REG - Kore Potash PLC - Review of Operations for Quarter to 30 Sept 2024
31/10/2024 07:00
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RNS Number : 3064K Kore Potash PLC 31 October 2024
31 October 2024
Kore Potash Plc
("Kore Potash" or "the Company")
Review of Operations for the Quarter ended 30 September 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 30 September 2024 (the "Quarter").
Quarterly Highlights
Projects
· Final agreement on outstanding points in respect of the Engineering,
Procurement and Construction ("EPC") contract was reached with PowerChina
International Group Limited ("PowerChina") on 28 October 2024. The EPC
agreements have now been finalised and Kore Potash and PowerChina are working
towards convening a date which is currently set for 19 November 2024 for the
signing ceremony with the Minister of Mines (the "Minister") and other high
officials of the RoC in Brazzaville. Following the signing ceremony, relevant
details of the agreement will be made public.
Corporate
· Successful completion of US$1.221 million fundraise on 1 July 2024 with
a further US$60,000 conditionally raised and subsequently approved by
shareholders at a General Meeting on 23 August 2024.
· The Company released its Half Year Report for the six months ended 30
June 2024 on 13 September 2024.
· As of 30 September 2024, the Company held US$1.28 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
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 Electric Power Construction
Corporation ("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 present 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. Of the remaining US$3 million, US$800,000 is payable up to 6
weeks from the date of PowerChina and SEPCO having presented to Kore a
"complete contractual document capable of finalising the financing arrangement
of the Kola Project and capable of acceptance by Kore to form a binding
construction contract" and US$2.2 million to be paid subject to Kore
concluding its fund raise with a target date of no later than 12 months from
the signing of the EPC.
PowerChina, SEPCO and the subcontractors, in pursuit of the timeline
objectives, commenced the Works before reaching an agreement with the Company
on costs.
PowerChina delivered the EPC proposal and draft EPC contract on 6 February
2024.
The Company met PowerChina's senior officials in Beijing in May 2024 and then
again in Dubai in July 2024 where both parties satisfactorily resolved all
outstanding commercial points to enable Kore Potash and PowerChina to conclude
the agreements.
Final agreement on outstanding points in respect of the EPC contract was
reached on 28 October 2024. The EPC agreements have now been finalised and
Kore Potash and PowerChina are working towards convening a date which is
currently set for 19 November 2024 for the signing ceremony with the Minister
and other high officials of the Republic of Congo in Brazzaville. Following
the signing ceremony, relevant details of the agreement will be notified to
shareholders.
Kola Financing
Kore Potash continues to work with the Summit Consortium to provide financing
for the construction cost of Kola, which is intended to be based on royalty
and debt finance.
The financing parties of the Consortium have confirmed their ongoing strong
interest in financing Kola and await the execution of the EPC contract in the
Republic of Congo.
The Consortium has advised that the financing term sheet for the construction
cost of Kola will be provided to the Company within three months of the
execution of the EPC Contract.
Kore Potash continues to believe that the Consortium members can provide
financing for the construction of Kola and that pursuing this financing
opportunity remains the best path forward for Kore Potash's shareholders.
The Company plans to conduct a small capital fund raise in November 2024 to
finance working capital.
Congo Government Relations
On 21 August 2023, Minister Pierre Oba, the Minister wrote a letter to the
Company 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.
The Minister showed further support for the Company's development of the Kola
Project during a visit to the Kola Project in September 2023.
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 Minister, members of his Ministry and local dignitaries were in
attendance, along with the Chairman of Kore Potash, David Hathorn, Warren
Thompson from the Summit Consortium and SEPCO Vice President Zhang Quan.
On 24 February 2024, David Hathorn and Warren Thompson met with The Minister
to update him on the EPC progress.
The Company's CEO, André Baya was also received by Minister Pierre Oba, and
his Adviser, Professor Hilaire Elenga, in Brazzaville on 18 April 2024 where
he updated the Minister regarding the Kola EPC contracting progress. Minister
Oba reiterated the full support of the Congolese Government in the development
of Kola which is in line with the Government's plan to develop and create jobs
in the region in which Kola is located.
While discussions with PowerChina were progressing, communications have been
ongoing with the Ministry of Mines in the RoC to schedule the signature
ceremony which is expected to take place in November 2024 in Brazzaville.
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 1 July 2024, the Company raised US$1,221,000 via the issue of 87,503,183
new ordinary shares of US$0.001 each in the Company with existing and new
shareholders at a price of 1.1 pence per share.
On 1 July 2024, the Company also announced that David Hathorn, Chairman of
Kore Potash conditionally subscribed for 4,299,454 new Ordinary Shares of
US$0.001 each in the Company at a price of 1.1 pence per new Ordinary Share,
for a total consideration of US$60,000 (the "Conditional Subscription"). The
Conditional Subscription was approved by the shareholders at a General Meeting
held on 23 August 2024.
As at 30 September 2024, the Company held US$1.28 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$592,000 in exploration in the Quarter, which comprised
US$589,000 related to the Kola Study and US$3,000 for the DX DFS Study. The
Company ended the Quarter with c.US$1.28 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
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 (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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