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 or
contact:
|
Kore Potash
André Baya, CEO
Andry Maruta, CFO
|
|
Tel: +44
(0) 20 3963 1776
|
|
Tavistock Communications
Nick Elwes
Josephine Clerkin
|
|
Tel: +44
(0) 20 7920 3150
|
|
SP
Angel Corporate Finance - Nomad and
Broker
Ewan Leggat
Charlie Bouverat
|
|
Tel: +44
(0) 20 7470 0470
|
|
Shore Capital - Joint
Broker
Toby Gibbs
James Thomas
|
|
Tel: +44
(0) 20 7408 4050
|
|
Questco Corporate Advisory -
JSE Sponsor
Doné Hattingh
|
|
Tel: +27
(11) 011 9205
|
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
Mining
|
Decree 2013-412
of 9 August 2013
|
100%
potassium rights only
|
Kola Potash
Mining S.A.
|
|
Dougou
Mining
|
Decree 2017-139
of 9 May 2017
Revised Decree No 2021-389 of 2
August 2021
|
100%
potassium rights only
|
Sintoukola
Potash S.A.
|
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.