TIDMKP2
RNS Number : 0284Q
Kore Potash PLC
25 October 2021
25 October 2021
Kore Potash Plc
("Kore Potash" or "the Company")
Review of Operations for the Quarter ended 30 September 2021
Kore Potash, the potash development company with 97%-ownership
of the Kola and DX Potash Projects in the Sintoukola Basin, located
within the Republic of Congo ("RoC"), provides the following
quarterly update for the period ended 30 September 2021 (the
"Quarter").
Quarterly Highlights:
Kola Potash Project
-- The process to potentially finance the construction of the
Kola Potash Project (" Kola Project ") progressed in line with the
Memorandum of Understanding ("MoU") signed with the Summit
Consortium ("Consortium") in April 2021.
-- The Optimisation Study ("Study") on the Kola Project remains
on track for completion in Q1 2022.
-- The Company expects to receive an interim report on the Study within weeks.
-- Engineering, Procurement and Construction ("EPC") contract
terms are being discussed with the Consortium consistent with the
2017 2(nd) edition FIDIC Silver book.
-- The Consortium remains on track to present an EPC proposal
for the construction of Kola to the Company in Q2 of 2022.
-- The Consortium also continues to progress its debt and
royalty financing arrangements and is finalising its interest in
product offtake.
-- The Consortium advise that subject to completion of a
successful Study, they remain on track to provide the royalty and
debt financing proposal for the full construction cost of Kola to
the Company in Q2 of 2022.
-- Kore Potash management also continued to brief potential
offtake partners with the capability to procure all of the Kola
production and who have expressed interest in partnering with the
Company.
DX Potash Project
-- Work commenced developing an updated geological model for the
DX deposit which is expected to be completed in Q4 2021.
Corporate Highlights
-- Ms Amanda Farris was appointed as interim Chief Financial Officer on 15 July 2021.
-- Mr Ignacio Maijluf was appointed as a Non-Executive Director
on the Board as a nominee of S ociedad Química y Minera de Chile
S.A.
-- As of 30 September 2021, the Company held US$ 12.6 million in cash.
-- After the end of the Quarter, as a result of the COVID-19
pandemic, two long term Congolese consultants to the Company sadly
passed away. Kore Potash expresses its deepest sympathy to their
families, friends, and colleagues. The Company's Pointe Noire
office has been temporarily closed while risks to our employees and
additional mitigation measures are further assessed. This action is
not expected to have any material impact on the next Quarter's
activities.
Brad Sampson, Chief Executive Officer of Kore Potash,
commented:
"We are saddened by the recent COVID-19 impacts on our people
and their families in the Congo and continue to work with our
communities and the Government to further mitigate COVID-19 risks
to our people in the Congo."
" The Company is very pleased that the Optimisation Study and
the Consortium's financing process are progressing to schedule. We
are excited that the next key milestones for the Consortium are
imminent and look forward to receiving the interim study report and
being able to update shareholders further on the progress to
develop Kola."
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
The Consortium's first key milestone in the MoU is to complete
the Study on the Kola Project with key goals to improve the project
value, reduce the capital cost and shorten the construction
schedule. The Consortium set objectives at the start of the Study
to reduce the capital cost to US$ 1.65 billion and the construction
schedule to 40 months. The Study continues to progress as planned
and remains on track for completion in Q1 2022.
The completion of the Study has been the major focus of the
Company and the Consortium during the Quarter.
The Consortium has advised the Company that its key technical
partner with accountability for engineering design and
construction, SEPCO Electric Power Construction Corporation
("SEPCO"), is nearing completion of an interim report on the Study
and that the interim report will be delivered to the Company during
Q4 2021.
The Company intends to update shareholders further on the Study
progress following the completion of this interim report.
SEPCO and its subcontractor China ENFI Engineering Corporation
("ENFI") have had more than 80 personnel engaged full time on the
Study including a review of value opportunities identified in all
major areas of the Kola Definitive Feasibility Study ("DFS")
design.
During the Quarter, SEPCO appointed CCCC-FHDI Engineering
("FHDI") as marine consultants to bring additional marine
capability to the Study team. FHDI is a wholly-owned subsidiary of
the China Communications Construction Company Ltd founded in 1964
and was previously known as the Fourth Harbour Design Institute of
the Ministry of Transport.
The Study process includes weekly meetings between SEPCO, other
members of the Consortium, and Kore Potash management. These
meetings include discussion on capital cost and construction
schedule reduction initiatives being considered by SEPCO. Some of
the topics discussed during the Quarter included accommodation camp
design and construction methodology, possible relocation of the
processing plant closer to the mining area, improved mine shaft
design, improved shaft sinking methodology, optimum process plant
equipment design and a reduced cost approach to key component and
equipment sourcing.
Construction Contract Terms
In advance of completion of the Study and facilitating the
earliest possible receipt of a construction proposal from the
Consortium, the Company is engaging with SEPCO to agree EPC
contract terms consistent with the 2017 2(nd) edition FIDIC Silver
book and appropriate for the construction of Kola.
The Consortium has also advised it remains on track to present
an EPC proposal for the construction of Kola to the Company in Q2
2022 following completion of the Study.
Kola Financing
The Study and the EPC proposal are two key milestones committed
to by the Consortium in the MoU the Company signed with the
Consortium in April 2021. The Study will confirm the total quantum
of capital required to construct Kola and the construction
timeframe. This is important information the Consortium require to
be able to present the financing proposal to the Company.
Kore Potash management 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 their level of
product offtake interest.
The Consortium advises that it remains on track, subject to the
completion of a successful Study, to provide the royalty and debt
financing proposal for the full construction cost of Kola to the
Company in Q2 2022.
Other Kola matters
Separate from the Consortium's activity, Kore Potash management
also continued to brief potential offtake partners with the
capability to procure all of the Kola production and who have
expressed interest in partnering with the Company.
During the Quarter, the Company requested the Government of the
RoC to extend the existing Kola land access agreement Decree
D'Utilité Publique ("DUP") to incorporate additional land areas to
allow flexibility for possible relocation of the Kola Processing
Plant following completion of the Study. Representatives of the
Ministry of Land Affairs visited the Kola Project site during
September to facilitate the Company's request. This request was
well received by the Government and the Ministry's staff are
working cooperatively with the Company to complete this as rapidly
as possible.
DX Potash Project
Following completion of the drilling at the DX Potash Project
("DX Project") by the Company earlier in 2021 as part of the first
phase of a DFS for the DX Project, all of the geological data for
the DX Project has now been provided to the geological consultants
to develop an updated geological model for the DX deposit.
This modelling work is expected to be completed late in Q4 2021
and presented to the Company for review.
This new model is expected to facilitate decision making on the
most appropriate next steps in the development of the DX Project.
The completion of this work may also result in a re-estimate of the
DX Mineral Resources.
Corporate
On 15 July 2021, Mr Jean-Michel Bour resigned from the Chief
Financial Officer role due to personal circumstances that prevented
his continued employment with the Company.
Ms Amanda Farris was subsequently appointed as Chief Financial
Officer on 15 July 2021. Ms Farris is a respected mining industry
accountant who has been working with the Company since May 2021 and
is familiar with the Company's systems, processes, and people.
On 24 August 2021, the Company announced its financial results
for the half year ended 30 June 2021.
On 2 September 2021, the Company announced the appointment of Mr
Ignacio Maijluf as a Non-Executive Director. Mr Majluf was
nominated by S ociedad Química y Minera de Chile S.A. ("SQM") to
replace Ms Trinidad Reyes, who has taken maternity leave from SQM
and resigned from the Board on 1 September 2021.
As at 30 September 2021, the Company held US$ 12.6 million
cash.
After the end of the Quarter, as a result of the COVID-19
pandemic, two long term Congolese consultants to the Company sadly
passed away. The Company expresses its deepest sympathy to their
families, friends, and colleagues. The Company has provided support
to the families in line with our normal practice in the Congo.
The Company's Pointe Noire office has been temporarily closed,
and the staff are working from home, while risks to our employees
and additional potential mitigating actions are further
assessed.
This action is not expected to have any material impact on the
next quarter's activities.
There were no mining production or construction activities
during the Quarter.
Planned Activity
During the quarter ending 31 December 2021, the Company aims
to:
Kola Potash Project
-- Receive the interim Study report from the Consortium.
-- Update shareholders on the Study progress following the
completion of this interim report by SEPCO.
-- Continue to work with SEPCO to evaluate the optimisation
initiatives for inclusion in the Final Optimisation Study
Report.
-- Finalise the granting of the revised DUP with the Minister of Land Affairs.
-- Continue discussing the financing proposal with the
Consortium for the royalty and debt financing for the full cost of
construction of the Kola Project.
DX Potash Project
-- Receive the completed updated geological model for the DX
Project incorporating the results of the 2021 drilling
campaign.
-- Commence review of this model and determination of the
appropriate next steps in developing the DX Project.
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 CEO salary of US$
198 thousand settled in cash. The Company settled outstanding
directors' fees for the Quarter ended 30 June 2021 through the
issue of 2,954,079 ordinary shares, as announced on 8 July
2021.
The Company invested US $681 thousand in exploration in the
Quarter, which comprised US$ 671 thousand related to the Kola Study
and US$ 10 thousand for the DX DFS Study. The Company ended the
Quarter with US$ 12.6 million in cash.
This announcement has been approved for release by the Board of
Kore Potash.
S
For further information, please visit www.korepotash.com or
contact:
Kore Potash Tel: +27 84 603 6238
Brad Sampson - CEO
Tavistock Communications Tel: +44 (0) 20 7920
Jos Simson 3150
Oliver Lamb
Canaccord Genuity - Nomad and Tel: +44 (0) 20 7523
Broker 4600
James Asensio
Henry Fitzgerald-O'Connor
Shore Capital - Joint Broker Tel: +44 (0) 20 7408
Jerry Keen 4050
Toby Gibbs
James Thomas
Questco Corporate Advisory - Tel: +27 (11) 011 9205
JSE Sponsor
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% holding in SPSA in the RoC. SPSA is the 100%
owner of Dougou Potash Mining S.A. which will hold the Dougou
Mining Lease upon the transfer from SPSA to Dougou Potash Mining
S.A. through the issue of a Presidential Decree. The Kola Deposit
is located within the Kola Mining Lease. The Dougou Mining lease
hosts the Dougou Deposit and the Dougou Extension Deposit.
Table 1: Schedule of mining tenements (Republic of Congo)
Project & Tenement Issued Company Interest Title Registered
Type to
Kola Decree 2013-412 100% Kola Potash Mining
Mining of 9 August potassium rights S.A.
2013 only
------------------ ------------------- -------------------
Dougou Decree 2017-139 100% Sintoukola Potash
Mining of 9 May 2017 potassium rights S.A.
only
------------------ ------------------- -------------------
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 Sylvinite Average Grade Contained Sylvinite Average Contained
Category Million Tonnes KCl % KCl million Million Tonnes Grade KCl KCl million
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 +
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 Sylvinite Average Grade Contained Sylvinite Average Contained
Category Million Tonnes KCl % KCl million Million Tonnes Grade KCl KCl million
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)
----------------------------------------------- --------------------------------------------
Mineral Resource Sylvinite Average Grade Contained Sylvinite Average Contained
Category Million Tonnes KCl % KCl million Million Tonnes Grade KCl KCl million
tonnes % 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 Sylvinite Average Contained Sylvinite Average Contained
Category Million Grade KCl million Million Grade KCl KCl million
Tonnes KCl % tonnes Tonnes % 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 Million Average Contained Million Average Contained
Resource Tonnes Grade KCl KCl million Tonnes Grade KCl million
Category carnallite % tonnes carnallite KCl % 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 Million Average Contained Million Average Contained
Resource Tonnes Grade KCl KCl million Tonnes Grade KCl million
Category carnallite % tonnes carnallite KCl % 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 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.
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END
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