REG - Kore Potash PLC - Review of Operations for Quarter to 30 June 2023

Kore PotashAnnouncement

18/07/2023 07:30

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RNS Number : 3518G  Kore Potash PLC  18 July 2023

18 July 2023

 

Kore Potash Plc

("Kore Potash" or "the Company")

Review of Operations for the Quarter ended 30 June 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 ("DX") Potash Project in the Sintoukola Basin, located in the
Republic of Congo ("RoC"), provides its quarterly update for the period ended
30 June 2023 (the "Quarter").

 

Quarterly Highlights

 

Projects

·    Discussions continue towards finalising terms for the Engineering,
Procurement and Construction ("EPC") contract at the Kola Project.

·    PowerChina International Group Limited ("PowerChina") and SEPCO
Electric Power Construction Corporation ("SEPCO") have commenced work to
support the provision of guarantees regarding an EPC contract for Kola.

·    Summit Consortium ("Consortium") has confirmed that the financing
proposal for the full capital cost of Kola will be provided within six weeks
of finalisation of EPC contract terms.

·    A review of the strategic options available for the DX Project is
underway.

 

Corporate

·    The Company held its Annual General Meeting ("AGM") on 20 June 2023.

·    Pablo Hernandez-MacDonald did not offer himself for re-election as a
non-executive director to the Board at the AGM. A replacement Sociedad
Química y Minera de Chile S.A ("SQM") nominated non-executive director will
be announced in due course.

·    As of 30 June 2023, the Company held US$2.6 million in cash.

 

Operational Activities

 

Kola EPC

Kore Potash signed a Memorandum of Understanding with the Consortium in April
2021 for the Optimisation of Kola, the provision of an EPC contract proposal
and to provide a debt and royalty financing proposal for the full construction
cost of Kola.

 

The results of the Optimisation Study ("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
recognises the outcomes of the Study, and confirmed the capital cost of Kola,
the construction period and related EPC contract terms.

 

Discussions with SEPCO to finalise key EPC terms continue.

 

Recognising the world-class scale of Kola, the length of the proposed
construction period and the total financing requirement, Kore Potash has
requested that SEPCO's parent company, PowerChina, provides the typically
required EPC contract guarantees, including performance and retention bonds
supporting the completion of construction and the operating performance of
Kola.

 

PowerChina is now actively involved in the process to finalise the EPC
contract terms. As part of this process, PowerChina is reviewing aspects of
the Kola design and the planned construction schedule and has had direct
communications with the management of Kore Potash. PowerChina's review has
generated a number of potential design improvements to the Kola Project that
identify potential opportunities to further reduce the capital cost and the
construction schedule. Discussions on incorporating these design improvements
into the EPC contract continue.

 

PowerChina has engaged a number of external experts to support its review of
the Kola design and they require completion of this review to support the
provision of the required EPC contract guarantees. PowerChina has not yet
advised Kore Potash of the timeline to complete its reviews and internal
approvals.

 

The process to conclude EPC contract discussions has taken longer than the
Consortium initially envisaged, however it is necessary to conclude these
discussions prior to receiving their financing proposal.

 

Kola Financing

Kore Potash continues to work with the Consortium to provide financing for the
full construction cost of Kola which is intended to be based on royalty and
debt finance.

 

The successful outcomes of the Study were in line with the Consortium's
requirements and supported the ongoing financing discussions. The financing
parties of the Consortium have again reinforced their ongoing strong interest
in financing Kola and await finalisation of the EPC contract terms.

 

The Consortium has advised that the financing proposal for the full
construction cost of Kola will be provided to the Company within six weeks of
EPC terms being finalised.

 

Kore Potash continues to hold the view that the members of the Consortium have
the capability to provide the required financing to commit to the construction
of Kola and that pursuing this financing opportunity currently remains the
best path forward for Kore Potash's shareholders.

 

Congo Government Relations

Key members of the Kore Potash Board and the Consortium, including SEPCO and
PowerChina, met with the Ministry of Mines ("Ministry") during the Quarter.
The Ministry feedback from the visit was positive and that it improved the
Ministry's understanding of the financing process.

 

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 now exploring what strategic options are available for the DX
project.

 

Corporate

At the Company's AGM held on 20 June 2023, all resolutions were duly passed on
a poll by the requisite majority.

 

Pablo Hernandez-MacDonald having resigned from SQM to pursue other interests
and did not offer himself for re-election at the AGM. A replacement SQM
nominated non-executive director will be announced in due course.

 

As at 30 June 2023, the Company held US$2.6 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. Included in those cashflows are
non-executive directors' fees and the CEO's salary of US$198,000 settled in
cash.

 

The Company invested US$1,083,000 in exploration in the Quarter, which
comprised US$1,015,000 related to the Kola Study and US$68,000 for the DX DFS
Study. The Company ended the Quarter with US$2.6 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
(http://www.korepotash.com) or contact:

 

 Kore Potash                                      Tel: +27 84 603 6238

 Brad Sampson - CEO
 Tavistock Communications                         Tel: +44 (0) 20 7920 3150

 Emily Moss

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

 Ewan Leggat

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

 Toby Gibbs

 James Thomas

 Questco Corporate Advisory - JSE Sponsor         Tel: +27 (11) 011 9205

 Doné Hattingh

 

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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