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KORE POTASH PLC - Review of Operations for the Quarter ended 31 March 2024
2024/04/29 08:00:00Download PDF Stock report
Review of Operations for the Quarter ended 31 March 2024
Kore Potash plc
(Incorporated in England and Wales)
Registration number 10933682
ASX share code: KP2
AIM share code: KP2
JSE share code: KP2
ISIN: GB00BYP2QJ94
('Kore Potash' or the 'Company')
29 April 2024
Review of Operations for the Quarter ended 31 March 2024
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 March 2024 (the 'Quarter').
Quarterly Highlights
Projects
• PowerChina International Group Limited ('PowerChina') delivered the Engineering,
Procurement and Construction ('EPC') proposal and draft EPC contract on 6 February 2024.
• Kore Potash and PowerChina commenced further detailed negotiation on the EPC proposal
and draft EPC contract, targeting signing the full EPC documentation in Q2 2024. The Company
is meeting PowerChina senior officials in Beijing in early May 2024 which is a major step
forward in bringing the EPC process to a conclusion.
Corporate
• On 28 March 2024, the Company released its Financial Results and Annual Report for the Year
Ended 31 December 2023.
• Successful completion of US$0.53 million fundraise with a further US$0.15m conditionally
raised subject to shareholder approval at a General Meeting to be held on 13 May 2024.
• As of 31 March 2024, the Company held US$1.4 million in cash.
• On 4 April 2024, the Company announced the appointment of Mr J. M. André ('André') Baya
as non-board Chief Executive Officer ('CEO') effective from 15 April 2024.
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 total 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. The remaining payments are planned
to be paid in two tranches 12 months from date of the execution of the EPC contract.
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.
Kore Potash and SEPCO continue to negotiate the EPC proposal and draft the EPC contract, targeting
signing full EPC documentation in Q2 2024. The Company is meeting PowerChina senior officials in
Beijing in early May 2024 to materially progress the finalisation of the EPC contract.
Kola Financing
Kore Potash continues to work with the Consortium to provide financing for the total 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 the finalisation of the EPC contract terms.
The Consortium has advised that the financing proposal for the total construction cost of Kola will be
provided to the Company within six weeks of the execution of the EPC Contract.
Kore Potash maintains that the Consortium members can provide the required financing for Kola's
construction of Kola and that pursuing this financing opportunity remains the best path forward for
Kore Potash's shareholders.
Congo Government Relations
On 21 August 2023 the Minister of Mines 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 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 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 Minster,
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 of Mines of the
RoC to update him on the EPC progress.
Company's CEO, André Baya was received by His Excellency, Minister Pierre Oba, and his Advisor, Pr
Hilaire Elenga, in Brazzaville on 18 April 2024. He updated the Minister of Mines of the RoC 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.
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 28 March 2024, the Company released its Financial Results and Annual Report for the Year Ended
31 December 2023 to the market.
On 22 March 2024 the Company raised US$530,000 via issue of five separate Convertible Loan Notes
('CLNs'). On 28 March 2024 the Company converted these CLNs into 109,865,053 new ordinary shares
of US$0.001 each in the Company ('Subscription Shares') at a price of 0.38 pence per share
('Subscription Price').
On 28 March 2024 the Company also announced that David Hathorn, Chairman of Kore Potash
conditionally subscribed for 31,093,883 new ordinary shares of US$0.001 each in the Company ('new
Ordinary Shares') at a price of 0.38 pence per new Ordinary Share, for a total consideration of
US$150,000 (the 'Conditional Subscription'). The Conditional Subscription is subject to the approval
of shareholders at a General Meeting ('GM') scheduled to be held on 13 May 2024.
As at 31 March 2024, the Company held US$1.4 million in cash.
On 4 April 2024, the Company announced the appointment of Mr J. M. André Baya as non-board CEO
effective from 15 April 2024.
André has over 20 years of experience in the global mining and agriculture sectors and brings
significant African experience including having held senior positions for groups with operations in the
RoC. Immediately prior to joining Kore Potash, André worked as a management consultant, leading
the corporate re-engineering of Fraser Alexander (Pty) Ltd.'s African subsidiaries and the corporate
development of Fortescue Mining Group's Belinga iron ore project in Gabon.
Prior to this, André was Country and General Manager for a variety of global mining corporations
including Sundance Resources, Cominco, Roxgold, Alliance Mining Commodities, Orezone and Central
Copper Resources. Other notable positions include Chief Operating Officer at Managem Group, the
international Moroccan mining group, where he was responsible for the management of the
Managem Group's operations and development projects across eight African nations.
Between 1985 and 2001, André spent 15 years in trade and agriculture, in both technical and
managerial roles for industrial chemicals and agrochemicals businesses in Africa and beyond.
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$625,000 in exploration in the Quarter, which comprised US$622,000
related to the Kola Study and US$3,000 for the DX DFS Study. The Company ended the Quarter with
c.US$1.4 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 Tel: +44 (0) 20 3963 1776
David Hathorn, Chairman
André Baya, 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
Kasia Brzozowska
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)
Contained KCl Contained KCl
Mineral Resource Sylvinite Million Average Grade Sylvinite Million Average Grade
million million
Category Tonnes KCl % Tonnes KCl %
tonnes 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
+ 508 35.4 179.7 457 35.4 161.7
Indicated
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)
Contained KCl Contained KCl
Sylvinite Million Average Grade Sylvinite Million Average Grade
Ore Reserve Category million million
Tonnes KCl % Tonnes KCl %
tonnes 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)
Contained KCl Contained KCl
Mineral Resource Sylvinite Million Average Grade Sylvinite Million Average Grade
million million
Category Tonnes KCl % Tonnes KCl %
tonnes 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
+ 28 29.9 8.3 25 29.9 7.5
Indicated
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)
Contained KCl Contained KCl
Sylvinite Million Average Grade Sylvinite Million Average Grade
Ore Reserve Category million million
Tonnes KCl % Tonnes KCl %
tonnes 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)
Contained KCl Contained KCl
Mineral Resource Million Tonnes Average Grade Million Tonnes Average Grade KCl
million million
Category carnallite KCl % carnallite %
tonnes 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
+ 1,068 20.6 220.2 961 20.6 198.2
Indicated
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)
Contained KCl Contained KCl
Mineral Resource Million Tonnes Average Grade Million Tonnes Average Grade KCl
million million
Category carnallite KCl % carnallite %
tonnes 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
+ 783 18.1 142.0 705 18.1 127.8
Indicated
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.
Date: 29-04-2024 08:00:00
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