KOLA project part 120 Apr 2021 16:51
KOLA Potash Project:/
Kola has a Measured and Indicated sylvinite Mineral Resource of 508Mt grading at 35.4% KCl, which is comparable to the grades of some of the world’s leading potash deposits. A DFS was completed in December 2018 and, at an estimated US$102/t CFR granular potash, it would represent one of the lowest cost MOP global producers.
***KORE POTASH – SIGNS MOU FOR FULL FINANCING OF KOLA POTASH PROJECT***
This latest announcement brings news that Kore and Summit Africa Limited (Summit), on behalf of a consortium of investors and engineering firms, have signed a non-binding MoU to arrange the total financing required for the construction of the Kola Potash Project (Kola). Potash development company Kore has a 97%-interest in the Kola and DX Potash Projects in the Sintoukola Basin, which are located within the Republic of Congo (RoC). Kore will retain 90% ownership under the deal.
The Kola Definitive Feasibility Study (DFS) included the forecasted generation of US$500million post tax free cash per annum. This project has a Measured and Indicated sylvinite Mineral Resource of 508Mt grading at 35.4% KCl, which is comparable to the grades of some of the world’s leading potash deposits. This DFS was completed in December 2018 and, at an estimated US$102/t CFR granular potash, it would represent one of the lowest cost MOP global producers.
The project scores highly on many points. Shipping costs from the export facility to Brazil are low due to the directness of the shipping route, which results in the lowest cost viable source of potash supply to Brazil. The ore body lies just 35km from the planned export facility on the coast, with a proposed overland conveyor and dedicated jetty for export to Brazil and West Africa. The potash will be processed with brine disposed into the ocean, which means that there is no need for any surface tailings storage facility. The project will also benefit from an abundant water supply available at a low cost along with competitive gas and power costs available locally. Imported equipment for the construction of the mine will only need to be transported 90km by road from the Port of Pointe Noire.
Our analysis (Align Research) is that if Kore gets 90% of that cash flow and even after deducting royalty finance costs once in production, even on modest multipliers Kore could well deserve to have a market capitalisation well in excess of $2 billion. Successful close of this financing on the terms proposed will allow Kore to retain 90% ownership of this world class asset without Kore shareholders having to inject the equity up front to construct the project. Very neatly, what would have been equity from Kore shareholders is now proposed to be replaced with royalty financing. All of which should set the scene for potentially dramatic share price growth.
Brad Sampson Kore’s CEO said, "This approach by the Summit Consortium to the financing of Kola would eliminate the requirement for furth
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