Updated Dougou Extension PFS and Production Target

Kore Potash

24/01/2023 07:00

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RNS Number : 6083N  Kore Potash PLC  24 January 2023

24 January 2023

Kore Potash Plc

("Kore Potash" or the "Company")

 

Updated Dougou Extension (DX) PFS and Production Target

 

Kore Potash plc, the potash development company with 97%-ownership of the Kola
and DX Potash Projects in the Sintoukola Basin, located within the Republic of
Congo ("RoC"), is pleased to announce an update of the JORC (2012) compliant
Mineral Resource, Ore Reserve, Pre-Feasibility Study ("PFS") information and
Production Target at the DX Project.  The updated Mineral Resource
incorporates the most recent drilling results and interpretation of the
geophysical data. A summary of the results is presented herein.

 

Highlights

·    Production Target of 15.5MT sylvinite at a grade of 30.63 %
KCl demonstrates initial project life of 12 years at a production rate of
400,000 tpa Muriate of Potash ("MOP").

·    Production Target based on Proven and Probable Ore Reserves and 13%
of the Inferred Mineral Resources that represents 30% of the life of project
MOP production.

·    NPV(10 (real)) of US$275 million and 27% IRR on a real post tax basis
at life of project average granular MOP price of US$450/t.

·    Approximately 2.9 years post-tax payback period from first
production.

·    Proven and Probable Ore Reserve of 9.31 Mt sylvinite at an average
grade of 35.7% KCl.

·      Mineral Resource of 129 Mt at an average grade of 24.9% KCl.

·      Higher confidence in the distribution of Sylvinite within the Top
Seams and improved understanding of the Sylvinite/Carnallite boundary within
the Hanging Wall Seam.

·      See link to the full announcement with appendices, graphs and
tables below:

 

http://www.rns-pdf.londonstockexchange.com/rns/6083N_1-2023-1-23.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/6083N_1-2023-1-23.pdf)

 

Cautionary Statement

·      There is a low level of geological confidence associated with
Inferred Mineral Resources. There is no certainty that further exploration
work will result in the determination of Indicated Mineral Resources or that
the production target itself will be realised.

·      The Updated Production Target for DX is an interim evaluation of
the potential viability of the DX project and is limited to a Pre-Feasibility
level technical and economic assessment (AACE Class IV estimate).

·      The Production Target is based on Proven and Probable Ore
Reserves of 9.31 Mt sylvinite at an average grade of 35.7% KCl, plus
production from 13% of the total Inferred Mineral Resources totalling 30% of
LOM MOP production. The average KCl grade of the MOP product is 98.5%.

·      The Production Target is not reliant on any exploration targets
or qualifying foreign estimates.

·      The Production Target is based on the material assumptions
outlined in this announcement. These include assumptions on availability of
funding. While the Company considers all the material assumptions to be based
on reasonable grounds, there is no certainty that they will prove to be
correct or that the range of outcomes indicated by the PFS will be achieved.

·      To achieve the range of outcomes indicated in the Production
Target, base case funding in the order of US$316 million will likely be
required. Investors should note that there is no certainty that the Company
will be able to raise that amount of funding when needed. It is also possible
that such funding may only be available on terms that may be dilutive to or
otherwise affect the value of the Company's existing shares.

·      It is also possible that the Company could pursue other 'value
realisation' strategies such as a sale, partial sale or joint venture of the
project. If it does, this could materially reduce the Company's proportionate
ownership of the project.

·      Given the uncertainties involved, investors should not make any
investment decisions based solely on the results of the Updated Production
Target.

·      The Mineral Resources and Ore Reserves underpinning the
Production Target and forecast financial information in this combined
AIM/JSE/ASX release were prepared by independent expert Dr. Michael Hardy,
Competent Persons in accordance with the requirements of the JORC Code 2012
edition (JORC).

 

Brad Sampson, CEO of Kore, commented: "We are pleased to be able to update
shareholders on the value of the DX project. The most recent drilling and
geophysical data has further improved confidence in the DX Deposit and the
economic attractiveness of the DX Project.

 

"The updated resource further confirms this Project to be a low operating cost
potash operation that can produce approximately 400,000 tonnes per annum of
MOP. What makes DX unique is its low capex and shallow deposit containing high
grade potassium chloride, qualities which are very rare in the potash
industry."

 

Executive Summary

The DX Project is located in the RoC, approximately 65 km North of Pointe
Noire and 13 km from the coast (Figure 1). Kore Potash has completed a full
update of the Production Target previously published in "Updated DX
Pre-Feasibility Study Production Target" on 11 November 2020 that includes:

·      drilling results as published in "DX Project drilling results and
progress update" on 27 May 2021;

·      additional geophysical interpretation of the area;

·      compilation of a new geological model incorporating the drilling
and geophysical information;

·      new Mineral Resource; and,

·      new Ore Reserves.

 

The Production Target models the DX project producing 400,000 tpa MOP via
selective solution mining of high grade sylvinite seams.

 

The DX Production Target demonstrates a scheduled life of project of 12 years
producing 4.82 Mt MoP.

The Production Target is based on the Ore Reserves, and a portion of the
Inferred Resources representing less than 30% of Life Of Mines ("LOM")
production.

 

 

 

 

 

 

Table 1: Summary of Production Target Economic Evaluation

 

 Description                         Production Target             Production Target

                                     January 2023                  11 November 2020
 Capital Cost Estimate               US$315.7 million              US$285.9 million
 Operating Cost: Mine Gate           US$67.44/t MoP                US$65.26/t MoP
 Operating Cost: FOB (Pointe Noire)  US$90.54/t MoP                US$86.61/t MoP
 Operating Cost: CFR (Africa)        US$112.94/t MoP               US$114.61/t MoP
 Life of Project                     12 years                      30 years
 Potash Price                        Flat US$450/t for LOM         US$422/t LOM average
 MOP Produced over life              4.82 Mt                       12.10 Mt
 Mineral Resource                    129 Mt @24.8 KCl              145 Mt @ 39.7% KCl
 Ore Reserve                         9.31 Mt sylvinite @35.7% KCl  17.7 Mt sylvinite @ 41.7% KCl
 NPV(10)                             US$275 million                US$412 million
 IRR                                 27.3 %                        23.4%

 

Consultants Team

The Production Target was prepared by Agapito Associates Inc. The Company's
team provided infrastructure information and costs, project management,
exploration and site management services and oversaw the financial analysis
conducted by Fraser McGill.

 

Ore Reserves and Mineral Resources

Ore Reserves (Table 2) were determined from Measured and Indicated Mineral
Resource. The Sylvinite is hosted by two layers ('seams') referred to as the
HWSS and the TSS, separated by 8 to 15 m of rock-salt. Table 3 provides the
Mineral Resource. Further detail on the Ore Reserves and Mineral Resource
Estimate is provided in Appendix B (JORC Code Table 1, Sections 1-4).

 

 

Table 2: DX Sylvinite Ore Reserves

 

 Classification      Ore Reserves  KCl grade  Mg       Insolubles

                     (Mt)          (% KCl)    (% Mg)   (% Insol.)
 Proved              6.13          32.55      0.05     0.14
 Probable            3.18          41.86      0.03     0.08
 Total Ore Reserves  9.31          35.73      0.04     0.12

 

Notes to Table 2: The Ore Reserves in Table 2 are gross numbers and the
attributable numbers are presented in Appendix C: Kore Potash Mineral
Resources and Ore Reserves as of 20 January 2023.

 

 

Table 3: DX Sylvinite Mineral Resource (inclusive of Ore Reserves)

 Classification           Mineral Resources  KCl Grade  Mg       Insolubles

                          (Mt)               (% KCl)    (% Mg)   (% Insol.)
 Measured                 20.16              32.43      0.05     0.14
 Indicated                7.64               23.13      0.03     0.13
 Inferred                 101.22             23.47      0.06     0.18
 Total Mineral Resources  129.02             24.85      0.06     0.15

 

Notes to Table 3: The Sylvinite Mineral Resources in Table 3 are gross numbers
and the attributable numbers are presented in Appendix C: Kore Potash Mineral
Resources and Ore Reserves as of 20 January 2023.

 

Reasonable Basis for Forward-Looking Statements (including production target
and forecast financial information) and Ore Reserves

This release, inclusive of Appendix A: Summary results of Production Target
for DX Project, contains a series of forward-looking statements. The Company
has concluded that it has a reasonable basis for providing these
forward-looking statements and the forecast financial information included in
this release. This includes a reasonable basis to expect that it will be able
to fund the development of the DX Project when required.

 

The detailed reasons for these conclusions are outlined throughout this
release. All material assumptions, including the modifying factors, upon which
the production target and forecast financial information is based are
disclosed in this release (including the summary information in Appendix B).
This announcement has been prepared in accordance with the requirements of the
JORC and the ASX Rules.

 

The Ore Reserves and Inferred Mineral Resources underpinning the Production
Target have been prepared by a Competent Person in accordance with the
requirements of JORC. Details of those Ore Reserves and Mineral Resources are
as set out in Appendix A: Summary results of Production Target for DX Project,
of this release.

 

The 400,000 tonnes per annum MOP Production Target over a 12 year LOM is
underpinned by scheduling of Proven and Probable Ore Reserves, plus production
from Inferred Resources totalling no more than 30% of LOM MOP production. No
exploration targets or qualifying foreign estimates underpin the Production
Target.

 

This announcement has been approved by the Board of Kore Potash plc.

 

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 Joint 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

 

Competent Persons Statement:

The estimated Ore Reserves and Mineral Resources underpinning the Production
Target have been prepared by Competent Persons in accordance with the
requirements of the JORC Code.

 

All information in this report that relates to Mineral Resources is based on
information compiled by Dr. Douglas F. Hambley, Ph.D., P.E., P.Eng., P.G. of
Agapito Associates Inc. Dr. Hambley is a licensed Professional Geologist in
the states of Illinois (196-000007) and Indiana (2175), USA, and is an
Honorary Registered Member (HRM) of the Society of Mining, Metallurgy and
Exploration, Inc. (SME, Member 1299100RM), a Recognized Professional
Organization' (RPO) included in a list that is posted on the ASX website from
time to time. Dr. Hambley served on the Illinois Board of Licensing for
Professional Geologists from its establishment in 1996 until 2000. He is
currently a member of the Resource and Reserve and Registered Member Ethics
Committees of SME and the Industrial Minerals Subcommittee of the Mineral
Resource/Mineral Reserve Committee of the Canadian Institute for Mining,
Metallurgy and Petroleum (CIM).

 

Dr. Hambley has more than 15 years' experience that is relevant to the style
of mineralisation and type of Deposit under consideration and to the activity
he is undertaking to qualify as a Competent Person, as defined in the 2012
Edition of the "Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves" (the JORC Code). Dr. Hambley consents to
the inclusion in this report of the matters based on the information in the
form and context in which it appears.

 

All information in this report that relates to Ore Reserves is based on
information compiled or reviewed by, Dr. Michael Hardy, a Competent Person who
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.

 

Dr. Michael Hardy has sufficient experience that is relevant to the style of
mineralization and type of deposit under consideration and to the activity
being undertaken to qualify as a Competent Person as defined in the 2012
Edition of the "Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves" (the JORC Code). Michael Hardy has
verified that this report is based on and fairly and accurately reflects in
the form and context in which it appears, the information in the supporting
documentation relating to preparation of the Ore Reserves.

 

Dr. Michael Hardy president of Agapito Associates Inc. is not associated or
affiliated with Kore Potash or any of its affiliates. Dr Hambley is not
associated or affiliated with Kore Potash or any of its affiliates. Agapito
Associates Inc. will receive a fee for the preparation of the Report in
accordance with normal professional consulting practices. This fee is not
contingent on the conclusions of the Report and Agapito Associates Inc.
Neither Michael Hardy or Douglas Hambley will receive other benefit for the
preparation of the Report, or have any pecuniary or other interests that could
reasonably be regarded as capable of affecting their ability to provide an
unbiased opinion in relation to the Dougou Extension Potash Project. Agapito
Associates Inc. does not have, at the date of the Report, and has not had
within the previous years, any shareholding in or other relationship with Kore
Potash or the Dougou Extension Potash Project and consequently considers
itself to be independent of Kore Potash.

 

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.

 

In particular, statements in this release regarding the Company's business or
proposed business, which are not historical facts, are "forward-looking"
statements that involve risks and uncertainties, such as Mineral Resource
estimates market prices of potash, capital and operating costs, changes in
project parameters as plans continue to be evaluated, continued availability
of capital and financing and general economic, market or business conditions,
and statements that describe the Company's future plans, objectives or goals,
including words to the effect that the Company or management expects a stated
condition or result to occur. Since forward-looking statements address future
events and conditions, by their very nature, they involve inherent risks and
uncertainties. Actual results in each case could differ materially from those
currently anticipated in such statements. Shareholders are cautioned not to
place undue reliance on forward-looking statements, which speak only as of the
date they are made. The forward-looking statements are based on information
available to the Company as at the date of this release. Except as required by
law or regulation (including the ASX Listing Rules), the Company is under no
obligation to provide any additional or updated information whether as a
result of new information, future events or results or otherwise.

 

Summary information

This announcement has been prepared by Kore Potash plc. This document contains
general background information about Kore Potash plc current at the date of
this announcement and does not constitute or form part of any offer or
invitation to purchase, otherwise acquire, issue, subscribe for, sell or
otherwise dispose of any securities, nor any solicitation of any offer to
purchase, otherwise acquire, issue, subscribe for, sell, or otherwise dispose
of any securities. The announcement is in summary form and does not purport to
be all-inclusive or complete. It should be read in conjunction with the
Company's other periodic and continuous disclosure announcements which are
available to view on the Company's website www.korepotash.com
(http://www.korepotash.com) .

 

The release, publication or distribution of this announcement in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which this announcement is released, published or
distributed should inform themselves about and observe such restrictions.

 

Not financial advice

This document is for information purposes only and is not financial product or
investment advice, nor a recommendation to acquire securities in Kore Potash
plc. It has been prepared without considering the objectives, financial
situation or needs of individuals. Before making any investment decision,
prospective investors should consider the appropriateness of the information
having regard to their own objectives, financial situation and needs and seek
legal and taxation advice appropriate to their jurisdiction.

 

Market Abuse Regulation

This announcement is released by the Company and contains inside information
for the purposes of the Market Abuse Regulation (EU) 596/2014 ("MAR") and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR. The person who arranged for the release of this announcement on behalf of
the Company was Brad Sampson, CEO. This announcement has been authorised for
release by the Board of Directors.

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