(Alliance News) - Kore Potash PLC on Tuesday inked a memorandum of understanding arranging the full financing required for the construction of the Kola potash project in Republic of Congo.
The potash development company focused on the Congo said has signed a non-binding memorandum of understanding with Summit which outlines a roadmap to optimise, fully finance and construct Kola via a mix of debt and royalty financing.
Kore Potash shares were up 26% at 1.80 pence each in London on Tuesday morning. In Johannesburg, the stock was up 2.9% at ZAR0.35.
Summit is an African strategic advisory, corporate finance and alternative investment group headquartered in Mauritius who in 2016 led and arranged the USD50 million financing of the definitive feasibility study for Kola. Summit will once again lead the financing.
Kore additionally said Summit and their technical partners, SEPCO Electric Power Construction Corp and China ENFI Engineering Corp, will work with Kore to undertake an optimisation study to reduce Kola's capital cost with a target of less than USD1.65 billion.
"Reducing the capital cost of Kola will reduce the size of the financing required for construction and improve returns for the Company's shareholders," Kore said.
Under the proposed financing arrangements, Kola would not be required to contribute to the capital needed to build the project and would retain a 90% equity interest in Kola. The Congo government will retain their 10% shareholding in Kola.
Kore will however contribute around USD900,000 to the optimisation study.
"We are excited to have this agreement in place with a consortium with such significant technical and financing capability and long term focus. We welcome the consortium's innovative proposal to potentially fully finance the construction of Kola through debt and royalty financing," said Kore Chief Executive Brad Sampson.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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Kore Potash (KP2)