Review of Operations Quarter ended 31 Dec 2022
19/01/2023 07:00
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RNS Number : 2463N Kore Potash PLC 19 January 2023
19 January 2023
Kore Potash Plc
("Kore Potash" or "the Company")
Review of Operations for the Quarter ended 31 December 2022
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
31 December 2022 (the "Quarter").
Quarterly Highlights
Kola Project
· The process to potentially finance the construction of Kola further
progressed in line with the Memorandum of Understanding ("MoU") signed with
the Summit Consortium ("Consortium") in April 2021.
· Contractual terms are being negotiated prior to accepting the
Engineering, Procurement and Construction ("EPC") proposal for the
construction of Kola provided to the Company by SEPCO Electric Power
Construction Corporation ("SEPCO"), the engineering partner of the Consortium.
· The financing proposal for the full construction cost of Kola is
expected to be provided by the Consortium following agreement on the EPC
contract terms that the Company is currently finalising with SEPCO.
· On 19 October 2022, the Company announced receipt of correspondence
from the Minister of Mines of the RoC (the "Minister") expressing discontent
with the progress towards construction of the Kola Project. The letter was
received following the arrest and subsequent release, without charge, of two
senior employees of the Company by the Congolese police. Neither the employees
nor the Company have been informed of the reason for the arrests. The Company
provided a response to the Minister on 11 November 2022. On 17 December 2022
the Company met in person with the Minister, and the discussion included a
further update on the progress towards financing Kola. At the end of the
meeting the Minister expressed his thanks for how the Company responded to his
most recent letter and assured the Company of his and the RoC Government's
ongoing support for Kore Potash and to develop the Kola Project.
Corporate
· On 21 December 2022, Mr Sameer Oundhakar resigned as a Non-Executive
Director on the Board as a nominee of Oman Investment Authority ("OIA").
· On 23 December 2022, the Company announced that Mr Gavin Chamberlain
Chief Operations Officer ("COO") would be leaving the Company in January 2023.
· As of 31 December 2022, the Company held US$5.0 million in cash.
Operational Activities
Kola Project
The financing process for the construction of the Kola Project progressed
further, in line with the MoU signed with the Consortium in April 2021.
Kola EPC
Kore Potash signed a MoU 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 the Kola development.
On 28 June 2022, the Company announced that it had signed a Heads of Agreement
("HoA") for the construction of Kola with SEPCO.
On 10 October 2022, Kore Potash announced that SEPCO had delivered the EPC
proposal for Kola. The EPC proposal was approved for presentation to Kore
Potash by the Boards of SEPCO, and its parent company, Power Construction
Corporation of China ("Power China").
The EPC proposal reflects the capital cost and construction timeline reported
in the Study and the terms agreed to in the HoA. The EPC proposal includes an
EPC Agreement which details the contractual terms in a format congruent with
the FIDIC silver book (2nd Edition, 2017) conditions of contract.
The contractual terms are being finalised prior to acceptance of the EPC. Kore
Potash and SEPCO are in dialogue to complete this process. The Company notes
that it may transpire that SEPCO will require further SEPCO and Power China
Board approvals prior to the finalisation of the contractual terms.
Kola Financing
The Consortium has advised that the strongly positive outcomes of the Study
continue to support its proposed financing of Kola and it intends to provide
the royalty and debt financing proposal for the full construction cost of Kola
after the EPC contract terms are finalised.
Correspondence from Minister of Mines
The Company's local subsidiary received a letter dated 12 October 2022 from
the Minister expressing his discontent with aspects of the administration of
the Company's subsidiary companies in the RoC and the apparent lack of
progress that Kore Potash and the Consortium are making towards the financing
of Kola.
The letter was received following the arrest, and subsequent release without
charge, of two senior employees of the Company by the Congolese police.
Neither the employees nor the Company have been informed of the reason for the
arrests.
The letter generally reserved the Government's right to take measures in
accordance with its existing agreements and the Mining Code of the RoC,
failing a response from the Company within 30 days.
The Company advised the Minister, in a formal response on the 11 November
2022, that it is continuing to progress the development of the Kola and DX
projects towards production, believes that it is compliant with its
obligations to the Government of the RoC under the Mining Code and Mining
Convention and will continue to keep the Minister briefed on the Company's
plans and progress.
Following receipt of the Minister's letter, an internal review of the
administration of the Subsidiaries did not identify any material deficiencies
in their administration. The Company has additionally commissioned two
separate independent reviews of the administration of its Subsidiaries via a
respected RoC legal services firm and the RoC office of an international legal
and financial services firm. These reviews are planned to be completed in
January 2023.
On 17 December 2022, the Company met in person with the Minister, and the
discussion included a further update on the progress towards financing the
Kola Project.
At the end of the meeting, the Minister expressed his thanks for how the
Company responded to his most recent letter and assured the Company of his and
the RoC Government's ongoing support for Kore Potash to develop its Kola
Project.
The Minister reinforced the great importance of the Kola Project to the people
of the RoC and encouraged the Company to continue to keep him informed on its
continued progress. He further encouraged the Company to continue with its
work to conclude the EPC contract terms and financing arrangements to enable
the commencement of the construction of the Kola Project as soon as possible.
Other Kola Matters
Separate from the Consortium's activity, Kore Potash's management team has
also continued discussions with potential offtake partners with the capability
to procure all Kola production and who have expressed interest in partnering
with the Company.
DX Potash Project
The Company is currently updating the Pre-Feasibility Study and production
target for the DX project and will update shareholders on the outcomes of this
work shortly.
Corporate
Mr Oundhakar served on the Board of the Company as a non-executive director
since 1 April 2021 after having been nominated by the OIA. He resigned from
his employment with OIA to pursue other interests and as a consequence was no
longer able to continue as a Director of Kore Potash. OIA has advised the
Company of its preferred non-executive director candidate to replace Mr
Oundhakar. This nomination is currently being considered by the Board and the
Company intends to provide a further update to shareholders following
completion of the normal due diligence processes.
Mr Gavin Chamberlain, the Chief Operating Officer will be leaving the
organisation in January 2023. Mr Ryan Leland continues in this role as Project
Director for Kola and will report directly to the Chief Executive Officer.
As at 31 December 2022, the Company held US$5.0 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$1,087,000 in exploration in the Quarter, which
comprised US$ 729,000 related to the Kola Study and US$358,000 for the DX DFS
Study. The Company ended the Quarter with US$5.0 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 - - - - - -
Indicated 79 39.1 30.8 71 39.1 27.7
Sub-Total Measured + Indicated 79 39.1 30.8 71 39.1 27.7
Inferred 66 40.4 26.7 59 40.4 24.0
TOTAL 145 39.7 57.5 130 39.7 51.8
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 - - - - - -
Probable 17.7 41.7 7.4 16 41.7 6.6
TOTAL 17.7 41.7 7.4 16 41.7 6.6
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 1789 20.8 372.2
TOTAL 3,056 20.7 633.7 2750 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 1140 18.7 212.8
TOTAL 2,049 18.5 378.5 1844 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 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 DX sylvinite Mineral Resources and Ore Reserves were reported in an
announcement titled "Dougou Extension (DX) Project Pre-Feasibility Study" on
13 May 2020. Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc. was the
Competent Person, for the Exploration Results and Mineral Resources. Ms.
Santos is a licensed professional geologist in South Carolina (Member 2403)
and Georgia (Member 1664), USA, and is a registered member (RM) of the Society
of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318). 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, other than the activity currently underway to
develop an improved geological model for the DX deposit which may in the
future necessitate a change in the DX Mineral Resources, 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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