REG - Kore Potash PLC - Review of Operations for quarter ended 31 Dec 2023
18/01/2024 07:00
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RNS Number : 0743A Kore Potash PLC 18 January 2024
18 January 2024
Kore Potash Plc
("Kore Potash" or "the Company")
Review of Operations for the quarter ended 31 December 2023
Kore Potash (AIM: KP2, ASX: KP2, JSE:KP2), the potash development company with
97% ownership of the Kola Potash Project ("Kola" or the "Kola Project") and
Dougou Extension Potash Project ("DX") in the Sintoukola Basin, located in the
Republic of Congo ("RoC"), provides its quarterly update for the period ended
31 December 2023 (the "Quarter").
Quarterly Highlights
Projects
· PowerChina International Group Limited ("PowerChina") continues with
the review process of the Engineering, Procurement and Construction ("EPC")
proposal, announced in December 2023.
Corporate
· Resignation of Brad Sampson, the Company's Chief Executive Officer
("CEO"), on 31 October 2023. The Company does not intend to appoint a new CEO
until after the receipt of the financing proposal for the construction of the
Kola Potash Project.
· David Hathorn, (Chairman) has assumed the role of CEO in the interim.
· Acting Chief Financial Officer ("CFO") Amanda Farris resigned on 11
December 2023 with Andrey Maruta appointed as non-board CFO.
· Successful completion of US$2.5 million equity fundraise.
· As of 31 December 2023, the Company held c.US$1.6 million in cash.
Operational Activities
Kola EPC
Kore Potash signed a Memorandum of Understanding with the Summit Consortium
("Consortium") in April 2021 for the Optimisation of Kola, the provision of an
EPC contract proposal, and a debt and royalty financing proposal for the total
construction cost of Kola.
The results of the Optimisation Study ("Study") announced on 27 June 2022
supported moving to the next phase of Kola's development.
On 28 June 2022, the Company announced that it had signed a Heads of Agreement
("HoA") for the construction of Kola with SEPCO. Under the HoA, SEPCO
undertook to continue negotiations with Kore Potash towards an EPC contract
for the construction of Kola. Importantly, the HoA recognised that the Study's
outcomes confirmed the capital cost of Kola, the construction period and
related EPC contract terms.
Recognising the world-class scale of Kola, the length of the proposed
construction period and the total financing requirement, Kore Potash requested
that SEPCO's parent company, PowerChina, provide the typically required EPC
contract guarantees, including performance and retention bonds supporting the
completion of construction and the operating performance of Kola.
On 8 August 2023, Kore Potash entered into a revised agreement ("Agreement")
with SEPCO to provide the Company with an EPC contract for the construction of
the Kola Project. Following the completion of SEPCO's parent company,
PowerChina's, review of the Kola design and construction schedule, one of the
agreed outcomes was that further engineering design works must be completed
before PowerChina and SEPCO jointly presenting an EPC proposal and EPC
contract to the Company.
PowerChina subcontracted five technical groups who commenced additional design
and engineering works. Specific design areas included the underground mine,
mineral processing jetty and transhipment operations, energy transportation
and storage, conveyor systems and material handling (the "Works"). PowerChina
advised the Company that the Works would cost in excess of US$10 million to
complete. Illustrating PowerChina's commitment to Kola, it capped Kore
Potash's contribution at a maximum of US$5 million, with the balance of the
costs to be paid by PowerChina.
Two payments of US$1.0 million each were made in August and November 2023 as
required under the Agreement. The remaining payments are contingent upon the
Company completing further fund raises and PowerChina and SEPCO's delivery of
the EPC contract. The remaining payments are planned to be paid in two
tranches 12 months from date of the execution of the EPC contract.
PowerChina, SEPCO and the subcontractors, in pursuit of the timeline
objectives, commenced the Works before reaching an agreement with the Company
on costs.
SEPCO has had personnel living in the Republic of Congo ("RoC") for the past
24 months who continue dialogue with potential in-country service providers
and who have conducted several Kola site visits collecting information for
both the Study and the Works. Additionally, SEPCO mobilised a larger team to
Kola for four months in the second half of 2023 to source additional
information to enable the Works finalisation, including the planned service
corridors, conveyor route, and geomechanical information on foundation
materials in the proposed processing plant and infrastructure areas. These
findings were presented to PowerChina in early December 2023.
PowerChina and SEPCO have confirmed that they have received all the
information relating to the Works, internal reports are being finalised, and
the EPC contract is in draft form.
Regarding the Works detailed in the Agreement:
§ Additional engineering design works - Completed;
§ Finalisation of internal reports - week commencing 15 January 2024;
§ EPC Proposal and EP Contract offer - on track to be delivered to the
Company by the end of January 2024;
§ Kore Potash and SEPCO/PowerChina signing the EPC contract - targeting
before the end of February 2024.
Kola Financing
Kore Potash continues to work with the Consortium to provide financing for the
total construction cost of Kola, which is intended to be based on royalty and
debt finance.
The successful outcomes of the Study were in line with the Consortium's
requirements and supported the ongoing financing discussions. The financing
parties of the Consortium have again reinforced their ongoing strong interest
in financing Kola and await the finalisation of the EPC contract terms.
The Consortium has advised that the financing proposal for the total
construction cost of Kola will be provided to the Company within six weeks of
EPC Contract terms finalisation.
Kore Potash maintains that the Consortium members can provide the required
financing for Kola's construction of Kola and that pursuing this financing
opportunity remains the best path forward for Kore Potash's shareholders.
Congo Government Relations
The Minister of Mines wrote a letter to Kore Potash that pledged the Ministry
and the RoC's support for Kore's development of its projects at Kola and
Dougou ("Projects").
The Minister acknowledged that some of the development objectives for the
Projects, as outlined in the Mining Convention, have not yet been met. He also
assured the Ministry's steadfast support, in the form of a moral guarantee, to
assist in addressing the remaining challenges to completing the financing of
Kola. The Minister reaffirmed the validity of the Company's mining tenement
titles and the Mining Convention, which is the operating agreement between the
Company and the Government.
He further conveyed a pledge of security reflecting the RoC's confidence in
Kore Potash to support ongoing dialogue and action towards developing our
projects in the RoC.
The Minister of Mines of the RoC showed further support for the Company's
development of the Kola Project during a visit to the Kola Project in
September.
Kore Potash held a ceremony at the intended location of the Kola processing
plant in recognition of the extensive development work completed by Kore
Potash. The ceremony also recognised the commencement of work on the ground at
the Kola site by SEPCO.
The ceremony was held near the village of Yanga in the Kouilou province of the
RoC. The Minster, members of his Ministry and local dignitaries were in
attendance, along with the Chairman and Interim CEO of Kore Potash, David
Hathorn, Warren Thompson from the Summit Consortium and SEPCO Vice President
Zhang Quan.
DX Potash Project
At present, the Company remains focused on completing the financing of Kola
and moving forward to the construction of Kola as soon as possible.
The Company is continuing to explore the strategic options available for the
DX project.
Corporate
The Company successfully raised US$2.5 million through the issue of
542,250,000 new ordinary shares of US$0.001 each in the Company ("Subscription
Shares") to certain eligible existing shareholders at a price of 0.38 pence
per share ("Subscription Price"). The Company's Chairman has participated with
US$750,000 investment.
At the Company's GM, held on 7 December 2023, all resolutions were duly passed
on a poll by the requisite majority.
There were no mining production or construction activities during the Quarter.
Quarterly cashflow report
In accordance with the ASX Listing Rules, the Company will also lodge its
cashflow report for the Quarter today. Included in those cashflows are Brad
Sampson's salary of US$164,000 settled in cash.
The Company invested US$1,683,000 in exploration in the Quarter, which
comprised US$1,667,000 related to the Kola Study and US$16,000 for the DX DFS
Study. The Company ended the Quarter with c.US$1.6 million in cash.
This announcement has been approved for release by the Board of Kore Potash.
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.
ENDS
For further information, please visit www.korepotash.com
(https://url.avanan.click/v2/___http:/www.korepotash.com___.YXAxZTpzaG9yZWNhcDphOm86NjE3ZDQ4NTIwYjAwMTA5MGQ5ZjYyMzY5ZGFiN2ZlMTE6Njo4NWJiOmI2Y2M5MmQzNjcwODhmMGY4ZGJiMzA5YmM0ZTRkMjQ5NWEyYzdjM2NlZjU2Yzg0NWU3NGQwZGJlNzIwZmQ1ZTM6cDpU)
or contact:
Kore Potash Tel: +27 84 603 6238
David Hathorn - Chairman & Interim CEO
Tavistock Communications Tel: +44 (0) 20 7920 3150
Nick Elwes
Adam Baynes
SP Angel Corporate Finance - Nomad and Broker Tel: +44 (0) 20 7470 0470
Ewan Leggat
Charlie Bouverat
Kasia Brzozowska
Shore Capital - Joint Broker Tel: +44 (0) 20 7408 4050
Toby Gibbs
James Thomas
Questco Corporate Advisory - JSE Sponsor Tel: +27 (11) 011 9205
Doné Hattingh
Tenement Details and Ownership
The Company is incorporated and registered in England and Wales and wholly
owns Kore Potash Limited of Australia. Kore Potash Limited has a 97%
shareholding in Sintoukola Potash SA ("SPSA") in the RoC. SPSA has 100%
ownership of Kola Potash Mining SA ("KPM"). KPM has 100% ownership of the Kola
Mining Lease on which the Kola Deposit is situated. The Kola Deposit is
located within the Kola Mining Lease. SPSA is also the 100% owner of the
Dougou Mining Lease. The Dougou Mining lease hosts the Dougou Deposit and the
DX Deposit.
Under the existing Mining Convention, the RoC Government is entitled to 10%
ownership in the Kola and DX Projects. The transfer of this 10% awaits
instructions from the Government and the Mineral Resources and Ore Reserves
are shown below in gross and 90% attributable bases.
Table 1: Schedule of mining tenements (Republic of Congo)
Project & Type Tenement Issued Company Interest Title Registered to
Kola Decree 2013-412 100% Kola Potash Mining S.A.
Mining of 9 August 2013 potassium rights only
Dougou Decree 2017-139 100% Sintoukola Potash S.A.
Mining of 9 May 2017 potassium rights only
Revised Decree No 2021-389 of 2 August 2021
Kore Potash Mineral Resources and Ore Reserves - Gross and according to future
90% interest (10% by the RoC government)
KOLA SYLVINITE DEPOSIT
Gross Net Attributable (90% interest)
Mineral Resource Category Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes
Measured 216 34.9 75.4 194 34.9 67.8
Indicated 292 35.7 104.3 263 35.7 93.9
Sub-Total Measured + Indicated 508 35.4 179.7 457 35.4 161.7
Inferred 340 34.0 115.7 306 34.0 104.1
TOTAL 848 34.8 295.4 763 34.8 265.8
Gross Net Attributable (90% interest)
Ore Reserve Category Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes
Proved 62 32.1 19.8 56 32.1 17.9
Probable 91 32.8 29.7 82 32.8 26.7
TOTAL 152 32.5 49.5 137 32.5 44.6
Ore Reserves are not in addition to Mineral Resources but are derived from
them by the application of modifying factors
DOUGOU EXTENSION SYLVINITE DEPOSIT (HWSS and TSS)
Gross Net Attributable (90% interest)
Mineral Resource Category Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes
Measured 20 32.4 6.5 18 32.4 5.9
Indicated 8 23.1 1.8 7 23.1 1.6
Sub-Total Measured + Indicated 28 29.9 8.3 25 29.9 7.5
Inferred 101 23.5 23.8 91 23.5 21.4
TOTAL 129 24.8 32.1 116 24.8 28.9
Gross Net Attributable (90% interest)
Ore Reserve Category Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes Sylvinite Million Tonnes Average Grade KCl % Contained KCl million tonnes
Proved 6.1 32.5 2.0 5.5 32.5 1.8
Probable 3.2 41.8 1.3 2.9 41.8 1.2
TOTAL 9.3 35.7 3.3 8.4 35.7 3.0
Ore Reserves are not in addition to Mineral Resources but are derived from
them by the application of modifying factors
DOUGOU CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
Mineral Resource Category Million Tonnes carnallite Average Grade KCl % Contained KCl million tonnes Million Tonnes carnallite Average Grade KCl % Contained KCl million tonnes
Measured 148 20.1 29.7 133 20.1 26.8
Indicated 920 20.7 190.4 828 20.7 171.4
Sub-Total Measured + Indicated 1,068 20.6 220.2 961 20.6 198.2
Inferred 1,988 20.8 413.5 1,789 20.8 372.2
TOTAL 3,056 20.7 633.7 2,750 20.7 570.3
KOLA CARNALLITE DEPOSIT
Gross Net Attributable (90% interest)
Mineral Resource Category Million Tonnes carnallite Average Grade KCl % Contained KCl million tonnes Million Tonnes carnallite Average Grade KCl % Contained KCl million tonnes
Measured 341 17.4 59.4 307 17.4 53.5
Indicated 441 18.7 82.6 397 18.7 74.4
Sub-Total Measured + Indicated 783 18.1 142.0 705 18.1 127.8
Inferred 1,266 18.7 236.4 1,140 18.7 212.8
TOTAL 2,049 18.5 378.5 1,844 18.5 340.6
Competent Persons Statements
All Mineral Resource and Ore Reserves are reported in accordance with the JORC
Code (2012 edition). Numbers are rounded to the appropriate decimal place.
Rounding 'errors' may be reflected in the "totals".
The Kola Mineral Resources were reported 6 July 2017 in an announcement titled
'Updated Mineral Resource for the High -Grade Kola Deposit'. It was prepared
by Competent Person Mr. Garth Kirkham, P.Geo., of Met-Chem division of DRA
Americas Inc., a subsidiary of the DRA Group, and a member of the Association
of Professional Engineers and Geoscientists of British Columbia. The Ore
Reserves for sylvinite at Kola was first stated on 29 January 2019 in an
announcement titled "Kola Definitive Feasibility Study" and was prepared by
Met-Chem. The Competent Person for the estimate was Mr Mo Molavi, member of
good standing of Engineers and Geoscientists of British Columbia. The Ore
Reserves were reviewed when the changes to the underlying assumptions (as
detailed in the 27 June 2022 announcement "Kola Project optimisation study
outcomes") were made and Mr Molavi verified that the Ore Reserves remained
unchanged.
The Dougou carnallite Mineral Resources were reported on 9 February 2015 in an
announcement titled 'Elemental Minerals Announces Large Mineral Resource
Expansion and Upgrade for the Dougou Potash Deposit'. It was prepared by
Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior
geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und
Bergbau mbH and members of good standing of the European Federation of
Geologists.
The Dougou Extension sylvinite Mineral Resource Estimate and Ore Reserve
Estimate were reported in an announcement titled "Updated Dougou Extension
(DX) PFS and Production Target" on 24 January 2023. Dr. Douglas F. Hambley,
Ph.D., P.E., P.Eng., P.G of Agapito Associates Inc., for the Exploration
Results and Mineral Resources. Mr. Hambley is a licensed professional
geologist in states of Illinois (Member 196-000007) and Indiana (Member 2175),
USA, and is an Honorary Registered Member (HRM) of the Society of Mining,
Metallurgy and Exploration, Inc. (SME, Member 1299100RM), a Recognized RPO
included in a list that is posted on the ASX website from time to time and Dr.
Michael Hardy was the Competent Person for the Ore Reserves, and he is a
registered member in good standing (Member #01328850) of Society for Mining,
Metallurgy and Exploration (SME) which is an RPO included in a list that is
posted on the ASX website from time to time.
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, in the case of estimates of Mineral Resources or statements
of Ore Reserves 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.
Forward-Looking Statements
This release contains certain statements that are "forward-looking" with
respect to the financial condition, results of operations, projects and
business of the Company and certain plans and objectives of the management of
the Company. Forward-looking statements include those containing words such
as: "anticipate", "believe", "expect," "forecast", "potential", "intends,"
"estimate," "will", "plan", "could", "may", "project", "target", "likely" and
similar expressions identify forward-looking statements. By their very nature
forward-looking statements are subject to known and unknown risks and
uncertainties and other factors which are subject to change without notice and
may involve significant elements of subjective judgement and assumptions as to
future events which may or may not be correct, which may cause the Company's
actual results, performance or achievements, to differ materially from those
expressed or implied in any of our forward-looking statements, which are not
guarantees of future performance. Neither the Company, nor any other person,
gives any representation, warranty, assurance or guarantee that the occurrence
of the events expressed or implied in any forward-looking statement will
occur. Except as required by law, and only to the extent so required, none of
the Company, its subsidiaries or its or their directors, officers, employees,
advisors or agents or any other person shall in any way be liable to any
person or body for any loss, claim, demand, damages, costs, or expenses of
whatever nature arising in any way out of, or in connection with, the
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