REG - Kore Potash PLC - Review of Operations for Quarter ended 31 Dec 2024

Kore PotashAnnouncement

30/01/2025 07:00

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RNS Number : 1733V  Kore Potash PLC  30 January 2025

30 January 2025

 

Kore Potash Plc

("Kore Potash" or "the Company")

 

Review of Operations for the Quarter ended 31 December 2024

 

Kore Potash (AIM: KP2, ASX: KP2, JSE: KP2, A2X: KP2), the potash development
company with 97% ownership of the Kola Potash Project ("Kola" or the "Kola
Project") and Dougou Extension ("DX") Potash Project in the Sintoukola Basin,
located in the Republic of Congo ("RoC"), provides its quarterly update for
the period ended 31 December 2024 (the "Quarter").

 

Quarterly Highlights

 

Projects

·    Engineering, Procurement and Construction contract ("EPC" or the
"Contract") for the Kola Project with PowerChina International Group Limited
("PowerChina" or the "Contractor") was signed in Brazzaville in the presence
of the RoC Minister of Mines and Geology on 19 November 2024.

 

Corporate

·   Lodgement of the cleansing prospectus on 22 November 2024 to remove any
on-sale restrictions in relation to the shares to be issued pursuant to the
Company's US$0.9 million placement.

·    Successful completion of c.US$0.9 million fundraise announced on 26
November 2024.

·    As of 31 December 2024, the Company held US$1.34 million in cash.

 

Operational Activities

 

Kola EPC

 

The EPC for the Kola Project with PowerChina was signed in Brazzaville in the
presence of the RoC Minister of Mines and Geology on 19 November 2024.

The EPC is a fixed price contract worth US$1.929 billion. This fixed price is
of significant benefit to the Company as it minimises the risk of cost
overruns for the Company. The EPC also includes provisions for penalties in
the event of delayed completion and non-compliance to performance metrics.

The EPC remains subject to Financial Close.

Entry into the EPC reaffirms the board of directors' strategy for Kore Potash
to become one of the lowest cost producers globally for the Brazilian
agricultural market and high growth African markets.

 

Kola Financing

 

As announced on 6 April 2021, a non-binding memorandum of understanding was
signed with the Summit Consortium ("Summit" or "Summit Consortium") to arrange
the full financing required for the construction of the Kola Project ("Summit
MoU").

 

The Company confirms the Summit Consortium is not a related party of the
Company.

In line with this memorandum of understanding, following the signing of 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 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 the 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.

The Summit Consortium is currently expected to deliver this finance proposal
by the end of February 2025.

Further details about the financing arrangements will be notified to the
market in accordance with the Company's continuous disclosure obligations.

 

Congo Government Relations

 

In August 2023, the RoC State Minister of Mines and Geology (the "Minister"),
H.E. Mr Pierre Oba, pledged written support for Kore Potash's projects despite
some unmet deadlines, reaffirming the validity of the Company's mining titles
and agreements; reiterating RoC Government support. One month later, the
Minister visited the Kola Project, where the Company held a ceremony to mark
development progress and the start of work by SEPCO Electric Power
Construction Corporation ("SEPCO"). PowerChina is SEPCO's parent company.

 

Thereafter, RoC government engagement was continual and positive. On 24
February 2024, David Hathorn and Warren Thompson visited RoC and updated the
Minister on EPC progress.  Two months later, the newly appointed CEO, André
Baya, met with the Minister in Brazzaville to keep him informed about further
progress.

 

At all times and without exception, the Minister expressed support and
enjoined Kore Potash to continue diligently. He was regularly informed of
negotiation meetings with PowerChina in Beijing and Dubai.  Finally, on 19
November 2024, the EPC construction contract was signed between Kore Potash
and PowerChina in Brazzaville in the presence of a large and supportive
delegation from the RoC Ministry of Mines & Geology. During his speech,
Summit Consortium reassured the audience that the next step was well underway
and that the financing process would result in a finance proposal by the end
of February 2025.

 

 

DX Potash Project

 

At present, the Company remains focused on completing the financing of Kola
and moving forward to construction of Kola as soon as possible. The Company is
also exploring what strategic options are available for the DX project.

Corporate

 

On 22 November 2024, the Company issued a cleansing prospectus for the offer
of up to 500 CHESS Depositary Interests ("CDIs") in the capital of the Company
at an issue price of AUD 0.0543 per CDI to raise up to AUD 27.15 (before
expenses). This cleansing prospectus had been prepared primarily for the
purpose of section 708A(11) of the Australian Corporations Act 2001 (Cth) to
remove any on-sale restrictions in relation to the shares to be issued
pursuant to the Company's US$900,000 placement announced on 6 November 2024.

On 26 November 2024, the Company successfully completed a c.US$0.9 million
fundraise via the issue of 25,441,268 new ordinary shares of US$0.001 each in
the Company with existing and new shareholders at a price of 2.76 pence per
share.

 

As at 31 December 2024, the Company held US$1.34 million in cash.

 

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.

The Company invested US$553,000 in exploration in the Quarter, which comprised
US$550,000 related to the Kola Study and US$3,000 for the DX DFS Study. The
Company ended the Quarter with c.US$1.34 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___.YXAxZTpzaG9yZWNhcDphOm86MDlkN2QxNGJhNDk0MzNjMTI4MTVmZjFjOWJhOTQ0MDg6NjplMTY5OjNlYWYwYmY3Zjk2NzhjZDU2NzQxOGU4ZmYwZGE1ZmE3MDNiODhlZTk1Y2QzYTg1YjE3ZmMzMTY2MDYwYzc2YmY6cDpGOk4)
or contact:

 

 Kore Potash                                      Tel: +44 (0) 20 3963 1776

 André Baya, CEO

 Andry Maruta, CFO
 Tavistock Communications                         Tel: +44 (0) 20 7920 3150

 Emily Moss

 Nick Elwes

 Josephine Clerkin
 SP Angel Corporate Finance - Nomad and Broker    Tel: +44 (0) 20 7470 0470

 Ewan Leggat

 Charlie Bouverat
 Shore Capital - Joint Broker                     Tel: +44 (0) 20 7408 4050

 Toby Gibbs

 James Thomas
 Questco Corporate Advisory - JSE Sponsor         Tel: +27 63 482 3802

 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
information contained in this document.

 

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