29 April 2024
Kore Potash
Plc
("Kore Potash" or
"the Company")
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
David Hathorn, Chairman
André Baya, CEO
|
|
Tel: +44
(0) 20 3963 1776
|
|
Tavistock Communications
Nick Elwes
Adam Baynes
|
|
Tel: +44
(0) 20 7920 3150
|
|
SP
Angel Corporate Finance - Nomad and
Broker
Ewan Leggat
Charlie Bouverat
Kasia Brzozowska
|
|
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.
|