for the Kola Mining License was approved on 31 March 2020 for 25
years.
The proposed new position of the process plant resulting from the Optimisation
Study creates a requirement to issue an addendum to the ESIA. It is intended
that work on this addendum will commence in the second half of 2025.
· Status of Mining Tenements and Approvals
Kore has a 97%-holding in SPSA, a company registered in the RoC. The remaining
3% in SPSA is held by "Les Establissements Congolais MGM" (RoC). SPSA in turn
has a 100% interest in its two ROC subsidiaries, Kola Potash Mining SA ("KPM")
and Dougou Potash Mining SA ("DPM"). The Mining Convention includes a
requirement for 10% of free-carry shares in KPM and DPM to be assigned to the
Government of the Congo. The Company is currently awaiting Government
instructions as to the share transfer process.
The Kola Deposit is within the Kola Mining Lease which is 100% owned by KPM
o In May 2008, a non-exclusive Prospecting Authorisation was granted to
Sintoukola Potash covering an area of 1,436.5 km(2). On 13 August 2009, this
was changed to a "Permis de Recherches" (Exploration Permit) named 'Permis
Sintoukola' under decree No. 2009-237 giving the Company exclusive rights to
explore.
o On 27 November 2012, the first renewal of the permit was made, by decree
No. 2012-1193 and reduced in size to 1,408 km(2).
o On the 9 August 2013, a Mining Lease for Kola issued under decree No.
2013-312, totaling 204.52 km(2) falling entirely within the Exploration
Permit.
· Déclaration d'Utilité Publique or "DUP"
Exclusive land acquisition rights have been granted to the Project company for
plant development through ministerial order gazetted on 30 August 2018 (the
"Déclaration d'Utilité Publique" or "DUP") valid for three years and
renewable once for a two-year period.
As a result of the optimization of the processing plant and camp location, a
new DUP process needs to be initiated with the approval and support of the
Government after receipt and acceptance of the financing proposal from Summit.
A subcontractor with prior experience on the previous DUP is awaiting the
greenlight of Kore to start the work.
· Other Governmental Factors
The Company entered into a mining convention with RoC government on 8 June
2017 and it was gazetted into law on 7 December 2018. The Mining Convention
provides certainty and enforceability of the key fiscal arrangements for the
development and operation of the Kola Project. This includes clarifying import
duty and VAT exemptions and agreed tax rates during mine operations. The
Mining Convention provides strengthened legal protection of the Company's
investments in the RoC through the settlement of any disputes by international
arbitration.
Infrastructure Requirements for Selected Mining, Processing and Product
Transportation to Market
The project infrastructure is comprised of the mine-site (shaft and offices),
the process plant 24 km from the mine and a product and marine export facility
at the coast (at Tchiboula), the 34 km infrastructure corridor between these
(including the overland conveyor, service road and power line), the gas line
from M'boundi gas field, overhead line from the MKII substation, the
accommodation and administrative camp and the transshipment facilities.
Changes to the infrastructure requirements that arise from the Optimisation
Study and Optimised DFS, and are thus different from the DFS are summarised
below.
· The process plant position has been moved 11 km inland which has
allowed optimisation of the foundation design, the resultant infrastructure at
the coast consists of the product storage building and marine export
facilities. The design of the barge loading jetty has also been optimised.
· Road access to the Kola Potash Project sites will be via the
existing Route Nationale 5 (RN5). Two external access roads will be built,
which are respectively connected from RN5 to the mining site and from RN5 to
the mineral processing site and living quarter, with a length of 2.0 km and
4.3 km respectively. Two maintenance roads for long-distance belt conveyors
will be built. One of the roads for RoM belt conveyor maintenance is about
24.0 km, connecting Koutou camp and the mineral processing site. The other
road is for MOP belt conveyor maintenance,
· Raw Water will be supplied from wells located at the Mine Site
and at the Accommodation Camp close to the Process Plant Site.
· The Accommodation Camp has been sized for a capacity of 950 beds
and will be located about 2 km away from the Process Plant
· Electrical Power will be sourced from the ROC national grid. A 57
km long 220 kV transmission line will be built from the Mongo Kamba II
substation north of Pointe Noire to the Process Plant Site. A second 34 km
long 220 kV transmission line will be built from the Process Plant Site to the
Mine Site and the marine facility at the coast.
· The Natural Gas needed for product drying will be supplied by a
local Oil and Gas producer who has plans to build a gas treatment plant some
35 km away from the Kore processing plant. The same company is also planning
to supply electricity to the Kola Project from the same offtake point. This
will be an interesting option to the Mongo Kamba II substation as it has a
lower environmental impact.
The infrastructure requirements that have not been modified in the
Optimisation Study or Optimised DFS, and thus remain the same as the DFS are
summarised below.
· Ongoing operational labour will be a combination of permanent
employees, permanent contract services, and part-time contract services for
intermittent needs. The total requirement for permanent employees is
expected to be 731. Local labour resources will be used for the majority of
labour requirements, while some selected positions are planned as expat roles.
· The Kola Potash Project intends to export up to 2.2 Mt MoP to
world markets each year. A transshipment solution has been developed, whereby
MoP for export is loaded at a dedicated jetty onto self-propelled shuttle
barges (two units), which will then travel to OGVs anchored 11 nautical miles
(20 km) offshore in a dedicated transshipment area. The cargo will be
transferred from the Barges to the OGVs using a Floating Crane Transhipper
Unit ("FCTU").
Appendix C: JORC 2012 - Table 1, Section 4 Ore Reserves
The Company has relied upon its previously reported information, in particular
the announcement of 27 Feb 2025, in respect of the matters related to sections
1, 2 and 3.
The Company confirms that the information in sections 1, 2 and 3 has not
changed since it was last reported and has been included in Appendix D of this
announcement for compliance with ASX requirements and ease of reference.
Section 4 Estimation and Reporting of Ore Reserves
(Criteria listed in section 1, and where relevant in sections 2 and 3, also
apply to this section)
Criteria JORC Code explanation Commentary
Mineral Resource estimate for conversion to Ore Reserves Description of the Mineral Resource estimate used as a basis for the The Ore Reserves are based on the Indicated and Measured Mineral Resource
conversion to an Ore Reserve. estimate for sylvinite carried out by Met-Chem DRA and reported in accordance
with the JORC Code (2012 edition), confirmed by the Company on 27 Feb 2025.
Clear statement as to whether the Mineral Resources are reported additional
to, or inclusive of, the Ore Reserves. The Measured Mineral Resource is 216 Mt with an average grade of 35.0% KCl.
The Indicated Mineral Resource is 292 Mt with an average grade of 35.7% KCl.
The total combined Measured and Indicated Mineral Resources are 508 Mt with an
average grade of 35.4% KCl.
The Measured and Indicated Mineral Resources for sylvinite are hosted by 3
layers (or 'seams') which are as follows from uppermost; the Hanging Wall
Seam, the Upper Seam and the Lower Seam, each separated by rock-salt (a
rock-type typically comprised of >95% halite).
Magnesium and insoluble content are considered deleterious but are present in
only very small amounts in the ore (average of 0.07% and 0.14% respectively).
The Mineral Resource Estimate was delivered to the Ore Reserve consultants in
the form of a standard block model, blocks having dimensions 250 x 250 x 1 m,
each block having a KCl grade, a density, and magnesium and insoluble content.
The Mineral Resources are inclusive of the Ore Reserves (i.e. the Ore Reserves
are the mineable part of the Mineral Resources after the application of
technical, economic and other modifying factors.)
Areas of potential structural disturbance, referred to as geological anomalies
were excluded from the Measured and Indicated Mineral Resource. They were
identified from seismic data as is standard in potash mining districts
elsewhere.)
A 10% cut-off grade was used in the Mineral Resource Estimate.
Site visits Comment on any site visits undertaken by the Competent Person and the outcome A site visit was conducted by the Competent Person for the Ore Reserve
of those visits. Estimate between June 26 to June 28, 2017. The visit included exploration camp
inspection, core viewing, site of shafts and process plant, access route from
If no site visits have been undertaken indicate why this is the case. Pointe Noire. The site visit supported the findings of the Competent Person.
Study status The type and level of study undertaken to enable Mineral Resources to be Prior to signing an EPC agreement, two studies have been completed by the
converted to Ore Reserves. Company: the Kola Definitive Feasibility Study ("DFS") in January 2019 and the
Kola Project Optimisation Study ("Optimisation Study") in June 2022. Following
The Code requires that a study to at least Pre-Feasibility Study level has signing of the EPC contract, the Company undertook an exercise to optimise the
been undertaken to convert Mineral Resources to Ore Reserves. Such studies DFS to account for the EPC contract, including updating the Kola production
will have been carried out and will have determined a mine plan that is schedule and the forecast financial information. The Company has now completed
technically achievable and economically viable, and that material modifying its review of the Optimised DFS, with the results summarised herein by way of
factors have been considered. update.
The results of the Optimised DFS incorporate the most current information
available to the Company, and have been updated from the DFS and Optimisation
Study to ensure compliance with the latest applicable listing rule
requirements and other regulatory policies of the Australian Stock Exchange
Limited, and therefore should be considered as superseding the results of both
the DFS and the earlier Optimisation Study.
Cut-off parameters The basis of the cut-off grade(s) or quality parameters applied. A CoG of 9.9% KCl has been calculated for the Ore Reserve Estimation based on
forecast revenue and estimated operating costs. The cut-off calculation
included all operating costs associated with the extraction, processing and
marketing of ore material. The cut-offs are based on a conservative MoP price
of US$250 per tonne of MoP. Inputs to the calculation of cut-off grades
included:
o Mining costs
o Metallurgical recoveries
o Processing costs
o Shipping costs
o General and administrative costs
All sylvinite of the Measured and Indicated Resource is present at a grade
significantly above 9.9% KCl (the Ore Reserve calculated CoG), therefore all
the Measured and Indicated Sylvinite Resources have been considered for the
Ore Reserve Estimate by application of the other modifying factors.
The uniformly very low content of deleterious elements (magnesium and
insoluble material) meant that these did not require consideration in the CoG
determination.
Mining factors or assumptions The method and assumptions used as reported in the Pre-Feasibility or Mining factors and assumptions have been derived from the historical
Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. information available for mature potash mines, the current best mining
either by application of appropriate factors by optimisation or by preliminary practices and the outcomes of the various technical studies completed in the
or detailed design). DFS and Optimisation Study
The choice, nature and appropriateness of the selected mining method(s) and The Kola orebody will be mined using conventional UG mining method consisting
other mining parameters including associated design issues such as pre-strip, of room and pillar in a 'chevron' (or herringbone) pattern, with CMs mining
access, etc. machines of the drum-cutting type.
The assumptions made regarding geotechnical parameters (e.g. pit slopes, stope The mining equipment selected for the Kola Potash Project Mine are CMs.
sizes, etc.), grade control and pre-production drilling.
Most of the mining will be one level only where only the US will be extracted.
The major assumptions made and Mineral Resource model used for pit and stope In some areas, both the US and the LS will be mined, in which case the LS will
optimisation (if appropriate). only be mined after the US. In other areas only the HWS will be mined.
The mining dilution factors used. In determining the Ore Reserves, a minimum mining height of 2.5 m was selected
based on capability of the selected CM which is also capable of mining up to
The mining recovery factors used. 6 m. Areas of the Mineral Resource with a seam height of less than 2.5 m were
excluded from the Ore Reserves.
Any minimum mining widths used.
The mine design is typical of potash mines, having 4 entries for access
The manner in which Inferred Mineral Resources are utilised in mining studies drives. Each drive will typically be 8 m wide and 3 m to 6 m high depending on
and the sensitivity of the outcome to their inclusion. the seam height. The typical configuration for the chevron pattern is an angle
of 65 degrees from the middle entry, and length of 150 m approximately.
The infrastructure requirements of the selected mining methods.
The Mine design relies on geotechnical modelling, carried out in FLAC 3D
software. The modelling was based on geotechnical test-work carried out on
representative core samples from the sylvinite seams and host rocks (rock-salt
and lesser carnallitite). The geotechnical modelling established that the mine
is stable over the LoM for the DFS mine design which includes the following
geotechnical parameters:
o Where both the US and LS seams are to be mined, the support interval
between the US and LS must be at least 3 m thick.
o An 8 m wide pillar between two consecutive production rooms (of 8 m each).
o A 50 m wide pillar between two production panels. Similarly, a 50 m wide
pillar will be left in place between the side of the production panel and the
main haulage access drift.
o The interval of rock-salt between the mine openings and the floor of the
overlying anhydrite member is referred to as the 'salt back'. This is
typically over 30 m but is less in some areas. The DFS design allows that it
may be a minimum of 15 m unless the Anhydrite Member is well developed where
it may be 10 m. This is based on the results of the geotechnical model.
o A stand-off distance of 20 m radius from the exploration holes.
o A stand-off distance of 30 m radius from class 2 geological anomalies and
60 m radius from class 3 geological anomalies.
o A pillar of 300 m in radius around the exhaust and intake shafts.
Based on the selected mining equipment (CMs), it is anticipated that a good
cutting selectivity would be achieved, and that a maximum of 0.2 m of dilution
material above and/or below the potash seam is likely. Carnallitite is present
in the floor of the seam in some areas. The roof is always of rock-salt. On
average, the dilution material is equivalent to approximately 10% of the
tonnage of the Ore Reserves. Dilution material was assigned a grade of 3% KCl
if rock-salt and 0% KCl if Carnallitite.
Based on the configuration of the proposed mining layout, and based on the
anticipated fleet of mining equipment, it is assumed that the mining recovery
in the different extraction chambers willbe 90% on average (i.e. mining losses
will be 10%). This considers the mining action which will lead to some losses
such as material being excavated and left in the production chamber, or
mineralized material left in the floor or roof, etc.
The Global extraction ratio is 30% (25% in the LS, 33% in the US and 28% in
the HWS). This is after excluding the tonnage associated with removal of all
pillars (pillars around the geological anomalies, the barrier pillars, the
shaft pillar, the pillars between chevrons and main access drifts), the
stand-off distance around boreholes, mining losses and the exclusion of
sylvinite <2.5 m thick.
Two vertical shafts, each with 8 m internal diameter, will be sunk at a
central location in the Ore Reserves, to provide access to the underground.
The intake shaft will be equipped with a hoist and cage system for
transportation of persons and material, while the exhaust shaft will be
equipped with a vertical conveyor system (pocket lift configuration) to convey
the mined-out ore to the surface. Both shafts are approximately 270 m deep.
One haulage from the CMs to the feeder breaker apron feeder will be done using
electrically- powered Shuttle Cars.
Underground conveyor belts will be used for materials handling (ore haulage)
ore transportation in all the areas of the mine. Conveyor belts are
distributed in the mains and submains and ultimately in the working panels
near the CM working face. The ore will be placed on the belts from the feeder
breakers that were fed by the shuttle cars. The conveyor belts will carry the
ore loaded by the feeder breakers to the ore bins. Then the ore is conveyed
from the ore bins to the Pocket Lift system located in the exhaust shaft.
The Life of Ore Reserves for the Kola Project is estimated at 23 years, and
full-scale production averaging approximately 2.1 million tonnes per annum of
MoP from Ore Reserves occurs for approximately 23 years. During the
exploitation of the 152.4 Mt of Ore Reserves, 9.7 Mt of Inferred Mineral
Resources are scheduled to be mined and processed. This represents
approximately 6.0% of the total amount of ROM material processed in the first
23 years. This portion of the Inferred Mineral Resources is at the periphery
of the Mineral Resources envelope and immediately adjacent to the Ore Reserves
and logically would be extracted in conjunction with the adjacent Ore
Reserves. The bulk of the Inferred Mineral Resources are planned for
extraction from year 10 onwards.
Metallurgical factors or assumptions The metallurgical process proposed and the appropriateness of that process to The metallurgical factors and assumptions applying to the Kola Project were
the style of mineralization. set out in the Company's announcement "Kola Definitive Feasibility Study"
dated 29 January 2019.
Whether the metallurgical process is well-tested technology or novel in
nature. As noted in that announcement, the final product will be MoP K60, comprising
at least 95% KCl. The DFS design allows for the production of this MoP in two
The nature, amount and representativeness of metallurgical test work forms, standard and granular. The optimised design simplified production to
undertaken, the nature of the metallurgical domaining applied and the a single product - red granular K60 MOP.
corresponding metallurgical recovery factors applied.
A conventional flotation process will be utilized for potash concentration.
Any assumptions or allowances made for deleterious elements. This method is well established, and the most widely used method in the potash
industry.
The existence of any bulk sample or pilot scale test work and the degree to
which such samples are considered representative of the orebody as a whole. The DFS metallurgical test work campaigns were based on representative core
samples of the three seams, collected from the exploration drill hole cores.
For minerals that are defined by a specification, has the Ore Reserve They comprised US (114.5 kg), LS (102.0 kg) and HWS (10.3 kg). All test work
estimation been based on the appropriate mineralogy to meet the was carried out at the Saskatchewan Research Council laboratory in Saskatoon,
specifications? Canada. No further testing was completed during optimisation.
The process flow sheets were optimised to meet the Kola Potash Project targets
of producing 2.2 Mtpa of MoP, at 95.3% KCl purity, with a minimum KCl recovery
of 89.9%.
Two metallurgical test work campaigns were conducted during the DFS in 2017
and 2018. The main philosophy of the first DFS test work campaign was to
prepare representative test feedstocks for each seam, confirm KCl liberation,
characterize the feedstock, perform flotation tests, optimize the operating
conditions, optimize reagent consumption for optimum KCl recovery and grade
performance, perform a sensitivity test on flotation.
The objective of the second test work campaign was to optimize the flotation
process and improve the plant recovery from the initial flow sheet. The
results of this second test works processed in SYSCAD™ model demonstrated
that the new flotation process performed above the project performance minimum
target.
With a raw ore feed grade of 31.3% KCl, the material balance confirmed that
the project objectives can be met with a production of 2.2 Mtpa with an
expected product recovery of 89.9%, and a final product grade of 95.3% KCl.
Magnesium and insoluble material are considered deleterious. The extremely low
content of these materials in the ore mean that their removal is relatively
straightforward. Insoluble material is removed by attrition scrubbing and
magnesium removed by brine purge.
The metallurgical test work campaigns provided a sound foundation for the
development of the process design engineering and subsequent project
performance, overall engineering studies and the cost estimate.
Environmental The status of studies of potential environmental impacts of the mining and The ESIA for the construction and operation phases of the mining project was
processing operation. Details of waste rock characterisation and the initially prepared by the consulting company SRK in Cardiff and approved by
consideration of potential sites, status of design options considered and, the RoC regulator in 2013.
where applicable, the status of approvals for process residue storage and
waste dumps should be reported. An amendment was prepared by SRK in parallel with the DFS to capture changes
to the project description and was submitted to the ROC regulator in Q4 2018;
It was approved on 31 March 2020 for 25 years.
The 2022 Optimization Study having proposed new locations for the
accommodation camp, process plant and small concomitant changes in the route
of the OLC, this has created a requirement to further amend some parts of the
2018 ESIA.
Discussions with the RoC authorities have led to the conclusion that Kore
Potash needs to make an addendum to the existing document to cover all recent
changes. It is planned to commence the base data collection for the route and
location changes once Term Sheets for financing the Kola project are finalized
during the first quarter of 2025.
While the approved ESIA already includes a detailed an Environment and Social
Management Plan ("ESMP") that is central to the construction construction, it
is expected that an augmented ESMP will result from the supplementary ESIA
work to be accomplished in 2025.
It should be noted that the mine-site and a portion of the infrastructure
corridor are located within the economic development and buffer zones of the
Conkouati-Douli National Park ("CDNP") while the processing plant is located
outside. Project activity in this area has been minimized and influx is led
away from the park through the siting of employee facilities outside the CDNP.
Tailings are insignificant, being only the <0.2% of insoluble material or
just under 1Mt over the LoM. The bulk of the waste is dissolved halite in the
form on an NaCl brine. All waste streams will be diluted with seawater to a
concentration of 200mg/l and discharged via a diffuser into the ocean. This
material has been characterised and ecotoxicological testing has been
undertaken to confirm that no adverse impacts are caused at the edge of the
mixing zone.
The overall conclusion of the ESIA is that negative environmental impacts
identified can be reduced to acceptable levels.
A rehabilitation and closure plan has been prepared and included in owner's
costs of the project.
Biodiversity, air quality, social, archeological, water and noise baseline
studies have been prepared and incorporated into the ESIA process.
Infrastructure The existence of appropriate infrastructure: availability of land for plant The project infrastructure is comprised of the mine-site (shaft and offices),
development, power, water, transportation (particularly for bulk commodities), the process plant is 24km from the mine site and the marine and product
labour, accommodation; or the ease with which the infrastructure can be storage facility a further 11km from the plant site, on the coast (at
provided or accessed. Tchiboula), the 34 km infrastructure corridor between these (including the
overland conveyor, service road and power line), the gas line from M'boundi
gas field, overhead line from the MKII substation, the accommodation and
administrative camp and the transshipment facilities.
Exclusive land acquisition rights through the DUP process will be applied for
based on the new plant position.
Road access to the Kola Potash Project sites will be via the existing Route
Nationale 5 (RN5). Two external access roads will be built, which are
connected from RN5 to the mining site and from RN5 to the mineral processing
site and living quarter, with a length of 2.0km and 4.3km respectively. Two
maintenance roads for long-distance belt conveyors will be built. One of the
roads for RoM belt conveyor maintenance is about 25 km, connecting Koutou camp
and the mineral processing site. The other 9 km road is for MOP belt conveyor
maintenance,
Electrical Power will be sourced from the RoC national grid. A 57 km long 220
kV transmission line will be built from the Mango Kamba II substation north of
Pointe Noire to the Process Plant Site. A second 34 km long 220 kV
transmission line will be built from the Process Plant Site to the Mine Site
from process plant to marine facility.
· The Natural Gas needed for product drying will be supplied by a
local Oil and Gas producer who has plans to build a gas treatment plant some
35 km away from the Kore processing plant. The same company is also planning
to supply electricity to the Kola Project from the same offtake point. This
will be an interesting option to the Mongo Kamba II substation as it has a
lower environmental impact.
Ongoing operational labour will be a combination of permanent employees,
permanent contract services, and part-time contract services for intermittent
needs. The total requirement for permanent employees is expected to be
731. Local labour resources will be used for most labour requirements, while
some selected positions are planned as expat roles.
The Accommodation Camp has been sized for a capacity of 950 beds and will be
located 2km away from the process plant.
The Kola Potash Project intends to export up to 2.2 Mt MoP to world markets
each year. A transshipment solution has therefore been developed, whereby the
material for export is loaded at a dedicated Jetty onto self-propelled shuttle
Barges (two units), which will then travel to OGVs anchored 11 nautical miles
(20 km) offshore in a dedicated transshipment area. The cargo will be
transferred from the Barges to the OGVs using a FCTU.
Costs The derivation of, or assumptions made, regarding projected capital costs in Capital Cost:
the study.
The pre-production capital cost for the Kola Project is now estimated at
The methodology used to estimate operating costs. US$2.07 billion (nominal), which includes the fixed price EPC contract of
US$1.929 billion and US$141 million owner's costs.
Allowances made for the content of deleterious elements.
The derivation of assumptions made of metal or commodity price(s), for the
principal minerals and co- products. Operating Cost:
The source of exchange rates used in the study. Operating costs were estimated using the detailed model in the Kola DFS,
revised to reflect current cost conditions. The Kola DFS Operating costs were
Derivation of transportation charges. based on first principles using quoted rates, estimated consumption, forecast
labour complements and remuneration estimates.
The basis for forecasting or source of treatment and refining charges,
penalties for failure to meet specification, etc. Operating Cost covering the Life of Mine (23 years) was estimated in 2019 and
revised to reflect current cost conditions. They include costs for Electric
The allowances made for royalties payable, both Government and private. power, Fuel, Gas, Labour, Maintenance parts, Operating Consumables, General
and Administration costs and Contract for Employee Facilities.
Mine Closure cost estimated in accordance with the Conceptual Rehabilitation
and Closure Plan developed by SRK Consulting.
Mine Closure duration of 24 months (2 years), for the effective dismantling,
demolition and rehabilitation works..
Quantities of equipment, materials and works directly assessed from the
Material Take-off prepared within the framework of the DFS for the Kola Potash
Project.
State mineral royalties of 3% of Net Revenue applies.
Other criteria
The marketed MoP will comprise at least 95% KCl, with a maximum of 0.2% Mg and
0.3% Insolubles.
Revenue factors The derivation of, or assumptions made regarding revenue factors including Head grade, recovery and product grade forecasts were based on the DFS
head grade, metal or commodity price(s) exchange rates, transportation and results.
treatment charges, penalties, net smelter returns, etc.
Product pricing - Potash market research specialist Argus Media provided the
The derivation of assumptions made of metal or commodity price(s), for the Company with historical and forecast pricing trends for the MoP CFR Brazil
principal metals, minerals and co-products. benchmarks over the period up to 2047 (see Figure 5 above). Kola's proposed
mine life covers the period from 2029 through to 2052 (23 years). The Argus
Media Marketing Report's estimates are provided in MoP CFR Brazil Real US$/t
2023 values for calendar years 2024 to 2047. After 2047, prices are indexed by
the Company using a US$2/t incremental annual increase to the 2047 price as in
the Argus Media Marketing Report. As a result, the estimated forecast average
granular MoP price is US$449/t for the life of the mine operations. For more
details on product pricing refer to Section 12.
Market assessment The demand, supply and stock situation for the particular commodity, As stated in the Argus Media Marketing Report MoP prices are currently
consumption trends and factors likely to affect supply and demand into the reaching their lowest levels over the past 5 years. Short-term pricing in the
future. next 12 months is based on the current market developments, such as weather
events, planned or unplanned plant outages and market participant sentiment.
A customer and competitor analysis along with the identification of likely Argus Media sees limited upside in medium-term (5 - 7 years) as the market
market windows for the product. reaches floor around the year 2028 with the ramp-up of BHP's Jansen project in
Canada. Potash market is facing transition to supply surplus with recovering
Price and volume forecasts and the basis for these forecasts. Russian and Belorussian and new capacity in Canada and Laos. Argus Media
believes that the long-term price of MoP is dictated by the industry's LRMC
For industrial minerals the customer specification, testing and acceptance for adding new potash supply.
requirements prior to a supply contract.
Total LRMC is the sum of:
· Mine capital costs, adjusted for location and the weighted
average cost of capital, amortised over the mine's life span
· Mine operating costs, including fuel, labour, materials,
sustaining capital and royalties
· Value-in-use considerations, crediting or debiting total cost to
consider access to target markets
The LRMC base year is then inflated by Argus Media over the forecast period to
provide their long-term price forecast. Each LRMC element is inflated using
the appropriate inflator from Argus Media's forecasts of fuel, energy and
macro inflators. The LRMC is a long-term trend forecast, meaning Argus Media
expects short-term oscillations around the calculated LRMC, driven by factors
such as weather and supply disruptions that cannot be predicted this far in
advance. Russian MoP development is no longer included in the LRMC set. As the
war in Ukraine continues, Argus Media assumes the impact on Russia as a
destination for investment will be more prolonged and this is reflected in a
higher-risk premium. Argus Media's view is that incremental tonnage from
Canada and Israel are expected to dictate long-run LRMC.
For more details on product pricing refer to Section 12.
Economic The inputs to the economic analysis to produce the net present value (NPV) in
the study, the source and confidence of these economic inputs including
estimated inflation, discount rate, etc. Key valuation assumptions and (sources)
NPV ranges and sensitivity to variations in the significant assumptions and Production - LoM of 23 years at nominal 2.2 Mtpa MoP production.
inputs.
Single MoP product type - red MOPG (Muriate of Potash - Granular)
Average LoM CFR price of US$ 449/tMoP
On-mine LoM average operating cost US$ 103.81/tMoP, Real
LoM Shipping (transshipment and sea freight) of US$ 24.38/tMoP
Project capital period 43 months
Total Nominal Project Capital US$ 2.07 billion (including Owners Capital)
Owners Capital US$ 141 million
Sustaining Capital US$ 13.06/tMoP, Real
Fiscal parameters: Company tax rate (15%), tax holidays (5 years at 0% + 5
years at 7.5%) (Mining Convention)
Royalties 3% (Mining Convention)
Government free carry (10%) (Mining Convention)
Other minor duties and taxes (Mining Convention)
Working capital: 30 days Debtors and Creditors, 60 days Stores (Kore)
Payback period: 8.5 years from start of construction
Social The status of agreements with key stakeholders and matters leading to social Approval of an ESIA is a prerequisite for beginning construction of any mining
license to operate. project in the Republic of Congo. The amended 2018 ESIA for the Kola Mining
License was approved on 31 March 2020 for 25 years. It was written to the
applicable international standards while respecting all Congolese legislation.
It is directly related to the Relocation Action Plan ("RAP") which was
prepared by RSK Consultants back in June 2018. Notwithstanding, socio-economic
and livelihood baseline reports which were prepared and approved as part of
the ESIA baseline process need to be updated with the passing of time. A RAP
update is thus planned for the first half of 2025.
At the time of the RAP, a DUP process was initiated with the support and input
of various Government ministries and legal authorities to allow land
acquisition and possible expropriation with compensation from the various
owners and users whose property or livelihood would be affected by the project
zone. The gazetted DUP was valid for 3 years but has since expired, requiring
a new process to be started afresh.The company is awaiting the new RAP/ESIA
updates to refresh the DUP.
Sintoukola Potash has implemented a Stakeholder Engagement Process and is
actively engaging with a wide range of project stakeholders, including, NOE,
the conservation NGO managing the adjacent National Park, the regulator and
communities.
In the RAP, three separate land take corridors were identified by RSK : the
Service Corridor including the Mine Site, the Conveyor Belt and Process Plant,
an HV line and the Gas Pipeline. Physical displacement is minimal with most
actions requiring livelihood restoration. Resettlement Costs have been
included in owner's costs and timed in the implementation schedule.
There are believed to be no social related issues that do not have a
reasonable likelihood of being resolved.
Other To the extent relevant, the impact of the following on the project and / or Kola is currently compliant with all legal and regulatory requirements subject
on the estimation and classification of the Ore Reserves: to final approval of the Kola Environmental and Social Impact Assessment
Amendments (which was required following the project design changes
Any identified material naturally occurring risks. implemented during the optimisation study).
The status of material legal agreements and marketing arrangements. A mining convention entered into between the RoC government and the Companies
on 8 June 2017 and gazetted into law on 29 November 2018 concludes the
The status of governmental agreements and approvals critical to the viability framework envisaged in the 25-year renewable Kola Mining License granted in
of the project, such as mineral tenement status, and government and statutory August 2013. The Mining Convention provides certainty and enforceability of
approvals. There must be reasonable grounds to expect that all necessary the key fiscal arrangements for the development and operation of Kola Mining
Government approvals will be received within the timeframes anticipated in the Licenses, which amongst other items include import duty and VAT exemptions and
Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of agreed tax rates during mine operations. The Mining Convention provides
any unresolved matter that is dependent on a third party on which extraction strengthened legal protection of the Company's investments in the Republic of
of the reserve is contingent. Congo through the settlement of disputes by international arbitration.
To the best of the Competent Person's knowledge, there is no reason to assume
any government permits and licenses or statutory approvals will not be
granted. There are no unresolved matters upon which extraction is contingent.
Classification The basis for the classification of the Ore Reserves into varying confidence Measured Mineral Resources were used for the estimation of the Proved Ore
categories. Reserves. Indicated Mineral Resources were used for the estimation of Probable
Ore Reserves.
Whether the result appropriately reflects the Competent Person's view of the
deposit. The conversion of Measured and Indicated Mineral Resource to Proved and
Probable Ore Reserve reflects the Competent Person's view of the deposit.
The proportion of Probable Ore Reserves that have been derived from Measured
Mineral Resources (if any). 40.6% of the Ore Reserves are classified in the Proved category and 59.4% of
the Ore Reserves are classified in the Probable category
Audits or reviews The results of any audits or reviews of Ore Reserve estimates. DFS deliverables were continually reviewed by an Owner's Team consisting of an
inter-discipline engineering team, specialists in ESIA and economic modelling
and construction experts.
Discussion of relative accuracy/ confidence Where appropriate a statement of the relative accuracy and confidence level in In the Competent Person's view, the Kola DFS achieves the required level of
the Ore Reserve estimate using an approach or procedure deemed appropriate by confidence in the modifying factors to justify the estimation of an Ore
the Competent Person. For example, the application of statistical or Reserve. All relevant modifying factors were considered in the Ore Reserve
geostatistical procedures to quantify the relative accuracy of the reserve Estimation and deemed to be modelled at a level of accuracy appropriate to the
within stated confidence limits, or, if such an approach is not deemed classification, that a global change of greater than 10% considered unlikely
appropriate, a qualitative discussion of the factors which could affect the
relative accuracy and confidence of the estimate. The DFS determined a mine plan and production schedule that is technically
achievable and economically viable.
The statement should specify whether it relates to global or local estimates,
and, if local, state the relevant tonnages, which should be relevant to The capital and operating costs are based on the fixed-price EPC contract
technical and economic evaluation. Documentation should include assumptions signed in November 2024.
made and the procedures used.
Factors that could affect the Ore Reserves locally include; localised changes
Accuracy and confidence discussions should extend to specific discussions of in salt-back thickness, greater dip of the seam in some areas, local changes
any applied modifying factors that may have a material impact on Ore Reserve in the thickness of the rock-salt support layer between the seams, areas of
viability, or for which there are remaining areas of uncertainty at the unexpected carnallite in floor. The Mineral Resource model attempted to model
current study stage. these features to a high level of detail and are 'passed-on' into the Ore
Reserve and mine plan. The Ore Reserve is also partially reliant on the model
It is recognized that this may not be possible or appropriate in all for the thickness of the overlying Anhydrite Member which was not part of the
circumstances. These statements of relative accuracy and confidence of the Mineral Resource.
estimate should be compared with production data, where available.
While local variation from the mine plan in the above are expected, is
considered unlikely that these would lead to significant negative change in
the Ore Reserves, and that positive changes are equally likely.
For the optimisation study, data from a potash mining operation was used to
guide and check the design, productivity assumptions, cost estimates and
budgets. The input data and design are likely to be realistic and achievable
in the Competent Persons view.
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
Criteria JORC Code explanation Commentary
1.1 Sampling techniques · Nature and quality of sampling (e.g. cut channels, random chips, or Sampling was carried out according to a strict quality control protocol
specific specialised industry standard measurement tools appropriate to the beginning at the drill rig. Holes were drilled to PQ size (85 mm core
minerals under investigation, such as down hole gamma sondes, or handheld XRF diameter) core, with a small number of holes drilled HQ size (63.5 mm core
instruments, etc). These examples should not be taken as limiting the broad diameter). Sample intervals were between 0.1 and 2.0 metres and sampled to
meaning of sampling. lithological boundaries. All were sampled as half-core except very recent
holes (EK_49 to EK_51) which were sampled as quarter core. Core was cut using
· Include reference to measures taken to ensure sample representivity an Almonte© core cutter without water and blade and core holder cleaned down
and the appropriate calibration of any measurement tools or systems used. between samples. Sampling and preparation were carried out by trained
geological and technical employees. Samples were individually bagged and
· Aspects of the determination of mineralisation that are Material to sealed.
the Public Report.
· In cases where 'industry standard' work has been done this would be
relatively simple (eg 'reverse circulation drilling was used to obtain 1 m A small number of historic holes were used in the Mineral Resource model; K6,
samples from which 3 kg was pulverised to produce a 30 g charge for fire K18, K19, K20, K21. K6 and K18 were the original holes twinned by the Company
assay'). In other cases more explanation may be required, such as where there in 2010. The grade data for these holes was not used for the Mineral Resource
is coarse gold that has inherent sampling problems. Unusual commodities or estimate but they were used to guide the seam model. The 2010 twin hole
mineralisation types (eg submarine nodules) may warrant disclosure of detailed drilling exercise validated the reliability of the geological data for these
information. holes (section 1.7).
KCl data for EK_49 to EK_51 was based on the conversion on calibrated API data
from downhole geophysical logging, as is discussed in Section 6. Subsequent
laboratory assay results for EK_49 and EK_51 support the API derived grades.
1.2 Drilling techniques · Drill type (eg core, reverse circulation, open-hole hammer, rotary Holes were drilled by 12 and 8 inch diameter rotary Percussion through the
air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or 'cover sequence', stopping in the Anhydrite Member and cased and grouted to
standard tube, depth of diamond tails, face-sampling bit or other type, this depth. Holes were then advanced using diamond coring with the use of
whether core is oriented and if so, by what method, etc). tri-salt (K, Na, Mg) mud to ensure excellent recovery. Coring was PQ (85 mm
core diameter) as standard and HQ (64.5 mm core diameter) in a small number of
the holes.
1.3 Drill sample recovery · Method of recording and assessing core and chip sample recoveries Core recovery was recorded for all cored sections of the holes by recording
and results assessed. the drilling advance against the length of core recovered. Recovery is between
95 and 100% for the evaporite and all potash intervals, except in EK_50 for
· Measures taken to maximise sample recovery and ensure the Carnallitite interval in that hole (as grade was determined using API data
representative nature of the samples. for that hole this is of no consequence). The use of tri-salt (Mg, Na, and
K) chloride brine to maximize recovery was standard. A fulltime mud engineer
· Whether a relationship exists between sample recovery and grade and was recruited to maintain drilling mud chemistry and physical properties. Core
whether sample bias may have occurred due to preferential loss/gain of is wrapped in cellophane sheet soon after it is removed from the core barrel,
fine/coarse material. to avoid dissolution in the atmosphere, and is then transported at the end of
each shift to a de-humidified core storage room where it is stored
permanently.
1.4 Logging · Whether core and chip samples have been geologically and The entire length of each hole was logged from rotary chips in the 'cover
geotechnically logged to a level of detail to support appropriate Mineral sequence' and core in the evaporite. Logging is qualitative and supported by
Resource estimation, mining studies and metallurgical studies. quantitative downhole geophysical data including gamma, acoustic televiewer
images, density and calliper data which correlates well with the geological
· Whether logging is qualitative or quantitative in nature. Core (or logging. Due to the conformable nature of the evaporite stratigraphy and the
costean, channel, etc) photography. observed good continuity and abrupt contacts, recognition of the potash seams
is straightforward and made with a high degree of confidence. Core was
· The total length and percentage of the relevant intersections photographed to provide an additional reference for checking contacts at a
logged. later date.
1.5 Sub-sampling techniques and sample preparation · If core, whether cut or sawn and whether quarter, half or all core Excluding QA-QC samples 2368 samples were analysed at two labs in 44 batches,
taken. each batch comprising between 20 and 250 samples. Samples were submitted in 46
batches and are from 41 of the 47 holes drilled at Kola. The other 6
· If non-core, whether riffled, tube sampled, rotary split, etc and drill-holes (EK03, EK_21, EK_25, EK_30, EK_34, EK_37) were either stopped
whether sampled wet or dry. short of the evaporite rocks or did not intersect potash layers. Sample
numbers were in sequence, starting with KO-DH-0001 to KO-DH-2650 (EK_01 to
· For all sample types, the nature, quality and appropriateness of EK_44) then KO-DH-2741 to KO-DH-2845 (EK_46 and EK_47).
the sample preparation technique.
· Quality control procedures adopted for all sub-sampling stages to
maximise representivity of samples. The initial 298 samples (EK_01 to EK_05) were analysed at K-UTEC in
Sondershausen, Germany and thereon samples were sent to Intertek-Genalysis in
· Measures taken to ensure that the sampling is representative of the Perth. Samples were crushed to nominal 2 mm then riffle split to derive a 100
in-situ material collected, including for instance results for field g sample for analysis. K, Na, Ca, Mg, Li and S were determined by ICP-OES. Cl
duplicate/second-half sampling. is determined volumetrically. Insolubles (INSOL) were determined by filtration
of the residual solution and slurry on 0.45 micron membrane filter, washing to
· Whether sample sizes are appropriate to the grain size of the remove residual salts, drying and weighing. Loss on drying by Gravimetric
material being sampled. Determination (LOD/GR) was also competed as a check on the mass balance.
Density was measured (along with other methods described in section 3.11)
using a gas displacement Pycnometer.
1.6 Quality of assay data and laboratory tests · The nature, quality and appropriateness of the assaying and For drill-holes EK_01 to EK_47, a total of 412 QAQC samples were inserted into
laboratory procedures used and whether the technique is considered partial or the batches comprising 115 field duplicate samples, 84 blank samples and 213
total. certified reference material (CRM) samples. Duplicate samples are the other
half of the core for the exact same interval as the original sample, after it
· For geophysical tools, spectrometers, handheld XRF instruments, is cut into two. CRMs were obtained from the Bureau of Reference (BCR), the
etc, the parameters used in determining the analysis including instrument make reference material programme of the European Commission. Either river sand or
and model, reading times, calibrations factors applied and their derivation, later barren Rock-salt was used for blank samples. These QA-QC samples make up
etc. 17% of the total number of samples submitted which is in line with industry
norms. Sample chain of custody was secure from point of sampling to point of
· Nature of quality control procedures adopted (eg standards, blanks, reporting.
duplicates, external laboratory checks) and whether acceptable levels of
accuracy (i.e. lack of bias) and precision have been established.
In addition two batches of 'umpire' analyses were submitted to a second lab.
The first batch comprised 17 samples initially analysed at K-UTEC sent to
Intertek-Genalysis for umpire. The second umpire batch comprised 23 samples
from Intertek-Genalysis sent to SRC laboratory in Saskatoon for umpire. They
demonstrate excellent validation of the primary laboratory analyses.
Potash intersections for EK_49 to EK_51 were partially sampled for
geotechnical test work and so were not available in full for chemical
analysis. Gamma ray CPS data was converted to API units which were then
converted to KCl % by the application of a conversion factor known, or
K-factor. The geophysical logging was carried out by independent downhole
geophysical logging company Wireline Workshop ("WW") of South Africa, and data
was processed by WW. Data collection, data processing and quality control and
assurance followed a stringent operating procedure. API calibration of the
tool was carried out at a test-well at WW's base in South Africa to convert
raw gamma ray CPS to API using a coefficient for sonde NGRS6569 of 2.799 given
a standard condition of a diameter 150mm bore in fresh water (1.00gm/cc mud
weight).
To provide a Kola-specific field based K-factor, log data were converted via a
K-factor derived from a comparison with laboratory data for drill-holes EK_13,
EK_14 and EK_24. In converting from API to KCl (%), a linear relationship is
assumed (no dead time effects are present at the count rates being
considered). To remove all depth and log resolution variables, an
'area‐under‐the‐curve' method was used to derive the K factor. This
overcomes the effect of narrow beds not being fully resolved as well as the
shoulder effect at bed boundaries. For this, laboratory data was converted to
a wireline log and all values between ore zones were assigned zero. A block
was created that covered all data and both Wireline Gamma Ray Log ("GAMC") and
laboratory data log were summed in terms of area under the curves. From this
like-for -like comparison a K factor of 0.074 was calculated. In support if
this factor, it compares well with the theoretical K-factor derived using
Schlumberger API to KCl conversion charts which would be 0.0767 for this tool
in hole of PQ diameter (125 mm from calliper data. As a check on instrument
stability over time, EK_24 is logged frequently. No drift in the gamma-ray
data is observed.
As confirmation of the accuracy of the API-derived KCl grades for EK_49 to
EK_51, samples for the intervals that were not taken for geotechnical
sampling, were sent to Intertek-Genalysis for analysis. The results are within
5% of the API-derived KCl and thickness, and so the latter was used
unreservedly for the Mineral Resource estimation.
1.7 Verification of sampling and assaying · The verification of significant intersections by either independent 40 samples of a variety of grades and drill-holes were sent for umpire
or alternative company personnel. analysis and as described these support the validity of the original analysis.
Other validation comes from the routine geophysical logging of the holes.
· The use of twinned holes. Gamma data provides a very useful check on the geology and grade of the potash
and for all holes a visual comparison is made in log form. API data for a
· Documentation of primary data, data entry procedures, data selection of holes (EK_05, EK_13, EK_14, EK_24) were formally converted to KCl
verification, data storage (physical and electronic) protocols. grades. In all cases the API derived KCl supports the reported intersections.
· Discuss any adjustment to assay data. As mentioned above; K6, K18, K19, K20, K21 were used in the geological
modelling but not for the grade estimate. K6 and K18 were twinned in 2010 and
the comparison of the geological data is excellent, providing validation that
the geological information for the aforementioned holes could be used with a
high degree of confidence.
1.8 Location of data points · Accuracy and quality of surveys used to locate drill holes (collar A total of 50 Resource related drill-holes have been drilled by the Company:
and down-hole surveys), trenches, mine workings and other locations used in EK_01 to EK_52. EK_37 and EK_48 were geotechnical holes. Of the 50 Resource
Mineral Resource estimation. holes, 4 stopped short above the Salt Member due to drilling difficulties. Of
the 46 Resource holes drilled into the Salt Member, all except 4 contained a
· Specification of the grid system used. significant Sylvinite intersection.
· Quality and adequacy of topographic control.
The collars of all drill-holes up to EK_47 including historic holes were
surveyed by a professional land surveyor using a DGPS. EK_48 to EK_52 were
positioned with a handheld GPS initially (with elevation from the LIDAR data)
and later with a DGPS. All data is in UTM zone 32 S using WGS 84 datum.
Topography for the bulk of the Mineral Resource area is provided by high
resolution airborne LIDAR (Light Detection and Ranging) data collected in
2010, giving accuracy of the topography to <200 mm. Beyond this SRTM 90
satellite topographic data was used. Though of relatively low resolution, it
is sufficient as the deposit is an underground mining project.
1.9 Data spacing and distribution · Data spacing for reporting of Exploration Results. In most cases drill-holes are 1-2 km apart. A small number of holes are much
closer such as EK_01 and K18, EK_04 and K6, EK_14 and EK_24 which are between
· Whether the data spacing and distribution is sufficient to 50 and 200 m apart.
establish the degree of geological and grade continuity appropriate for the
Mineral Resource and Ore Reserve estimation procedure(s) and classifications
applied.
The drill-hole data is well supported by 186 km of high frequency closely
· Whether sample compositing has been applied. spaced seismic data acquired by the Company in 2010 and 2011 that was
processed to a higher standard in 2016. This data provides much guidance of
the geometry and indirectly the mineralogy of the potash seams between and
away from the holes, as well as allowing the delineation of discontinuities
affecting the potash seams. The combination of drill-hole data and the seismic
data supports geological modelling with a level of confidence appropriate for
the classification assigned to the Measured, Indicated and Inferred sections
of the deposit. The seismic data is described in greater detail below.
Two sources of seismic data were used to support the Mineral Resource model:
1) Historical oil industry seismic data of various vintage and acquired
by several companies, between 1989 and 2006. The data is of low frequency and
as final SEG-Y files as PreStack Time Migrated ("PreSTM") form. Data was
converted to depth by applying a velocity to best tie the top-of-salt
reflector with drill-hole data. The data allows the modelling of the top of
the Salt Member (base of the Anhydrite Member) and some guidance of the
geometry of the layers within the Salt Member.
2) The Company acquired 55 lines totalling 185.5 km of data (excluding
gaps on two lines) in 2010 and 2011. These surveys provide high frequency data
specifically to provide quality images for the relatively shallow depths
required (surface to approximately 800 m). Data was acquired on strike (tie
lines) and dip lines. Within the Measured Mineral Resource area lines are
between 100 and 200 m apart. Data was re-processed in 2016, for the 2017
Mineral Resource update, by DMT Petrologic GmbH ("DMT") of Germany. DMT worked
up the raw field data to Post Stack Migration ("PoSTM") and PreSTM format. By
an iterative process of time interpretation of known reflectors (with
reference to synthetic seismograms) the data was converted to PreStack Depth
Migrated ("PSDM") form. Finally, minor adjustments were made to tie the data
exactly with the drill-hole data.
The Competent Person reviewed the seismic data and processing and visited DMT
in Germany for meetings around the final delivery of the data to the Company.
1.10 Orientation of data in relation to geological structure · Whether the orientation of sampling achieves unbiased sampling of All exploration drill-holes were drilled vertically and holes were surveyed to
possible structures and the extent to which this is known, considering the check for deviation. In almost all cases tilt was less than 1 degree (from
deposit type. vertical). Dip of the potash seam intersections ranges from 0 to 45 degrees
with most dipping 20 degrees or less. All intersections with a dip of greater
· If the relationship between the drilling orientation and the than 15 degrees were corrected to obtain the true thickness, which was used
orientation of key mineralised structures is considered to have introduced a for the creation of the Mineral Resource model.
sampling bias, this should be assessed and reported if material.
1.11 Sample security · The measures taken to ensure sample security. At the rig, the core is under full time care of a Company geologist and end of
each drilling shift, the core is transported by Kore Potash staff to a secure
site where it is stored within a locked room. Sampling is carried out under
the fulltime watch of Company staff; packed samples are transported directly
from the site by Company staff to DHL couriers in Pointe Noire 3 hours away.
From here DHL airfreight all samples to the laboratory. All core remaining at
site is stored is wrapped in plastic film and sealed tube bags, and within an
air-conditioned room (17-18 degrees C) to minimize deterioration.
1.12 Audits or reviews · The results of any audits or reviews of sampling techniques and The Competent Person has visited site to review core and to observe sampling
data. procedures. As part of the Mineral Resource estimation, the drill-hole data
was thoroughly checked for errors including comparison of data with the
original laboratory certificates; no errors were found.
Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
Criteria JORC Code explanation Commentary
2.1 Mineral tenement and land tenure status · Type, reference name/number, location and ownership including The Kola deposit is within the Kola Mining Lease which is held 100% under the
agreements or material issues with third parties such as joint ventures, local company Kola Mining SARL which is in turn held 100% by Sintoukola Potash
partnerships, overriding royalties, native title interests, historical sites, SA RoC, of which Kore Potash holds a 97% share. The lease was issued August
wilderness or national park and environmental settings. 2013 and is valid for 25 years. There are no impediments on the security of
tenure.
· The security of the tenure held at the time of reporting along with
any known impediments to obtaining a licence to operate in the area.
2.2 Exploration done by other parties · Acknowledgment and appraisal of exploration by other parties. Potash exploration was carried out in the area in the1960's by Mines de
Potasse d' Alsace S.A in the 1960's. Holes K6, K18, K19, K20, K21 are in the
general area. K6 and K18 are within the deposit itself and both intersected
Sylvinite of the Upper and Lower Seam; it was the following up of these two
holes by Kore Potash (then named Elemental Minerals) that led to the discovery
of the deposit in 2012.
Oil exploration in the area has taken place intermittently from the 1950's
onwards by different workers including British Petroleum, Chevron, Morel et
Prom and others. Seismic data collected by some of these companies was used to
guide the evaporite depth and geometry within the Inferred Mineral Resource
area. Some oil wells have been drilled in the wider area such as Kola-1 and
Nkoko-1.
2.3 Geology · Deposit type, geological setting and style of mineralisation. The potash seams are hosted by the 300-900 m thick Lower Cretaceous-aged
(Aptian age) Loeme Evaporite formation These sedimentary evaporite rocks
belong to the Congo (Coastal) Basin which extends from the Cabinda enclave of
Angola to the south well into Gabon to the north, and from approximately 50 km
inland to some 200-300 km offshore. The evaporites were deposited between 125
and 112 million years ago, within a post-rift 'proto Atlantic' sub-sea level
basin following the break-up of Gondwana forming the Africa and South America
continents.
The evaporite is covered by a thick sequence of carbonate rocks and clastic
sediments of Cretaceous age to recent (Albian to Miocene), referred to as the
'Cover Sequence', which is between 170 and 270 m thick over the Kola deposit.
The lower portion of this Cover Sequence is comprised of dolomitic rocks of
the Sendji Formation. At the top of the Loeme Formation, separating the Cover
Sequence and the underlying Salt Member is a layer of anhydrite and clay
typically between 5 and 15 m thick and referred to as the Anhydrite Member. At
Kola, this layer rests un-conformably over the Salt-Member, as described in
more detail below.
Within the Salt Member, ten sedimentary-evaporative cycles (I to X) are
recognized with a vertical arrangement of mineralogy consistent with classical
brine-evolution models; potash being close to the top of cycles. The Salt
Member and potash layers formed by the seepage of brines into an extensive sub
sea-level basin. Evaporation resulted in precipitation of evaporite minerals
over a long period of time, principally halite (NaCl), carnallite
(KMgCl(3)·6H(2)O) and bischofite (MgCl(2)·6H(2)O), which account for over
90% of the evaporite rocks. Sylvinite formed by the replacement of
Carnallitite within certain areas. Small amounts of gypsum, anhydrite,
dolomite and insoluble material (such as clay, quartz, organic material) is
present, typically concentrated in relatively narrow layers at the base of the
cycles (interlayered with Rock-salt), providing useful 'marker' layers. The
layers making up the Salt Member are conformable and parallel or sub-parallel
and of relatively uniform thickness across the basin, unless affected by some
form of discontinuity.
There are upwards of 100 potash layers within the Salt Member ranging from 0.1
m to over 10 m in thickness. The Kola deposit is hosted by 4 seams within
cycles 7, 8 and 9, from uppermost these are; (HWS, US, LS, Footwall Seam
("FWS"). Seams are separated by Rock-salt.
Individual potash seams are stratiform layers that can be followed across the
basin are of Carnallitite except where replaced by Sylvinite, as is described
below. The potash mineralogy is simple; no other potash rock types have been
recognized and Carnallitite and Sylvinite are not inter-mixed. The seams are
consistent in their purity; all intersections of Sylvinite are comprised of
over 97.5% euhedral or subhedral halite and sylvite of medium to very coarse
grainsize (0.5 mm to ≥ 5 mm). Between 1.0 and 2.5% is comprised of anhydrite
(CaSO(4)) and a lesser amount of insoluble material. At Kola the potash layers
are flat or gently dipping and at depths of between 190 and 340 m below
surface.
The contact between the Anhydrite Member and the underlying salt is an
unconformity and due to the undulation of the layers within the Salt Member at
Kola, the thickness of the salt member beneath this contact varies. This is
the principal control on the extent and distribution of the seams at Kola and
the reason why the uppermost seams such as the Hangingwall Seam are sometimes
absent, and the lower seams such as the Upper and Lower Seam are preserved
over most of the deposit.
The most widely distributed Sylvinite seams at Kola are the US and LS, hosted
within cycle 8 of the Salt Member. These seams have an average grade of 35.5
and 30.5 % KCl respectively and average 3.7 and 4.0 m thick. The Sylvinite is
thinned in proximity to leached zones or where they 'pinch out' against
Carnallitite. They are separated by 2.5-4.5 m thick Rock-salt layer referred
to as the interburden halite ("IBH"). Sylvinite Hangingwall Seam is extremely
high grade (55-60% KCl) but is not as widely preserved as the Upper and Lower
Seam being truncated by the Anhydrite Member over most of the deposit. Where
it does occur, it is approximately 60 m above the Upper Seam and is typically
2.5 to 4.0 m thick. The Top Seams are a collection of narrow high grade seams
10-15 m above the Hangingwall Seam but are not considered for extraction at
Kola as they are absent (truncated by the Anhydrite Member) over almost all
the deposit.
The Footwall Seam occurs 45 to 50 m below the Lower Seam. The mode of
occurrence is different to the other seams in that it is not a laterally
extensive seam, but rather elongate lenses with a preferred orientation,
formed not by the replacement of a seam, but by the 'accumulation' of
potassium at a particular stratigraphic position. It forms as lenses of
Sylvinite up to 15 m thick and always beneath areas where the Upper and Lower
seam have been leached. It is considered a product of re-precipitation of the
leached potassium, into pre-existing Carnallitite-Bischofitite unit at the top
of cycle 7.
The insoluble content of the seams and the Rock-salt immediately above and
below them is uniformly low (<0.2%) except for the FWS which has an average
insoluble content of 1%. Minor anhydrite is present throughout the Salt
Member, as 0.5-3 mm thick laminations but comprise less than 2.5% of the rock
mass of the potash layers.
Reflecting the quiescence of the original depositional environment, the
Sylvinite seams exhibit low variation in terms of grade, insoluble content,
magnesium content; individual sub-layers and mm thick laminations within the
seams can be followed across the deposit. The grade profile of the seams is
consistent across the deposit except for the FWS; the US is slightly higher
grade at its base, the LS slightly higher grade at its top. The HWS is 50 to
60% sylvite (KCl) throughout. The FWS, forming by introduction of potassium
and more variable mode of formation has a higher degree of grade variation and
thickness.
The original sedimentary layer and 'precursor' potash rock type is
Carnallitite and is preserved in an unaltered state in many holes drill-holes,
especially of LS and in holes that are lateral to the deposit. It is comprised
of the minerals carnallite (KMgCl(3)·6H(2)O), halite (NaCl) (these two
minerals comprise 97.5% of the rock) and minor anhydrite and insolubles
(<2.5%). The Carnallitite is replaced by Sylvinite by a process of
'outsalting' whereby brine (rich in dissolved NaCl) resulted in the
dissolution of carnallite, and the formation of new halite (in addition to
that which may already be present) and leaving residual KCl precipitating as
sylvite. This 'outsalting' process produced a chloride brine rich in Mg and
Na, which presumably continued filtering down and laterally through the Salt
Member.
The grade of the Sylvinite is proportional to the grade of the precursor
Carnallitite. For example, in the case of the HWS when Carnallitite is 90
percent carnallite (and grades between 24 and 25 percent KCl), if all
carnallite was replaced by sylvite the resulting Sylvinite would theoretically
be 70.7 percent (by weight) sylvite. However, as described above the inflowing
brine introduced new halite into the potash layer, reducing the grade so that
the final grade of the Sylvinite of layer 3/IX is between 50 and 60 percent
KCl (sylvite).
Importantly, the replacement of Carnallitite by Sylvinite advanced laterally
and always in a top-down sense within the seam. This Sylvinite-Carnallitite
transition (contact) is observed in core and is very abrupt. Above the
contact the rock is completely replaced (Sylvinite with no carnallite) and
below the contact the rock is un-replaced (Carnallitite with no sylvite). In
many instances the full thickness of the seam is replaced by Sylvinite, in
others the Sylvinite replacement advanced only part-way down through the seam.
Carnallitite is reliably distinguished from Sylvinite based on any one of the
following:
· Visually: Carnallitite is orange, Sylvinite is orange-red or
pinkish red in colour and less vibrant.
· Gamma data: Carnallitite < 350 API, Sylvinite >350 API
· Magnesium data: Sylvinite at Kola does not contain more than 0.1%
Mg. Instances of up to 0.3% Mg within Sylvinite explained by 1-2 cm of
Carnallitite included in the lowermost sample where underlain by Carnallitite.
Carnallitite contains upwards to 5% Mg.
· Acoustic televeiwer and calliper data clearly identify
Carnallitite from Sylvinite.
Based on the 'stage' of replacement, 5 seam types are recognized. The
replacement process was extremely effective, no mixture of Carnallitite and
Sylvinite is observed, and within a seam, Carnallitite is not found above
Sylvinite.
It is thought that over geological time groundwater and/or water released by
the dehydration of gypsum (during conversion to anhydrite in the Anhydrite
Member) infiltrated the Salt Member under gravity, centred on areas of
'relatively disturbed stratigraphy' referred to as RDS zones (not to be
confused with subsidence anomalies, see section 3.5). In these areas the salt
appears to be gently undulating over broad zones, or forms more discrete
strike extensive gentle antiformal features. There appears to be a correlation
of these areas with small amounts undulation of the overlying strata and the
Salt Member and thickening of the Bischofitite at the top of Cycle 7 (some
45-50 m below the LS). The cause of the undulation appears to be related to
immature salt-pillowing.
The process of sylvinite formation appears to have been very gradual and
non-destructive; where leached, the salt remains in-tact and layering is
preserved. Brine or voids are not observed. Fractures within the Salt Member
appear to be restricted to areas of localized subsidence, as observed in
potash deposits mined elsewhere, and described in more detail in section 3.5.
Within and lateral to the RDS zones, brine moved downward then laterally,
preferentially along the thicker higher porosity Carnallitite layers,
replacing the carnallite with sylvite (as described in preceding text) 10s to
100's metres laterally and to a depth of 80-90 m below the Anhydrite Member.
Beyond the zone affected by sylvite replacement, the potash is of unaltered
primary Carnallitite. In the intermediate zone, the lower part of the layer
may not be replaced supporting a lateral then 'top-down' replacement of the
seams. For the most part the US is 'full' (fully replaced by Sylvinite), and
the LS often is Carnallitite especially within synformal areas giving rise to
pockets or troughs of Carnallitite. The HWS, being close to the anhydrite is
only preserved in synformal areas where it is always Sylvinite (being close to
the top of the Salt Member), or lateral to the main deposit where it is likely
to be Carnallitite, relating to the broader control on the zone of Sylvinite
formation discussed below.
Some of the longer seismic lines show that the relative disturbance of the
salt over much of Kola relates to the 'elevation' of the stratigraphy due to
the formation of a northwest-southeast orientated horst block, bound either
side by half-graben. The horst block referred to as the 'Kola High' and is
approximately 8 km wide and at least 20 km in length. Lateral to this 'high'
Sylvinite is rarely found except immediately beneath (within 5-10 m of) the
Anhydrite Member.
2.4 Drill hole Information · A summary of all information material to the understanding of the All drill-hole collar information for holes relevant to the Mineral Resource
exploration results including a tabulation of the following information for estimate was provided in Table 5 of the announcement (dated 27 Feb 2025),
all Material drill holes: including historic holes. Hydrological drill-holes are excluded as they were
drilled to a shallow depth. All holes except one were drilled vertically and
o easting and northing of the drill hole collar deflection from this angle was less than 3 degrees for almost all holes. Holes
were surveyed with a gyroscope or magnetic deviation tool to obtain downhole
o elevation or RL (Reduced Level - elevation above sea level in metres) of the survey data.
drill hole collar
o dip and azimuth of the hole
o down hole length and interception depth
o hole length.
· If the exclusion of this information is justified on the basis that
the information is not Material and this exclusion does not detract from the
understanding of the report, the Competent Person should clearly explain why
this is the case.
2.5 Data aggregation methods · In reporting Exploration Results, weighting averaging techniques, For the calculation of the grade over the full thickness of the seams, the
maximum and/or minimum grade truncations (eg cutting of high grades) and standard 'length-weighted' compositing method was used to combine individual
cut-off grades are usually Material and should be stated. results within each seam intersection.
· Where aggregate intercepts incorporate short lengths of high grade
results and longer lengths of low grade results, the procedure used for such
aggregation should be stated and some typical examples of such aggregations No selective cutting of high or low grade material was carried out as it is
should be shown in detail. not justified given the massive nature of the potash mineralization and
absence of the localised high/low grade areas.
· The assumptions used for any reporting of metal equivalent values
should be clearly stated.
Results for short lengths of high grade material included in the Mineral
Resource Estimate are justifiable based on their lateral continuity. They were
included in the full seam grade by standard 'length-weighted' compositing.
No metal equivalents were calculated.
2.6 Relationship between mineralisation widths and intercept lengths · These relationships are particularly important in the reporting of All mineralised intersections where the dip of the seam is 15 degrees or
Exploration Results. greater were corrected to obtain true thickness which was used in the Mineral
Resource Estimate.
· If the geometry of the mineralisation with respect to the drill
hole angle is known, its nature should be reported.
· If it is not known and only the down hole lengths are reported,
there should be a clear statement to this effect (eg 'down hole length, true
width not known').
2.7 Diagrams · Appropriate maps and sections (with scales) and tabulations of The announcement (dated 27 Feb 2025) included appropriate maps and sections.
intercepts should be included for any significant discovery being reported
These should include, but not be limited to a plan view of drill hole collar
locations and appropriate sectional views.
2.8 Balanced reporting · Where comprehensive reporting of all Exploration Results is not Not relevant to the reporting of the Mineral Resource Estimate.
practicable, representative reporting of both low and high grades and/or
widths should be practiced to avoid misleading reporting of Exploration
Results.
2.9 Other substantive exploration data · Other exploration data, if meaningful and material, should be All substantive data has been reported herein.
reported including (but not limited to): geological observations; geophysical
survey results; geochemical survey results; bulk samples - size and method of
treatment; metallurgical test results; bulk density, groundwater, geotechnical
and rock characteristics; potential deleterious or contaminating substances.
2.10 Further work · The nature and scale of planned further work (eg tests for lateral The exploration database should be updated with the most recent drilling data.
extensions or depth extensions or large-scale step-out drilling). No other further work is necessary currently. If conversion of Indicated
resources to Measured and Inferred to Indicated Mineral Resource is deemed
· Diagrams clearly highlighting the areas of possible extensions, important, additional seismic data would need to be acquired. Furthermore, the
including the main geological interpretations and future drilling areas, deposit is open laterally, in places to the west and east (though in the case
provided this information is not commercially sensitive. of the latter is limited by the Mining Lease boundary) and probably to the
greatest extent to the southeast, along the strike of the Kola High.
Additional drilling and seismic data may allow the delineation of additional
resources in these areas if results of the work are positive.
Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to
this section.)
Criteria JORC Code explanation Commentary
3.1 Database integrity · Measures taken to ensure that data has not been corrupted by, for Geological data is collected in hardcopy then captured digitally by data
example, transcription or keying errors, between its initial collection and entry. All entries are thoroughly checked. During import into Micromine©
its use for Mineral Resource estimation purposes. software, an error file is generated identifying any overlapping intervals,
gaps and other forms of error. The data is then compared visually in the form
· Data validation procedures used. of strip logs against geophysical data. Laboratory data was imported into an
Access database using an SQL driven software, to sort QA-QC samples and a
check for errors is part of the import. Original laboratory result files are
kept as a secure record. For the Mineral Resource model a 'stratigraphic file'
was generated, as synthesis of key geological units, based on geological,
geophysical and assay data. The stratigraphic file was then used as a key
input into the Mineral Resource model; every intersection and important
contact was checked and re-checked, by visual comparison with the other data
types in log format. Kore Potash is in the process of creating an updated
database, to include the most recent geology and assay data.
For the process of setting up a Mineral Resource database, Met-Chem division
of DRA Americas Inc., a subsidiary of the DRA Group underwent a rigorous
exercise of checking the database, including a comparison with the original
laboratory certificates. Once an explanation of the files had had been
provided, no errors were found with the assay or stratigraphic data, or with
the other data types imported (collar, survey, geophysics). The database is
considered as having a high degree of integrity.
3.2 Site visits · Comment on any site visits undertaken by the Competent Person and The Competent Person visited the project from the 5-7 November 2016 to view
the outcome of those visits. drill-hole sites, the core shed and sample preparation area. Explanation of
all procedures were provided by the Company, and a procedural document for
· If no site visits have been undertaken indicate why this is the core logging, marking and sampling reviewed. Time was spent reviewing core
case. and hard copy geological logs. All was found to meet or exceed the industry
standards.
3.3 Geological interpretation · Confidence in (or conversely, the uncertainty of) the geological Recognition and correlation of potash and other important layers or contacts
interpretation of the mineral deposit. between holes is straightforward and did not require assumptions to be made,
due the continuity and unique characteristics of each of the evaporite layers;
· Nature of the data used and of any assumptions made. each being distinct when thickness, grade and grade distribution, and
stratigraphic position relative to other layers is considered. Further support
· The effect, if any, of alternative interpretations on Mineral is provided by the reliable identification of 'marker' units within and at the
Resource estimation. base of the evaporite cycles. Correlation is further aided by the downhole
geophysical data clearly shows changes in mineralogy of the evaporite layers
· The use of geology in guiding and controlling Mineral Resource and is used to validate or adjust the core logged depths of the important
estimation. contacts. The abrupt nature of the contacts, particularly between the
Rock-salt, Sylvinite and Carnallitite contributes to above.
· The factors affecting continuity both of grade and geology.
Between holes the seismic interpretation is the key control in the form and
extent of the Sylvinite, in conjunction with the application of the geological
model. The controls on the formation of the Sylvinite is well understood and
the 'binary' nature of the potash mineralization allows an interpretation with
a degree of confidence that relates to the support data spacing, which in turn
is reflected in the classification. In this regard geology was relied upon to
guide and control the model, as described in detail section 3.5. Alternative
interpretations were tested as part of the modelling process but generated
results that do not honour the drill-hole data as well as the adopted model.
The following features affect the continuity of the Sylvinite or Carnallitite
seams, all of which are described further in Section 3.5. By using the seismic
data and the drill-hole data, the Mineral Resource model captures the
discontinuities with a level of confidence reflected in the classification.
• where the seams are truncated by the anhydrite
• where the Sylvinite pinches out becoming Carnallitite or vice
versa
• areas where the seams are leached within zones of subsidence
Outside of these features, grade continuity is high reflecting the small range
in variation of grade of each seam, within each domain. Further description of
grade variation is provided in later in text.
3.4 Dimensions · The extent and variability of the Mineral Resource expressed as In its entirety, the deposit is 14 km in length (deposit scale strike) and 9
length (along strike or otherwise), plan width, and depth below surface to the km in width. The shallowest point of the upper most Sylvinite (of the HWS) is
upper and lower limits of the Mineral Resource. approximately 190 metres below surface. The depth to the deepest Sylvinite (of
the FWS) is approximately 340 metres below surface. The thickness of the seams
was summarized in Table 3 of the announcement (dated 27 Feb 2025).
3.5 Estimation and modelling techniques · The nature and appropriateness of the estimation technique(s) Table 8 and Table 9 of the announcement (dated 27 Feb 2025) provide the
applied and key assumptions, including treatment of extreme grade values, Mineral Resource for Sylvinite and Carnallitite at Kola. This Mineral Resource
domaining, interpolation parameters and maximum distance of extrapolation from replaces that dated 21 August 2012, prepared by CSA Global Pty Ltd. This
data points. If a computer assisted estimation method was chosen include a update incorporates reprocessed seismic data and additional drilling data.
description of computer software and parameters used. Table 10 and Table 11 of the announcement (dated 27 Feb 2025) provide the
Sylvinite and Carnallitite Mineral Resource from 2012. The updated Measured
· The availability of check estimates, previous estimates and/or mine and Indicated Mineral Resource categories are not materially different from
production records and whether the Mineral Resource estimate takes appropriate the 2012 estimate and is of slightly higher grade. The Inferred category has
account of such data. reduced due to the reduction in the FWSS tonnage, following the updated
interpretation of it being present within relatively narrow lenses that are
· The assumptions made regarding recovery of by-products. more constrained than in the previous interpretation. There is no current plan
to consider the FWSS as a mining target and so the reduction in FWSS tonnage
· Estimation of deleterious elements or other non-grade variables of is of no consequence to the project's viability.
economic significance (eg sulphur for acid mine drainage characterisation).
· In the case of block model interpolation, the block size in
relation to the average sample spacing and the search employed. As described in section 3.3, the spatial application of the geological model
was central to the creation of the Mineral Resource model. Geological controls
· Any assumptions behind modelling of selective mining units. were used in conjunction with the seismic data interpretation. The process
commenced with the interpretation of the depth migrated drill-hole-tied
· Any assumptions about correlation between variables. seismic data in Micromine 2013 © involving the following. Table 7 of the
announcement (dated 25 Feb 2025) provides an explanation of abbreviations used
· Description of how the geological interpretation was used to in text.
control the resource estimates.
· Discussion of basis for using or not using grade cutting or
capping. 1. Interpretation of the base of anhydrite surface or Salt Roof
("SALT_R") which is typically a distinct seismic event.
· The process of validation, the checking process used, the
comparison of model data to drill hole data, and use of reconciliation data if 2. Interpretation of base of salt, the 'intra-salt marker' and 'base
available. cycle 8' ("BoC8") markers. Based on synthetic seismograms the latter is a
negative event picking out the contrast between the top of the Cy78 and
overlying Rock-salt.
Using Leapfrog Geo 4.0 (Leapfrog) surfaces were created for the SALT_R and
BoC8 . In doing so, an assessment of directional control on the surfaces was
made; following the observation based on the sectional interpretation a
WNW-ESE 'strike' is evident. Experimental semi-variograms were calculated for
the surface elevation values at 10° azimuth increments. All experimental
semi-variograms were plotted; 100° and 10° produce good semi-variograms for
the directions of most and least continuity respectively. This directional
control was adopted for the modelling of surfaces, created in Leapfrog on a 20
by 20 m 'mesh' using a 2:1 ellipsoid ratio (as indicated by the semi-variogram
ranges).
The following steps were then carried out:
1. The BoC8 surface was projected up to the position of the Upper Seam
roof (US_R) by 'gridding' the interval between these units from drill-hole
data. On seismic lines, The US_R interpretation was then adjusted to fit
reflectors at that position, considering interference features common in the
data in the Salt Member close to the SALT_R
2. In all cases drill-hole intersections were honoured. In addition to
USS and USC intersections, the small number of leached US intersections, all
within subsidence zones) were used to guide the seam model.
3. The new US_R interpretation along seismic lines, was then 'gridded'
in Leapfrog, also into a mesh of 20 m by 20 m resolution making use of the
100° directional control and 2:1 anisotropy, to create a new US_R surface.
The Mineral Resource model has two potash domains in order to represent the
geology i.e. Sylvinite or Carnallitite. A third non-potash domain areas of
leaching and/or subsidence as described in the following text. Using the
reference horizons, the Sylvinite and Carnallitite seam model was developed as
follows:
1. The US_R surface was fixed as the reference horizon for the
modelling of the US, LS and HWS. The US_R surface was imported into Datamine
Studio 3 (Datamine), using the same 20 by 20 m cells as described above.
2. The US Sylvinite (USS) model was developed by analysing the
position of the cell in relation to the SALT_R and to the RDS zones. The
latter were interpreted from seismic data. As described in section 2.3 these
attributes are the main geological controls.
3. To a lesser extent the dip of the seam and the relative elevation
of each cell, relative to the cells within a 100 by 100 m area were also
considered, to further identify Sylvinite with the understanding that areas of
very low dip are more likely to be of Carnallitite.
4. Beyond the 2010/2011 seismic data (within the Indicated Mineral
Resource area) the influence of the distance from RDS zones was reduced and
the proximity to the SALT_R and the dip and relative elevation were assigned
greater consideration.
5. Seam thickness of the USS was determined by gridding the drill-hole
data of the full Sylvinite intersections (excluding those that have a
Carnallitite basal layer or are leached) using Inverse distance squared
("IDW(2)") and adjusting it to account for the influence of 2 and 3 above. The
Sylvinite thickness was then subtracted from the elevation of the US_R to
create the USS floor ("USS_F"), on the 20m by 20m mesh.
6. Only the true thickness of drill-hole intersections were used (i.e.
corrections for any dip were made) for the above. As the seam model thickness
developed in a vertical sense, areas of the model with a dip were corrected so
that the true thickness was always honoured.
7. Even if the USS has zero thickness the surface for the USS_F was
created, overlying exactly that of the US_R to facilitate the creation of DTMs
for each surface.
8. The same method (effectively the inverse) was applied to create the
US Carnallitite model ("USC") below the USS. The roof of the USC ("USC_R") is
the same surface as the USS_F.
9. A number of iterations of the model were produced and assessed. The
selected model was the one that produced a result that ties well with the
drill-hole data and honours the proportional abundance of Sylvinite as
intersected in the drill-holes.
The Lower Seam model was created in a similar manner as follows:
1. The LS is separated by between 2 and 6 metres of barren Rock-salt,
also referred to as the Interburden-halite or IBH. This layer is an important
geotechnical consideration and so care was taken to model it. The IBH
thickness from drill-hole data was 'gridded' in Datamine using IDW(2) into the
20 by 20 cells. This thickness was then subtracted from the elevation of the
US_F to obtain the LS_R elevation from which a DTM was made.
2. Unlike the USS the LSS is often underlain by a layer of
Carnallitite. For the LSS model the thickness of the LSS from drill-hole data
was gridded using IDW(2) into the 20 x 20 mesh without influence from distance
to the SALT_R or RDS zones. However, based on the geological understanding
that LSS rarely occurs beneath USC the LSS model was cut accordingly, based on
the USC model. Reflecting the model and based on analysis the following rule
was also applied; that if the US is 'full' then the LSS is also full but only
if the LS_R is within 30 m of the SALT_R. Finally, if the US_R is truncated by
the SALT_R, then the remaining LS is modelled as full LSS due to its proximity
to the SALT_R.
For the US and LS Inferred Resources, the distribution of Sylvinite and
Carnallitite was by manual interpretation based on available drill-hole data
and plots of the distance between the seam and the SALT_R. The thickness of
the USS and LSS was determined by gridding all USS drill-hole data. The
Carnallitite was then modelled as the Inverse of the Sylvinite model, in
adherence to the geological model.
The Hangingwall seam model was created as follows
1. The distance between the US_R and HWS_R in drill-hole intersection
was gridded using IDW(2) into the 20 by 20 m mesh. This data was then added to
the elevation of the US_R to create a HWS_R.
2. Being close to the SALT_R (within 30 m in all cases) there is less
variation in domain type; in all areas except for the zone labelled 'A' on
Figure 24 of the announcement (dated 27 Feb 2025) the USS is full Sylvinite
(not underlain by USC). For all HWS outside of zone A the model was created by
gridding the thickness using IDW(2) into the 20 x 20 mesh.
3. The HWS model was created without input from distance to the SALT_R
or RDS zones for the reasons stated above, by gridding of the drill-hole
intersections.
4. Within the area labelled 'A' on Figure 24 of the announcement
(dated 27 Feb 2025), the HWSS is underlain by HWSC and so this was
incorporated into the model.
5. Finally, the HWS was 'pinched' upwards from 4 m below the SALT_R to
reflect the geological observation that close to this surface the seam is
leached.
Modelling of the FWS
1. A different approach was adopted for the modelling of the FWS as
the mode of occurrence is different to the other seams as described in section
2.3. Only Sylvinite FWSS was modelled as Carnallitite FWS is poorly developed
or absent, and low grade.
2. Drill-hole and seismic data was used to identify areas of leaching
of the Salt Member based on subsidence of the overlying strata signs of marked
disturbance of the salt, within which FWSS is typically developed. These were
delineated in plan view.
Where possible drill-hole data was used to guide thickness of the FWS, in
other areas the thickness was interpreted using the seismic data. The FWS was
'constructed' from the top of the Cy7B upwards.
As is standard practice in potash mining zones of subsidence which pose a
potential risk to mining were identified using seismic and drill-hole data and
classified from 1 to 3 depending on severity where 3 is highest. Several
drill-holes within or adjacent to these features show that the Salt Member is
intact but has experienced some disturbance and leaching.
The HWS, US and LS Mineral Resource models were 'cookie-cut' by these
anomalies before calculation of the Mineral Resource estimate. The FWSS model
was not cut as that Sylvinite is considered the product of potassium
precipitation below the influence of the subsidence anomalies.
Finally, all the potash seams were truncated (cut) by the SALT_R surface (base
of the Anhydrite Member) as it is an unconformity.
Traditional block modelling was employed for estimating %KCl, %Na, %Cl, %Mg,
%S, %Ca and %Insols (insolubles). No assumptions were made regarding
correlation between variables. The block model is orthogonal and rotated by 20
degrees reflecting the orientation of the deposit. The block size chosen was
250m x 250m x 1m to roughly reflect drill hole spacing, seam thickness and to
adequately descretize the deposit without injecting error.
Volumetric solids were created for the individual mineralized zones (i.e.,
Hangingwall Seam, Upper Seam, Lower Seam, Footwall Seam) for both Sylvinite
and Carnallitite using drill hole data and re-processed depth migrated seismic
data. The solids were adjusted by moving the nodes of the triangulated domain
surfaces to exactly honour the drill hole intercepts. Numeric codes denoting
the zones within the drill hole database were manually adjusted to ensure the
accuracy of zonal intercepts. No assay values were edited or altered.
Once the domain solids were created, they were used to code the drill hole
assays and composites for subsequent statistical analysis. These solids or
domains were then used to constrain the interpolation procedure for the
mineral resource model, the solids zones were then used to constrain the block
model by matching composites to those within the zones in a process called
geologic matching. This ensures that only composites that lie within a
particular zone are used to interpolate the blocks within that zone.
Relative elevation interpolation methods were also employed which is helpful
where the grade is layered or banded and is stratigraphically controlled. In
the case of Kola, layering manifests itself as a relatively high-grade band at
the footwall, which gradually decreases toward the hanging wall. Due to the
undulations of the deposit, this estimation process accounts for changes in
dip that are common in layered and stratified deposits.
The estimation plan includes the following:
· Store the mineralized zone code and percentage of
mineralization.
· Apply the density, based on calculated specific gravity.
· Estimate the grades for each of the metals using the relative
elevation method and an inverse distance using three passes. The three
estimation passes were used to estimate the Resource Model because a more
realistic block-by-block estimation can be achieved by using more restrictions
on those blocks that are closer to drill holes, and thus better informed.
· Include a minimum of one composite and a maximum of nine,
with a maximum of three from any one drill hole.
The nature and distribution of the Kola Deposit shows uniform distribution of
KCl grades without evidence of multiple populations which would require
special treatment by either grade limiting or cutting. Therefore, it was
determined that no outlier or grade capping was necessary.
The grade models have been developed using inverse distance and anisotropic
search ellipses measure 250 x 150 x 50 m and have been oriented relative to
the main direction of continuity within each domain. Anisotropic distances
have been included during interpolation; in other words, weighting of a sample
is relative to the range of the ellipse. A sample at a range of 250 m along
the main axis is given the same weight as a sample at 50 m distance located
across the strike of the zone.
A full set of cross-sections, long sections, and plans were used to check the
block model on the computer screen, showing the block grades and the
composite. There was no evidence that any blocks were wrongly estimated.
It appears that block grades can be explained as a function of: the
surrounding composites, the solids models used, and the estimation plan
applied. In addition, manual ballpark estimates for tonnage to determine
reasonableness was confirmed along with comparisons against the nearest
neighbor estimate.
As a check on the global tonnage, an estimate was made in Microsoft Excel by
using the average seam thickness and determining a volume based on the
proportion of holes containing Sylvinite versus the total number of holes
(excluding those that did not reach the target depth) then applying the mean
density of 2.1 (t/m(3)) to determine the total tonnes. This was carried out
for the USS and LSS within the Measured and Indicated categories. A deduction
was made to account for loss within subsidence anomalies. The tonnage of this
estimate is within 10% of the tonnage of the reported Mineral Resource.
3.6 Moisture · Whether the tonnages are estimated on a dry basis or with natural Mineral Resource tonnages are reported on an insitu basis (with natural
moisture, and the method of determination of the moisture content. moisture content), Sylvinite containing almost no moisture and Carnallitite
containing significant moisture within its molecular structure. Moisture
content of samples was measured using the 'Loss on Drying' ("LOD") method at
Intertek Genalysis as part of the suite of analyses carried out. Data shows
that for Sylvinite the average moisture content is 0.076 % and the maximum
value was 0.6%. Representative moisture analyses of Carnallitite are difficult
as it is so hygroscopic. 38% of the mass of the mineral carnallite is due to
water (6 H(2)0 groups within its structure). Using the KCl data to work out a
mean carnallite content, the Carnallitite has an average moisture content
approximately 25% insitu. It can be reliably assumed that this amount of
moisture would have been held by the Carnallitite samples at the time of
analysis of potassium, in a temperate atmosphere for the duration that they
were exposed.
3.7 Cut-off parameters · The basis of the adopted cut-off grade(s) or quality parameters For Sylvinite, a CoG of 10% was determined by an analysis of the
applied. Pre-feasibility and 'Phased Implementation study' operating costs analysis and
a review of current potash pricing. The following operating costs were
determined from previous studies per activity per tonne of MoP (95% KCl)
produced from a 33% KCl ore, with a recovery of 89.5%:
· Mining US$30/t
· Process US$20/t
· Infrastructure US$20/t
· Sustaining Capex US$15/t
· Royalties US$10/t
· Shipping US$15/t
For the purpose of the CoG calculation, it was assumed that infrastructure,
sustaining capex, royalty and shipping do not change with grade (i.e. are
fixed) and that mining and processing costs vary linearly with grade. Using
these assumptions of fixed costs (US$60/t) and variable costs at 33% (US$50/t)
and a potash price of US$250/t, we can calculate a cut-off grade where the
expected cost of operations equals the revenue. This is at a grade of 8.6%
KCl. To allow some margin of safety, a CoG of 10% is therefore proposed. For
Carnallitite, reference was made to the Scoping Study for Dougou which
determined similar operating costs for solution mining of Carnallitite and
with the application of a $250/t potash price a CoG of 10% KCl is determined.
3.8 Mining factors or assumptions · Assumptions made regarding possible mining methods, minimum mining The Kola Sylvinite has been the subject of several scoping studies as well as
dimensions and internal (or, if applicable, external) mining dilution. It is a publicly available NI43-101 compliant PFS completed in September 2012 by SRK
always necessary as part of the process of determining reasonable prospects Consulting of Denver. The study found that economic extraction of 2 to 5m
for eventual economic extraction to consider potential mining methods, but the thick seams with conventional underground mining machines is viable and that
assumptions made regarding mining methods and parameters when estimating mining thickness as low as 1.8m can be supported. Globally, potash is mined in
Mineral Resources may not always be rigorous. Where this is the case, this similar deposits with seams of similar geometry and form. The PFS determined
should be reported with an explanation of the basis of the mining assumptions an overall conversion of resources to reserves of 26%. A Definitive
made. Feasibility Study is underway.
Mining of Carnallitite is not planned at this stage but in the form, grade and
quantity of the Carnallitite does support reasonable ground for eventual
economic extraction. A Scoping Study complete in 2015 for the nearby Dougou
Carnallitite deposit further supports this.
3.9 Metallurgical factors or assumptions · The basis for assumptions or predictions regarding metallurgical The Kola Sylvinite ore represents a simple mineralogy, containing only
amenability. It is always necessary as part of the process of determining sylvite, halite and minor fragments of other insoluble materials. Sylvinite of
reasonable prospects for eventual economic extraction to consider potential this nature is well understood globally and can be readily processed.
metallurgical methods, but the assumptions regarding metallurgical treatment Separation of the halite from sylvite by means of flotation has been proven in
processes and parameters made when reporting Mineral Resources may not always potash mining districts in Russia and Canadas. Furthermore, metallurgical test
be rigorous. Where this is the case, this should be reported with an work was performed on all Sylvinite seams (HWSS, USS, LSS and FWSS) at the SRC
explanation of the basis of the metallurgical assumptions made. which confirmed the viability of processing the Kola ore by conventional
flotation.
3.10 Environmental factors or assumptions · Assumptions made regarding possible waste and process residue The Kola deposit is located in a sensitive environmental setting in an area
disposal options. It is always necessary as part of the process of determining that abuts the CDNP. Approximately 60% of the deposit is located within the
reasonable prospects for eventual economic extraction to consider the economic development zone of the CDNP, while the remainder is within the
potential environmental impacts of the mining and processing operation. While buffer zone around the park. The economic development zone does permit mining
at this stage the determination of potential environmental impacts, activities if it is shown that impact can be minimised. For these reasons,
particularly for a greenfields project, may not always be well advanced, the Sintoukola Potash has focussed its efforts on understanding the environmental
status of early consideration of these potential environmental impacts should baseline and the potential impacts that the project will have. Social, water,
be reported. Where these aspects have not been considered this should be hydrobiology, cultural, archaeological, biodiversity, noise, traffic and
reported with an explanation of the environmental assumptions made. economic baseline studies were undertaken as part of the ESIA process between
2011 and 2013. This led to the preparation of an Equator Principles compliant
ESIA in 2013 and approval of this study by the government in the same year.
Waste management for the project is simplified by the proximity to the ocean,
which acts as a viable receptor for NaCl from the process plant. Impacts on
the forest and fauna are minimised by locating the process plant and employee
facilities at the coast, outside the CDNP. Relationships with the national
parks, other NGO's and community and government stakeholders have been
maintained continuously since 2011 and engagement is continuing for the
ongoing DFS. All stakeholders remain supportive of the project.
3.11 Bulk density · Whether assumed or determined. If assumed, the basis for the The separation of Carnallitite and Sylvinite (no instances of a mixed ore-type
assumptions. If determined, the method used, whether wet or dry, the frequency have been observed) and that these rock types each comprise over 97.5% of only
of the measurements, the nature, size and representativeness of the samples. two minerals (Carnallitite of carnallite and halite; Sylvinite of sylvite and
halite) means that density is proportional to grade. The mineral sylvite has a
· The bulk density for bulk material must have been measured by specific gravity of 1.99 and halite of 2.17. Reflecting this, the density of
methods that adequately account for void spaces (vugs, porosity, etc), Sylvinite is less if it contains more sylvite. The same is true of
moisture and differences between rock and alteration zones within the deposit. Carnallitite, carnallite having a density of 1.60.
· Discuss assumptions for bulk density estimates used in the
evaluation process of the different materials.
Conventional density measurements using the weight in air and weight in water
method were problematic due to the soluble nature of the core and difficulty
applying wax to salt. As an alternative, gas pycnometer analyses were carried
out (71 on Sylvinite and 37 on Carnallitite samples). Density by pycnometer
was plotted against grade for each and a regression line was plotted, the
formula of which was used in the Mineral Resource model to determine the bulk
density of each block. As a check on the pycnometer data, the theoretical bulk
density (assumes a porosity of nil) was plotted using the relationship between
grade and density described above. As a further check, a 'field density' was
determined for Sylvinite and Carnallitite from EK_49 and EK_51 on whole core,
by weighing the core and measuring the volume using a calliper, before sending
samples for analysis. An average field density of 2.10 was derived from the
Sylvinite samples, with an average grade of 39% KCl, and 1.70 for Carnallitite
with an average grade of 21% KCl, supporting the pycnometer data. The
theoretical and field density data support the approach of determining
bulk-density.
3.12 Classification · The basis for the classification of the Mineral Resources into Drill-hole and seismic data are relied upon in the geological modelling and
varying confidence categories. grade estimation. Across the deposit the reliability of the geological and
grade data is high. Grade continuity is less reliant on data spacing as within
· Whether appropriate account has been taken of all relevant factors each domain grade variation is small reflecting the continuity of the
(i.e. relative confidence in tonnage/grade estimations, reliability of input depositional environment and 'all or nothing' style of Sylvinite formation.
data, confidence in continuity of geology and metal values, quality, quantity
and distribution of the data).
· Whether the result appropriately reflects the Competent Person's It is the data spacing that is the principal consideration as it determines
view of the deposit. the confidence in the interpretation of the seam continuity and therefore
confidence and classification; the further away from seismic and drill-hole
data the lower the confidence in the Mineral Resource classification, as
summarized in Table 13 of the announcement (dated 27 Feb 2025). In the
assigning confidence category, all relevant factors were considered and the
final assignment reflects the Competent Persons view of the deposit.
3.13 Audits or reviews · The results of any audits or reviews of Mineral Resource estimates. No audits or reviews of the Mineral Resource have been carried out other than
those of professionals working with Met-Chem division of DRA Americas Inc., a
subsidiary of the DRA Group as part of the modelling and estimation work.
3.14 Discussion of relative accuracy/ confidence · Where appropriate a statement of the relative accuracy and The Competent Person has a very high degree of confidence in the data and the
confidence level in the Mineral Resource estimate using an approach or results of the Mineral Resource Estimate. The use of tightly spaced seismic
procedure deemed appropriate by the Competent Person. For example, the that was reprocessed using state-of-the-art techniques combined with high
application of statistical or geostatistical procedures to quantify the quality drill data formed the solid basis from which to model the deposit.
relative accuracy of the resource within stated confidence limits, or, if such Industry standard best practices were followed throughout and rigorous quality
an approach is not deemed appropriate, a qualitative discussion of the factors assurance and quality control procedures were employed at all stages. The
that could affect the relative accuracy and confidence of the estimate. Competent Person was provided all information and results without exception
and was involved in all aspects of the program leading up to the estimation of
· The statement should specify whether it relates to global or local resources. The estimation strategy and method accurately depict tonnages and
estimates, and, if local, state the relevant tonnages, which should be grades with a high degree of accuracy both locally and globally.
relevant to technical and economic evaluation. Documentation should include
assumptions made and the procedures used.
· These statements of relative accuracy and confidence of the There is no production data from which to base an opinion with respect to
estimate should be compared with production data, where available. accuracy and confidence.
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. END MSCPPUMWPUPAUMMRecent news on Kore Potash
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