31 July 2024
Kore Potash
Plc
("Kore Potash" or
"the Company")
Review of Operations for the
Quarter ended 30 June 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 June 2024 (the "Quarter").
Quarterly
Highlights
Projects
·
PowerChina International Group Limited ("PowerChina") delivered the
Engineering, Procurement and Construction ("EPC") proposal and draft EPC contract
to the Company on 6 February 2024.
·
Kore Potash and PowerChina commenced further detailed
negotiation on the EPC proposal and draft EPC
contract. The Company met senior PowerChina officials
in Beijing in May 2024 and again in Dubai in July 2024, where both
parties satisfactorily resolved all outstanding commercial points.
The agreements are now with the respective legal counsels of both
parties to finalise the agreements. When the agreements are in
final state Kore Potash and PowerChina will work towards fixing a
date for signing ceremony with the Minister of Mines and his
colleagues of the Republic of Congo in Brazzaville. Following the
signing ceremony relevant details of the agreement will be made
public.
Corporate
· 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.
· On
15 April 2024, the Company granted options over 35,000,000 new
Ordinary Shares ("new
Ordinary Shares") to
management.
· On
7 May 2024, the Company announced a secondary listing on the A2X
exchange ("A2X") with
effect from 14 May 2024.
· The
Company held a General Meeting on 13 May 2024 to approve a
conditional fundraise of US$150,000.
· The
Company held its Annual General Meeting on 6 June 2024.
· On
27 June 2024, the Company announced the appointment of
Amit Mehta as a non-executive director to the Board, nominated by
Oman Investment Authority ("OIA"), with effect from 26 June
2024.
· As
of 30 June 2024, the Company held US$0.96 million in
cash.
·
Successful completion of US$1.221 million fundraise on 1 July
2023 with a further US$60,000 conditionally raised subject to
shareholder approval at a General Meeting to be held on 23 August
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 PowerChina continue to
negotiate the EPC proposal and draft the EPC contract.
The Company met PowerChina 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. The
agreements are now with the respective legal counsels of both
parties to finalise the agreements. When the agreements are in
final state Kore Potash and PowerChina will work towards fixing a
date for signing ceremony with the Minister of Mines and his
colleagues of the Republic of Congo in Brazzaville. Following the
signing ceremony relevant details of the agreement will be made
public.
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 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 of Mines of the RoC to
update him on the EPC progress.
The Company's CEO, André Baya was received by
His Excellency, Minister Pierre Oba, and his Adviser, Professor
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.
While discussions with PowerChina were
progressing, the CEO also engaged with the Ministry of Mines in the
RoC to plan the organization of the signature ceremony which should
take place in Brazzaville. The Company are waiting to update the
Minister and finalise the date and venue as soon as the legal
process is completed.
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 4 April 2024, the Company announced the
appointment of 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.
On 15 April 2024, the Company granted options
over 35,000,000 new Ordinary Shares to management.
On 7 May 2024, the Company announced a
secondary listing on A2X, with effect from 14 May 2024.
The Company held a General Meeting on 13 May
2024 where a conditional fundraise of US$150,000 was
approved.
The Company held its Annual General Meeting on
6 June 2024.
On 27 June 2024, the Company
announced the appointment of Amit Mehta as a non-executive director
to the Board, nominated by OIA, with effect from 26 June
2024.
Mr Mehta is the Senior Manager in the Private
Equity team at OIA, the Sovereign Wealth fund of Oman. He oversees
the diversified investments strategy covering the Metals and Mining
investments, Renewables and Energy Transition sector. He has over
14 years of Private Equity and Investment Banking experience
working across the New York and Middle East regions. His position
within OIA gives him commercial and corporate perspectives that
will be of value to Kore Potash.
As at 30 June 2024, the Company held US$0.96
million in cash.
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 (the "Unconditional Subscription
Shares") with existing and new shareholders at
a price of 1.1 pence per share ("Subscription
Price").
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 is
subject to approval by the shareholders at a General Meeting
scheduled to be held on 23 August 2024.
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$492,000 in exploration
in the Quarter, which comprised US$489,000 related to the Kola
Study and US$3,000 for the DX DFS Study. The Company
ended the Quarter with c.US$0.96 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.