Review of Operations - Quarter ended 31 March 2022

RNS Number : 0258J

Kore Potash PLC

22 April 2022

 

22 April 2022

Kore Potash Plc

("Kore Potash" or "the Company")

Review of Operations for the Quarter ended 31 March 2022

Kore Potash (AIM: KP2, ASX: KP2, JSE:KP2), the potash development company with 97% ownership of the Kola and DX Potash Projects in the Sintoukola Basin, located in the Republic of Congo ("RoC"), provides the following quarterly update for the period ended 31 March 2022 (the "Quarter").

Quarterly Highlights:

Kola Potash Project

· The process to potentially finance the construction of the Kola Potash Project ("Kola" or the "Kola Project") progressed in line with the Memorandum of Understanding ("MoU") signed with the Summit Consortium ("Consortium") in April 2021.

· Receipt of the Optimisation Study ("Study") on the Kola Project was announced to shareholders on 1 April 2022; this completes the Consortium's work on the Study.

· The Company has commenced its detailed review of the Study and intends to provide a further update as soon as the review is completed, and the results are in an acceptable format for public disclosure.

· The Consortium has advised that it expects to submit an Engineering, Procurement and Construction contract (" EPC ") proposal for the construction of Kola based on the outcomes of the Study within the next two months.

· The Consortium has advised that it expected to provide the financing proposal for the construction of Kola following Kore Potash's receipt of the EPC proposal and agreement on EPC terms.

Corporate Highlights

· On 1 January 2022, SP Angel Corporate Finance LLP was appointed the Company's Nominated Adviser and Joint Broker.

· On 31 March 2022, the Company released its Financial Results and Annual Report for the Year Ended 31 December 2021 .

· As of 31 March 2022, the Company held US$ 9.4 million in cash.

Brad Sampson, Chief Executive Officer of Kore Potash, commented:

"Recent global events have heightened concerns for food security and continuity of supply of fertiliser to feed the world's growing population. The dramatic increase in the potash price reinforces the need for the development of new low cost potash production from high quality potash deposits, located close to customers such as our projects in the Sintoukola basin. The progress towards financing our Kola Project is exciting and we look forward to receiving the financing proposal later this year. "

Operational activities

Kola Potash Project

The financing process for the construction of the Kola Project progressed in line with the MoU signed with the Consortium in April 2021.

Optimisation Study ("Study")  

The Consortium's first key milestone in the MoU was to complete the Study on the Kola Project to improve the Kola Project value, reduce the capital cost and shorten the construction schedule. The Study, which represented the first part of the financing process, was undertaken by SEPCO Electric Power Construction Corporation (" SEPCO "), the engineering and construction partner of the Consortium.

The Study was provided following the Consortium's review of the Definitive Feasibility Study ("DFS") of the Kola Project as released in our announcement dated 29 January 2019 entitled "Kola Definitive Feasibility Study" and their investigation of a number of improvement opportunities.

There is a large amount of information that collectively constitutes the Study. The Company has commenced a detailed review of the Study and the proposed Kola design changes presented by the Consortium. This review is expected to take some weeks and is not expected to impact the timing of the EPC and financing proposals being prepared for presentation to the Company.

As soon as the Company has completed its review and has the results available for public disclosure in a format acceptable to its market regulators, it will announce the results of the review to the market.

With the delivery of the Study, the Consortium's work on the optimisation of Kola has now concluded, and its attention is focused on finalisation of the EPC proposal.

Kola EPC

To facilitate the earliest possible receipt of a construction proposal from the Consortium, the Company has engaged with the Consortium to agree to EPC contract terms consistent with the 2017 2nd edition Fédération Internationale des Ingénieurs-Conseils Silver book and appropriate for the construction of Kola during the Quarter.

The Consortium has also advised that it remains on track to present an EPC proposal for the construction of Kola to the Company within two months of the receipt of the Study.

Kola Financing

The Study and the EPC proposal are two key milestones committed to in the MoU the Company signed with the Consortium in April 2021. The Study confirms the total capital required to construct Kola and the construction timeframe. This is important information the Consortium required to present the financing proposal to the Company.

The Consortium has agreed to present the financing proposal for the full construction costs of the Kola Project to the Company following Kore Potash's receipt of the EPC proposal and agreement on EPC terms .

Kore Potash's management has continued twice-weekly meetings with the Consortium to remain briefed on the Consortium's progress towards forming its debt and royalty financing proposal.  The Consortium has also continued to keep the Company informed on its level of Muriate of Potash product offtake interest.

Other Kola matters

Separate from the Consortium's activity, Kore Potash's management team also continued discussions with potential offtake partners with the capability to procure all the Kola production and who have expressed interest in partnering with the Company.

DX Potash Project

Following the completion of the drilling at the DX Potash Project ("DX Project") by the Company earlier in 2021, the Company's geological consultants developed an updated geological model for the DX deposit.

This new model, completed in 2021, incorporated all information from the latest drilling programme. It improves confidence in the geological modelling of the DX deposit and improves the Company's understanding of the Sylvinite / Carnallite boundaries in the Top Seams and Hanging wall seams. 

There has been no update of the DX Mineral Resources or Ore Reserves.

The Company's focus during the Quarter has been on the Kola Project. The Company is still assessing the most appropriate next steps for developing the DX deposit and associated pricing and intends to update shareholders further once these steps have been confirmed.  

Corporate

On 31 December 2021, the Company announced it had appointed SP Angel Corporate Finance LLP as the Company's Nominated Adviser and Joint Broker effective from 1 January 2022. Shore Capital continues to work with the Company as Joint Broker.

On 31 March 2022, the Company released its Financial Results and Annual Report for the Year Ended 31 December 2021 to the market.

As at 31 March 2022, the Company held US$ 9.4 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. Included in those cashflows are non-executive directors' fees and the CEO 's salary of US$ 198,000 settled in cash.

The Company invested US$ 1,245,000 in exploration in the Quarter, which comprised US$ 1,208,000 related to the Kola Study and US$ 37,000 for the DX DFS Study. The Company ended the Quarter with US$ 9.4 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 Brad Sampson - CEO		Tel: [phone]
Tavistock Communications Jos Simson Oliver Lamb		Tel: [phone]
SP Angel Corporate Finance- Nomad and Broker    Ewan Leggat Charlie Bouverat		Tel: [phone]
Shore Capital - Joint Broker Toby Gibbs James Thomas		Tel: [phone]
Questco Corporate Advisory - JSE Sponsor Doné Hattingh		Tel: [phone]

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 Dougou Extension ("DX") Deposit.

Under the existing Mining Convention, the Government of the Congo is entitled to 10% ownership in the Kola and Dougou 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.

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)
Mineral Resource Category	Sylvinite Million Tonnes	Average Grade KCl %	Contained KCl million tonnes	Sylvinite Million Tonnes	Average Grade KCl %	Contained KCl million 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 + Indicated	508	35.4	179.7	457	35.4	161.7
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)
Ore Reserve Category	Sylvinite Million Tonnes	Average Grade KCl %	Contained KCl million tonnes	Sylvinite Million Tonnes	Average Grade KCl %	Contained KCl million 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)
Mineral Resource Category	Sylvinite Million Tonnes	Average Grade KCl %	Contained KCl million tonnes	Sylvinite Million Tonnes	Average Grade KCl %	Contained KCl million tonnes
Measured	-	-	-	-	-	-
Indicated	79	39.1	30.8	71	39.1	27.7
Sub-Total Measured + Indicated	79	39.1	30.8	71	39.1	27.7
Inferred	66	40.4	26.7	59	40.4	24.0
TOTAL	145	39.7	57.5	130	39.7	51.8

 

		Gross						Net Attributable (90% interest)
Ore Reserve Category		Sylvinite Million Tonnes	Average Grade KCl %			Contained KCl million tonnes		Sylvinite Million Tonnes		Average Grade KCl %	Contained KCl million tonnes
Proved		-	-			-		-		-	-
Probable		17.7	41.7			7.4		16		41.7	6.6
TOTAL		17.7	41.7			7.4		16		41.7	6.6
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)
Mineral Resource Category	Million Tonnes carnallite			Average Grade KCl %	Contained KCl million tonnes		Million Tonnes carnallite		Average Grade KCl %			Contained KCl million 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 + Indicated	1,068			20.6	220.2		961		20.6			198.2
Inferred	1,988			20.8	413.5		1789		20.8			372.2
TOTAL	3,056			20.7	633.7		2750		20.7			570.3
KOLA CARNALLITE DEPOSIT
	Gross						Net Attributable (90% interest)
Mineral Resource Category	Million Tonnes carnallite			Average Grade KCl %	Contained KCl million tonnes		Million Tonnes carnallite		Average Grade KCl %			Contained KCl million 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 + Indicated	783			18.1	142.0		705		18.1			127.8
Inferred	1,266			18.7	236.4		1140		18.7			212.8
TOTAL	2,049			18.5	378.5		1844		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 Resource Estimate was 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 Reserve Estimate for sylvinite at Kola was first reported 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 Dougou carnallite Mineral Resource estimate was 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 ("DX") sylvinite Mineral Resource Estimate and Ore Reserve Estimate were reported in an announcement titled "Dougou Extension (DX) Project Pre-Feasibility Study" on 13 May 2020. Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc. was the Competent Person, for the Exploration Results and Mineral Resources. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318). 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, other than the activity currently underway to develop an improved geological model for the DX deposit which may in the future necessitate a change in the DX Mineral Resources, 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 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.

 

END

 

 

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