REG - Kore Potash PLC - Review of Operations for Quarter to 30 Sept 2023
12/10/2023 07:00
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RNS Number : 9107P Kore Potash PLC 12 October 2023
12 October 2023
Kore Potash Plc
("Kore Potash" or "the Company")
Review of Operations for the quarter ended 30 September 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
30 September 2023 (the "Quarter").
Quarterly Highlights
Projects
· Revised agreement signed with SEPCO Electric Power Construction
Corporation ("SEPCO") to provide the Company with an Engineering, Procurement
and Construction ("EPC") contract for the construction of Kola.
· Letter of support received from the Minister of State and Minister
for Geology and Mining Industry of the RoC (the "Ministry" or "Minister of
Mines") in relation to the Company's development of the Kola Project.
· PowerChina International Group Limited ("PowerChina") commenced work
in the RoC to support the provision of guarantees regarding an EPC contract
for Kola.
Corporate
· On 24 July 2023, Wouter Pulinx was appointed as a non-executive
director nominated by Sociedad Química y Minera de Chile S.A ("SQM").
· Successful completion of US$1.0 million fundraise.
· The Company released its Half Year Report for the six months ended 30
June 2023 on 12 September 2023.
· The Company held a General Meeting ("GM") on 21 September 2023.
· As of 30 September 2023, the Company held US$1.1 million in cash.
Operational Activities
Kola EPC
Kore Potash signed a Memorandum of Understanding with the Summit Consortium in
April 2021 for the Optimisation of Kola, the provision of an EPC contract
proposal and to provide a debt and royalty financing proposal for the full
construction cost of Kola.
The results of the Optimisation Study ("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.
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, provides 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 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
prior to PowerChina and SEPCO jointly presenting an EPC proposal and EPC
contract to the Company.
PowerChina has subcontracted five technical groups who have commenced
additional design and engineering works. Specific design areas include the
underground mine, mineral processing jetty and transhipment operations, energy
transportation and storage, conveyor systems and material handling (the
"Works"). PowerChina has advised the Company that the Works will cost in
excess of US$10 million to complete. Illustrating PowerChina's commitment to
Kola, it has capped Kore Potash's contribution at a maximum of US$5 million of
these costs with the balance of the costs to be paid by PowerChina.
An initial payment of US$1.0 million was made in August as required under the
agreement and the remainder, which is contingent upon the Company completing
further fund raises and SEPCO's delivery of the EPC contract, is planned to be
paid in three tranches between 25 October 2023 and 12 months from the date
that the Company signs the EPC contract.
PowerChina, SEPCO and the subcontractors are well progressed with the Works,
having commenced immediately following the direction from PowerChina that
further work was required, and in advance of reaching this Agreement with the
Company on costs.
SEPCO has had personnel living in the RoC for the past 6 months who continue
dialogue with potential service providers, and who have conducted site visits
to Kola collecting information to further enable the Works. SEPCO has
mobilised a larger team to Kola, for a period of up to eight weeks, and which
is collecting additional information on the planned service corridors,
planned conveyor route, and geomechanical information on foundation materials
in the proposed processing plant and infrastructure areas.
SEPCO has committed to a work schedule that provides for:
- Completion of all of the engineering design works before the end of December
2023.
- EPC contract offer to be made to the Company during January 2024.
- Kore Potash and SEPCO scheduled to sign the EPC contract before the end of
January 2024.
PowerChina and SEPCO have confirmed that on completion of the Works they will
have all of the information required to issue an EPC contract to the Company.
Importantly, PowerChina and SEPCO have indicated that certain of the Works to
be completed now would have formed part of the front end design and
engineering (FEED) works which would have been completed at the inception of
the Project, which will assist with reducing certain timelines during the
construction phase.
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
The Minister of Mines wrote a letter to Kore Potash that pledges the Ministry
and the Republic of Congo'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
assures the Ministry's steadfast support, in the form of a moral guarantee, to
assist in addressing 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 the development of
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 to date. The ceremony also recognised the commencement of work on the
ground at the Kola site by SEPCO which is currently conducting detailed
surveys and foundation testing programmes in the plant site area.
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 of Kore Potash David Hathorn, Mr 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 what strategic options are available for
the DX project.
Corporate
On 24 July 2023, Wouter Pulinx was appointed as a non-executive director
nominated by SQM.
The successful completion of a share subscription, which has raised US$ 0.8
million through the issue of 124,384,000 new Ordinary Shares of US$0.001 each
in the Company to certain eligible existing shareholders at a price of 0.5
pence per Ordinary Share and the issue of convertible loans by the Company
with an aggregate value of US$ 0.2 million ("Convertible Loans") (collectively
the "Fundraise"), was completed on the 8 August 2023.
The Company released its Half Year Report for the six months ended 30 June
2023 on 12 September 2023.
At the Company's GM, held on 21 September 2023, all resolutions were duly
passed on a poll by the requisite majority.
The GM was held, inter alia, to approve the issue of 31,096,000 new Ordinary
Shares of US$0.001 each in the Company at 0.5 pence per Ordinary Share in line
with the Fundraise.
David Hathorn, the Chairman of Kore Potash, participated in the Fundraise via
two separate trusts, for a total of 31,096,000 new Ordinary Shares for a total
value of US$0.2 million. These shares were issued under ASX listing rule
10.11.1, having received the relevant shareholder approvals at the GM which
extinguished the Convertible Loans.
As at 30 September 2023, the Company held US$1.1 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$271,000 settled in
cash.
The Company invested US$2,021,000 in exploration in the Quarter, which
comprised US$1,983,000 related to the Kola Study and US$38,000 for the DX DFS
Study. The Company ended the Quarter with US$1.1 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
Nick Elwes
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
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