Kore Potash Regulatory News (KP2)

This Announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 ("MAR"). Upon the publication of this Announcement, this inside information is now considered to be in the public domain.

29 April 2019

Kore Potash Plc

("Kore Potash" or the "Company")

Dougou Extension Solution Mining Project Scoping Study

Kore Potash, the potash development company whose flagship asset is the 97%-owned Sintoukola Potash Project in the Republic of Congo, is pleased to announce the results of a Scoping Study undertaken to assess the viability of producing 400 thousand tonnes per annum (ktpa) of Muriate of Potash (MoP) from a portion of the sylvinite in the Dougou Extension (DX) Deposit by a solution mining method (all together the "Scoping Study"). The Scoping Study supports a low opex and strong cash generative operation with attractive estimated base case up-front capital costs of US$327 million. The DX Deposit is located within the Company's Dougou mining permit, southwest of the Company's flagship Kola sylvinite Deposit, which would be a separate development.

Highlights

· Scoping Study demonstrates low technical risk and attractive economics for DX Project

· Utilises a highly efficient potash extraction method that is well understood and is in use across multiple potash operations globally

· Attractive life-of-mine cost of sales, free on board (FOB) of approximately US$82.74/t MoP

· Mine life of approximately 17 years based on solution mining of 52 million tonnes of Indicated Mineral Resource @ 43.1% KCl from a total Indicated Mineral Resource base of 111 million tonnes @ 37.2% KCl

· Estimated base case initial capital cost of approximately US$327 million (real 2019) to produce approximately 400 ktpa white granular MoP

· Estimated two-year construction period provides the company with near term production options

· Base case real ungeared IRR of approximately 19.3% and base case post-tax ungeared NPV10 (real) of approximately US$221 million on an attributable basis at life-of-mine average MoP price for granular product of US$360/t

· Average base case annual post construction, post-tax, free cash flow of approximately US$74 million and approximately 4.25 years post-tax payback period from first production

· Infrastructure overlaps with the Kola sylvinite and Dougou carnallite projects will have a positive impact on the future development costs and construction timeframes of those two projects

· Several areas of the Scoping Study were completed to a higher level of confidence than is normal for a scoping study. As a result, the work required to complete a PFS, once commenced, is estimated to require only 9 months, with the drilling of an additional 4 diamond drill holes being the item currently controlling the overall timeframe

Table 1: Key Project Metric Estimates (real 2019 basis):

Brad Sampson, CEO of Kore, commented:

"The completion of the Dougou Extension Solution Mining Project Scoping Study confirms the district scale development potential of this world-class potash basin. We are incredibly excited at the prospect of accelerating the Company into production and cashflow generation via the DX project while we continue to optimise the flagship Tier-1 Kola sylvinite project.

"We believe that the US$327 million capital cost estimate to construct the DX Project makes the project attractive from a capital perspective and the successful completion of the Scoping Study allows the Company to rapidly progress to pre-feasibility study, which will further define and de-risk the project.

"The development of the DX Project will give advantages in terms of overlapping infrastructure reducing the future capital cost of Kola."

For further information, please visit www.korepotash.com or contact:

Cautionary Statement

· The Scoping Study referred to in this announcement has been undertaken to investigate the potential for a new potash development in the Republic of Congo.

· The Scoping Study is a preliminary technical and economic study of the potential viability of the DX project and is based on low level technical and economic assessments (-15% and +30% accuracy) that are not sufficient to support the estimation of Ore Reserves. Further evaluation work and appropriate studies are required before the Company will be in a position to estimate any Ore Reserves or to provide any assurance of an economic development case.

· The Scoping Study is based on the material assumptions outlined in this announcement and Appendix B. These include assumptions on availability of funding. While the Company considers all of the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.

· To achieve the range of outcomes indicated in the Scoping Study, base case funding in the order of US$327 million will likely be required. Investors should note that there is no certainty that the Company will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company's existing shares.

· It is also possible that the Company could pursue other 'value realisation' strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce the Company's proportionate ownership of the project.

· Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.

· Of the Mineral Resources scheduled for extraction in the Scoping Study production plan, 100% are Indicated Mineral Resources. While modifying factors were sufficiently advanced and applied to the Indicated Mineral Resources, there is no certainty of eventual conversion to Ore Reserves or that the production target itself will be realised.

· The Mineral Resources underpinning the production targets and forecast financial information in this combined AIM/JSE/ASX Release were prepared by a competent person in accordance with the requirements of the JORC Code (2012).

Forward-Looking Statements

· This release contains a series of forward-looking statements. Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-looking statements. By their very nature forward-looking statements are subject to known and unknown risks and uncertainties that may cause our 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. Statements in this release regarding the Company's business or proposed business, which are not historical facts, are forward-looking statements that involve risks and uncertainties, such as Mineral Resource estimates, market prices of potash, capital and operating costs, changes in project parametres as plans continue to be evaluated, continued availability of capital and financing and general economic, market or business conditions, and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.

· The Company has concluded that it has a reasonable basis for providing these forward-looking statements and the forecast financial information included in this release. This includes a reasonable basis to expect that it will be able to fund the development of the DX project upon successful delivery of key development milestones and when required. The detailed reasons for these conclusions are outlined throughout this release (including Section 16) and in Appendix B.

· No Ore Reserve has been declared. This combined AIM/JSE/ASX Release has been prepared in compliance with the current JORC Code (2012) and the ASX Listing Rules. All material assumptions, including enough progression of all JORC modifying factors, on which the production target and forecast financial information are based have been included in this release.

1. Introduction and Project Overview

Kore remains committed to the development of its flagship Kola project and is concurrently investigating the potential for a new reduced-scale potash development in the Republic of Congo. The Company anticipates being in position to update investors on its review of the Kola EPC proposal within the next two months.

Following a review of the strategic options within the Sintoukola District, the Company has formed the view that a reduced-scale potash development has strong potential to expedite the Company's path to cash flow generation and consequently, accelerate the development of the Kola project.

The DX Solution Mining Project (the Project) provides a more rapid path to production with a significantly smaller capital cost than required for the Kola project. Development of this project will establish Kore Potash as the first potash producer in the Republic of Congo in over 40 years. The smaller scale of the Project comes with relatively low operational and financial risks.

Development of the Project is expected to create a very low-cost potash operation producing approximately 400,000 tonnes of K60 MoP annually. The mining target is the Dougou Extension Sylvinite Mineral Resource, where current geological data suggests a continuous sylvinite deposit with exceptionally high KCl grade. Selective solution mining and processing technology will be employed, resulting in minimal waste brine which will be disposed underground. Solution mining is the most effective means of exploiting an underground potash resource at a reduced scale, and the method is proven across other operations globally.

The Project is located (Figure 1) within 20km of the Company's flagship Kola project and closer to the coast; it will have some infrastructure overlap with the Kola project, and the development of the Project is expected to have a positive impact on the costs and timeline associated with the development of Kola.

Figure 1: Location Map showing Dougou Extension Deposit

(image available at www.korepotash.com)

2. Study Team

The Scoping Study was conducted by a team composed of Kore Potash staff, contractors to Kore Potash and Innovare Technologies, a specialist solution mining technology consultancy.

Innovare Technologies was responsible for the mining, drilling methodology and process design. The solution mine design and trade-offs were carried out by Max Ramey, a qualified and experienced solution mining expert with almost 30 years of experience in solution mining around the world. The drilling methodology work was done by Sandy Debusschere, an experienced driller in both the energy and potash sectors, with experience covering over 400 potash wells. The process design was undertaken by John McEwan, a chemical engineer with over 40 years of experience in chemical plants, including 13 years specifically in potash projects. The infrastructure design and trade-offs were executed by Kore through the consulting services of Ryan Leland, an independent consulting project manager and mechanical engineer with 20 years of experience in the potash industry gained in both process and mining operational roles.

3. Production Capacity

The Scoping Study considered a range of project capacities from 200 ktpa up to 400 ktpa. To test the flexibility and scalability of the project, capital and operational cost estimates were completed for all options and then tested in the economic evaluation. Based on the economic evaluation (Table1), this document talks to the selected option of 400 ktpa.

A summary of the outcomes for a capacity of 250 ktpa are presented in comparison to the selected 400 ktpa case in Table 1.

Table 1: Economic Evaluation of Plant Capacities

4. Geology and Mineral Resource Estimate

The "Maiden Sylvinite Mineral Resource at Dougou Extension" announcement by Kore Potash dated 20th August 2018 provides a description of the geology and Mineral Resource Estimate (Table 2) for Dougou Extension (prepared in accordance with the JORC 2012 Code).

The sylvinite at Dougou Extension is hosted by two flat-lying or gently dipping 'seams' at a depth of approximately 400-450 metres below surface and separated by 8 to 15 metres of rock-salt. The uppermost seam is the Top Seam (TS) and the lowermost is the Hanging Wall Seam (HWS).  These seams may be of sylvinite or carnallitite. However, these potash types are never mixed in the same location and carnallitite, if present, always occurs below the sylvinite. The Dougou Extension Mineral Resource Estimate was for the sylvinite only and is the basis of this Scoping Study.

The Scoping Study considers the exploitation of a portion of the Indicated Mineral Resource, where sylvinite of the HWS and TS is best developed, comprising 52.5 Mt of sylvinite at an average grade of 43.1% KCl. The average thickness and grade of sylvinite modelled for the seams is:

· TS: thickness 5.2m grading 31.7% KCl

· HWS: thickness 3.6m grading 60.1% KCl.

In some areas, both seams are present as sylvinite, in other areas only one is present as sylvinite.

Table 2: Mineral Resource Estimate for Dougou Extension

Notes: First reported 20 August 2018, in an announcement titled "Maiden Sylvinite Mineral Resource at Dougou Extension" in accordance with the JORC Code, using a minimum cut-off-grade of 15% KCl. Rounding errors may occur. Average density of the TS of 2.11 t/m3 and HWS of 2.03 t/m3.

The seams are overlain and underlain by massive halite (rock-salt). The interval of rock-salt above the seams and the overlying Anhydrite Member (an Aquitard) is between 5 and 80 metres.

The Scoping Study considers exploitation of 52 Mt of Indicated Mineral Resource only. The remaining 179.5 Mt of sylvinite Mineral Resource at Dougou Extension present potential to increase the life of the project or the scale or both.

5. Geotechnical and Hydrogeology

For the Scoping Study, a minimum 5 metre 'salt-back' (rock-salt between the cavern and the top of the Salt Member) is planned, and in most areas, this will be between 10 and 30 metres thick. In addition to this, there is a 10 to 16-metre-thick Anhydrite Member (comprised mostly anhydrite and clay) above the salt-back, separating it from the water-bearing sediments of the 'cover rocks'. This unit has been shown by test work at the nearby Kola deposit to be a very effective aquitard, having extremely low permeability.

There is currently insufficient data to accurately quantify the expected subsidence and cavern stability, and further geotechnical study is required in pre-feasibility study to provide a basis for cavern design and layout. 3D Seismic data is not available, so the presence of fractures or faults is not currently understood. For the Scoping Study, it was assumed that the anhydrite member has adequate inherent rock strength to remain intact during solution mining.

Cavern extraction ratio is limited to 30% for the Scoping Study. This is considered a conservative assumption as existing solution mining operations routinely extract 35% or more. It is assumed that caverns can be operated to balance brine inflows and outflows, as is common industry practice. For this Scoping Study no modelling of subsidence has been done. Subsidence assumptions have been based on depth, grade, total extraction, and subsidence data from past projects and operations.

6. Mining Method and Schedule

A trade-off of mining and drilling methods was completed by Innovare and the decision made to proceed with a selective dissolution mining method utilising vertically drilled dual well caverns.

The dual well method is simply two single well caverns that are solution mined until the caverns merge. Figure 2 and Figure 3 illustrate the method.

Figure 2: Sump development Phase

(image available at www.korepotash.com)

Figure 3: Cavern Connection and roof development Phase

(image available at www.korepotash.com)

The solution mining plan for the dual well method is to create a sump in the NaCl under the HWS, with the top of the sump at the base of the HWS, for two wells located about 80 m apart. It is estimated that it will take approximately 6 months to solution mine the sumps to connection.

Upon connection of the two sumps, brine is injected down one well and produced from the other. This process is continued for another 6 months to develop extended surface area for the solution mining. Upon completion of the cavern development, the HWS is then selectively mined with a nearly saturated NaCl injection fluid. As the solution mining of the HWS is complete, the process is repeated for the TS.

The sylvinite HWS is uniformly between 50 and 65% sylvite (KCl) throughout with the remainder comprised of rock-salt (halite with minor anhydrite and insoluble material). The selective solution mining method will use a brine saturated with halite (NaCl) so that only the sylvite is dissolved; the undissolved interstitial rock-salt will 'settle' out so that the cavern is expected to develop laterally very effectively. The uniformly high KCl grade is advantageous in this regard. The sylvinite TS is lower grade being comprised of sub-layers of sylvinite of 30 to 67% sylvite content, separated by halite 'inter-layers' of between 0.5 and 2.5 m thickness. Cavern development may deploy a roof blanket and use of freshwater to selectively dissolve the halite layers first, then switch to an NaCl saturated brine to dissolve the remaining sylvite. As per the HWS, the purity of the individual sylvinite sub-layers is an advantage. It is likely that the rock-salt and then sylvinite dissolution will lead to collapse of the remaining layers, increasing permeability of the remaining material and further aiding the selective dissolution of the last of the sylvite.

Successful application of the selective dissolution method requires maintenance of adequate permeability through the potash zone during operation. Our experts have advised that a rule of thumb is a minimum grade of 30% KCl are sufficient to create adequate permeability for the economic selective solution mining process to be sustained. The average grade of the Dougou Extension mine plan is 43.1% KCl, and the lowest grade in the top seam 31.3% both of which meet this criterion. 

Approximately 43% of the Indicated Mineral Resource was utilised for the Scoping Study, with the grade and tonnes of each of the two seams planned for extraction shown in Table 3. Within the planned extraction area, additional drilling and seismic survey information is required to improve confidence, and to delineate features that may impact on the solution mining.

Table 3: Sylvinite Resource Distribution

Current potash solution mining operations and projects in Canada that are deeper than the Dougou Extension and thus operate in higher stress regimes, are managed such that approximately 65% of the Mineral Resource are left in place to provide pillar support for stabilization of the solution mining caverns and to reduce the surface subsidence rate. The Scoping Study assumes a conservative estimate of 70% of the KCl Mineral Resource (Table 4) is to be left in place. 

Allowance has been made for areas of the deposit affected by localised negative geological features such as structures, areas of undulation of the seam and areas with basal carnallitite. Surface topographical features such as drainage and steep sided valleys which affect positioning of wells on surface have also been considered in the mine layout.

Table 4: Dougou Extension Production plan

To achieve a 30% extraction ratio, the solution mining cavern density is designed at approximately 15 solution caverns per square kilometre.

The solution mining operation requires 16 dual-well caverns to achieve design capacity, for a total of 32 vertical wells. Therefore, initially 32 well pads will be constructed, along with associated access. Once the planned drilling is complete at each well, a wellhead will be established consisting of piping, valving, and instrumentation to properly control each well.

The wellheads will be connected into the wellfield pipeline system, which will run from the wellfield to the process plant. A series of pipes is used to carry brine, water, and blanket fluid to each wellhead. The wellfield pipeline loops back to the process plant, where mine brine is introduced to the plant for KCl extraction, and then recirculated back to the wellfield for reuse. All wellfield pumps are located near the wellfield, and all instrumentation from the wellfield will be fed back to the plant control system.

The make-up water for the process plant is planned to be sourced from boreholes to be drilled into the upper aquifer.

During the development of the sumps, the brine contains primarily NaCl. A portion of this brine is used as process brine for mining of the caverns. The remainder will be disposed of through a disposal well into a local saline aquifer.

Although no specific testing has been carried out to verify the expected solution mining production for the Dougou Extension resource, K2P believes it has a reasonable basis for believing that the production target of 400,000 tpa can be achieved with the selected method, for the following reasons:

· Innovare as potash solution mining experts have assessed and recommended the proposed mining method based on their combined years of experience including experience with the application of this method in similar styles of potash deposits.

· The assumed rate of dissolution was selected by Innovare based on past operational experience, and dissolution testing in other sylvinite projects. The rate of dissolution is one factor determining the number of caverns required to achieve the targeted production rate. The number of caverns required will be further investigated during feasibility studies and following dissolution test work.

7. Processing

Plant and Flowsheet: The process plant will be located east of the Dougou Extension resource, (Figure 4) with a minimum buffer distance of 500m. The site perimetre fencing will be 400m x 250m, and the process plant platform will be 230m x 150m. The process plant building is 20m wide x 160m long, and 36m high. The process plant building will house all processing equipment, along with associated electrical and instrumentation. The control room will be located in the process plant building. The building will have no exterior walls, and a simple roof will be installed to keep rain off the personnel and equipment.

Figure 4: Plant Location in Relation to Wellfield

(image available at www.korepotash.com)

The process design shown in Figure 5 below consists of the following industry standard process steps:

· Injection and solution recovery: Return brine from processing will be heated to 100°C and pumped to the wellfield for re-injection into the mine caverns for dissolution and recovery of potassium chloride (KCl) from the underground Sylvinite ore deposit containing both KCl and sodium chloride (NaCl) minerals. The KCl mineral will be selectively dissolved from the ore due to the almost saturated NaCl and under saturated KCl in the return brine.

· Cooling and crystallisation: From the crystalliser feed tank, the brine will be pumped to the vacuum crystalliser for pre-cooling to approximately 47°C and then pumped to the surface crystallizers. In the four-stage surface cooled crystallisers, the mother liquor will be cooled to an end point of 10°C resulting in KCl solids precipitation. Spent brine from the 4th stage crystallizer will be pumped to the concentrate tank for return to the wellfield.

· KCl de-brining: Slurry containing KCl solids from the surface crystallizers will be pumped to the drum filter. A liquid ring vacuum pump will pull through the filter cake to promote water removal from the filter cake.

· KCl drying: A rotary drum dryer will be used to dry most of the residual moisture from the potash product.

· Compaction: Dried product will be conveyed to a twin-screw feeder for feed to a double-roll compactor where it will be compacted. The flakes exiting the compactor will be broken by a flake breaker followed by a cage mill for further size reduction. Granular product will be sent for post-processing, while oversize and undersize material will be recirculated through compaction. Post-processing for product includes drying, cooling and glazing to harden the granular material.

· Product Load Out: Anti-caking agent and de-dusting oil will be added to the final cooled granular potash product.

Figure 5: Process Flow Diagram

(image available at www.korepotash.com)

The long, narrow plant design, (Figure 6) makes it possible to position the mechanical equipment more densely than usual plant designs. Maintenance access is convenient from both sides of the building, so no service aisles will be included in the building interior. All removal of equipment will either be through the sides, or through the roof of the building. Elevated grated floors will be constructed for personnel access to all equipment, and several maintenance access lanes will be created for removal of some large components.

A covered loadout area 20m x 24m x 20m high will be located at the end of the process plant, where trailers will be directly loaded with product. A 50m x 50m x 28m high Utilities Building will be positioned adjacent to the process plant, housing the boiler, power infrastructure, and other utilities. The maintenance and warehouse facility will be 24m x 40m x 28m high, and also close to the process plant. The Administration Building will contain the security area, office space, and lab facilities for the operation.

Although no specific testing has been carried out to verify the expected process plant production for the Dougou Extension resource, K2P believes it has a reasonable basis for a production target of 400,000 tpa to be achieved with this method for the following reasons:

· During the Scoping Study, a potash process technology specialist, Whiting Equipment Canada, provided the Swenson process design, equipment list and estimated equipment costs relating to the crystallization process. The same Swenson process technology is successfully used at other global potash operations over a large range of plant capacities.

· The proposed methods are commonly used in potash solution mining operations, including large scale production facilities. Although these methods can be more energy-intensive than the conventional flotation methods commonly used in conjunction with conventional underground mining, they are known to typically yield higher KCl recovery and higher recovered KCl grade.

· It is possible that pockets of carnalite within the sylvinite may be encountered during mining that will input MgCl2 into the brine. The risk of this occurring including its effect on KCl recovery has been considered in the Scoping Study. Mg content in brine is planned to be managed by bleeding out brine from the process stream without material impact on plant performance.

Figure 6: Process Plant Layout

(image available at www.korepotash.com)

8. Infrastructure

This Scoping Study included investigation of the options available for location and methodology of the various infrastructure requirements, including:

· Method of Natural Gas Supply

· Process Plant location

· Method of MoP ground transport and storage

· Method of ship loading

· Location of marine infrastructure

· Road requirements

Based on the trade-off analysis, a combination of new and re-habilitated roads will be used for the hauling of gas (Figure 7) and product (Figure 8).  

Figure 7: Gas Transport Route

(image available at www.korepotash.com)

Figure 8: Product Transport Route

(image available at www.korepotash.com)

Upgrading of sections existing roadway to improve access to site for a product transport route has been planned. Road maintenance equipment has been included in the capital cost estimate to allow maintenance of roadways to be done by Kore. A marine trestle to facilitate trans-shipment of product will be used to load ships off the economic development zone near Pointe Indienne, utilising trucks to transport (Figure 8) product from site to a storage facility at the economic development zone.

9. Water, Gas and Power Supply

All process water requirements for processing and mining will be supplied from new water wells. Pump testing of aquifers was carried out at both the process plant and mine site in the Kola Definitive Feasibility Study and these indicated capacity in the aquifers to supply water at the required rate.

Gas will be trucked in using pressurised gas transport trailers. Power will be supplied from the CEC power station at Pointe Noire via an overhead power line.

10. Social and Environmental

The existing ESIA for the Dougou license area was approved in 2016. The company believes that a revised ESIA incorporating the Dougou Extension requirements for the sylvinite process plant and solution mine wellfield will be required.

The revised ESIA will utilise existing baseline documentation of both the Dougou ESIA and the Kola ESIA completed in 2018. The existing baseline information on the Dougou Extension area is believed to be adequate for the revised ESIA to be prepared and submitted for approval within 12 months.

A Decree D'Utilité Publique (DUP) and a Resettlement Action Plan (RAP) will be required to be developed for Longo-Bondi and possibly Youngou villages. It is unlikely that physical resettlement of any people from these villages will be required.

The mining licence for Dougou was approved on 9th May 2017 and is valid for 25 years, with an option to extend it by 15 years at that point. This mining licence covers the DX project area.

11. Operating Costs

The operating cost forecast for the Project (Table 5) has been estimated to an accuracy of approximately -15% +30%.

Table 5: Dougou Extension Project Operating Cost Estimates (CFR Africa)

The Scoping Study confirms that the operating cost of DX is highly competitive. The mine gate operating cost is estimated at US$78.85/t and the export (FOB) cost is estimated at US$82.74/t. This ranks DX costs in the lowest quartile of producers when compared to existing producers and 'committed' projects. The forecast CFR operating cost of $107.74 is based on shipping to African destinations. The operating cost estimates excludes sustaining capital.

12. Capital Costs

A capital cost estimate was factored from recent Innovare Technologies in-house data escalated to 2019, with an accuracy of -15% +30%.

The summary of the capital cost estimate (CAPEX) is shown in Table 6.

Table 6: Capital Cost estimate (real 2019)

The pre-production capital cost of US$326 million equates to a pre-production capital intensity of US$815/t MoP annual capacity.

Sustaining capital of US$153 million over the 17 years life of mine, and deferred capital of US$36 million relating to road construction, transport equipment and drill equipment, have also been allowed.

13. Financial Analysis

The base case economic evaluation delivers a real post-tax, ungeared IRR of approximately 19.3% and NPV10(real) of approximately US$221M on an attributable basis. The evaluation is based on a granular MoP price of US$360/t MoP CFR Africa (real 2019).

The key assumptions underpinning the base case economic evaluation are as follows:

· 17-year initial project life from first production based on depletion of the sylvinite;

· Approximately 400 ktpa average production of MoP;

· Granular MoP represents 100% of total MoP production and sales;

· All cashflows (Figure 9) are on a real 2019 basis;

NPVs are ungeared and calculated after-tax applying a real discount rate of 10% (based on a review of 7 recent potash projects, 4 of which were in Africa).

Figure 9: Estimated Annual Cash Flow over life of project (real 2019) 

(image available at www.korepotash.com)

Table 7: NPV 10 real Sensitivities

Table 8: Real IRR Sensitivities

Further analysis to determine effect of gearing was done and is reflected in Table 9.

Table 9: Impact of Gearing Options on Financial Indicators

14. Product Marketing

MoP produced from the Project is planned to be marketed into Africa to feed expected demand growth and displace higher cost MoP. The key targeted destination countries and their current demand for granular MoP are:

· South Africa 100,000 ktpa (100 GrMOP)

· Nigeria 400,000 ktpa (GrMOP/Blenders)

· Other West Africa 200,000 ktpa (GrMOP/ Blenders)

Note: Nigerian demand has been based on estimated demand supplied by our marketing consultant, WABCO.

15. Development Schedule

The development schedule has been based on an EPCM execution strategy with an overall execution schedule (Figure 10) of approximately 2 years from final investment decision.

Figure 10: Proposed Execution Schedule

(image available at www.korepotash.com)

16. Reasonable Basis for Funding Assumption

The Directors of Kore Potash have formed the view that there is a reasonable basis to believe that requisite future debt and equity funding for development of the DX Project will be available when required. Kore shareholders should be aware of the risk that future funding for development of the DX Project may dilute their ownership of the Company or Kore's economic interest in the Project (or the DX Project).

There are several grounds on which this reasonable basis is held:

· Kore Potash has two large strategic shareholders:

· SQM (18%): a Chilean company with a market capitalisation in excess of US$11B that is an integrated producer and distributor of specialty plant nutrients, including having an established business in the global potash market; and

· SGRF (19%): the sovereign wealth fund of Oman, which holds a range of natural resource investments, including on the African continent.

· These two groups invested a total of US$40 million into Kore Potash in late 2016. They collectively bring a considerable and highly relevant combination of substantial financial capacity, specific potash experience, Latin American, Middle Eastern and African operating experience, and financing expertise.

· The Scoping Study has been completed by a team of world-class solution mining experts in Innovare Technologies. The Scoping Study meets the expected level of detail required for a Scoping Study.

· The technical and financial parametres detailed in the Scoping Study are highly robust and economically attractive. Further improvements will be investigated in the pre-feasibility study phase of project.

· The funding for the construction of the Project would be required in approximately 2021 after completion of a further drilling and seismic investigation, and pre-feasibility and feasibility studies. The consensus around price forecasts for MoP in 2023 supports the use of a MoP granular price of US$360/t MoP granular CFR.

· Kore's options for raising the required funding may include selling down part of its interest in the Dougou Extension Solution Mining Project to a third party to form a joint venture. Introduction of a joint venture partner may also provide further comfort for potential debt project financiers and could reduce Kore's share of the equity funding requirements for the project. Kore shareholders should be aware that any sale of a joint venture interest in the project to a third party would most likely dilute Kore's economic ownership of the project.

· The Kore Potash Board and management team is highly experienced in the broader resources industry. They have played leading roles previously in the exploration and development of several large and diverse mining projects in Africa. In this regard, key Kore personnel have a demonstrated track record of success in identifying, acquiring, defining, funding, developing and operating quality mineral assets of significant scale.

17. Key Risks and Opportunities

Some key risks in the Scoping Study, which will be areas of focus in the pre-feasibility study, are:

· Geology: Resource may contain lower KCl quantity or grade than expected or higher than expected presence of carnallite. An additional drilling campaign and a 2D seismic investigation to improve confidence in the resource and better define sylvinite/carnallitite interfaces will be required in pre-feasibility study.

· Geotechnical: Cavern stability and surface subsidence will require geo-technical modelling in pre-feasibility study.

· Mining: The mine design in the Scoping Study was based on assumptions around normal dissolution rates applicable to the potash industry for selective dissolution and these will require test work to confirm the assumptions in the pre-feasibility study.

· Execution: The current execution schedule is a Level 1 schedule and will need to be further detailed in pre-feasibility study to ensure impacts and long lead items are detailed in the next level of schedule.

18. Next Steps

Work on the optimisation of Kola continues with the French Consortium and the company expects to update shareholders further within the next 2 months.

Kore also intends to progress work to define the technical and commercial feasibility of solution mining of the DX deposit.

The next planned phases of work on the DX project which are expected to take place over a 9-month duration from commencement include:

· A 2-dimensional seismic survey campaign primarily designed to improve delineation of the sylvinite /carnallitite interface within the two seams.

· A diamond drill hole programme to drill 4 holes to improve overall understanding of the Deposit.

· Studies required to achieve pre-feasibility level assessment of:

· Marine loading and transport options.

· Cavern formation.

· Test work to improve understanding on the operational control of dissolution in the DX seams.

Work is underway to prepare for commencement of the seismic surveys and drilling which will account for the bulk of the spend in the planned work programme. The Company intends to commence these works as soon as possible.

The Company believes that successful completion of these work streams will provide sufficient basis for a pre-feasibility level assessment of DX solution mining.

- ENDS -

www.korepotash.com

Appendix A: Competent Persons Statement

The information relating to Exploration Results and Mineral Resources in this report is based on, or extracted from previous reports referred to herein, and available to view on the Company's website www.korepotash.com. The Dougou Extension sylvinite Mineral Resource Estimate was reported on 20 August 2018 in an announcement titled 'Maiden Sylvinite Mineral Resource at Dougou Extension'. Kore Potash confirms that it is not aware of any new information or data that would materially affect the information included in that announcement and that all material assumptions and technical parametres underpinning the Mineral Resource estimates in that 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 in this report have not been materially modified from the original market announcement.

Innovare Technologies, John Mc Ewan, Sandy Debusschere, and Max Ramey are not associates or affiliates of Kore Potash or any of its affiliates. Innovare Technologies will receive a fee for the preparation of the Report in accordance with normal professional consulting practices. This fee is not contingent on the conclusions of the Report and Innovare Technologies, John McEwan, Sandy Debusschere, and Max Ramey will receive no other benefit for the preparation of the Report. John McEwan, Sandy Debusschere, and Max Ramey do not have any pecuniary or other interests that could reasonably be regarded as capable of affecting their ability to provide an unbiased opinion in relation to the Dougou Extension Potash Project. Innovare Technologies does not have, at the date of the Report, and has not had within the previous years, any shareholding in or other relationship with Kore Potash or the Dougou Extension Potash Project and consequently considers itself to be independent of Kore Potash.

Max Ramey is a registered member in good standing (Member # 2632850RM) of Society for Mining, Metallurgy and Exploration (SME) which is recognised and accepted under the JORC Code. John McEwan is a senior member in good standing (Member # 900062459) of American Institute of Chemical Engineers (AIChE). John McEwan and Max Ramey both have sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the JORC Code. Sandy Debusschere has over 40 years of drilling experience. John McEwan, Sandy Debusschere, and Max Ramey consent to the inclusion in the Report of the matters based on their information in the form and context in which it appears.

Appendix B: Material Assumptions

No Ore Reserve has been declared. This combined AIM/JSE/ASX release has been prepared in compliance with the current JORC Code (2012) and the ASX Listing Rules. All material assumptions, including consideration of the "modifying factors" under the JORC Code, on which the Scoping Study production target estimates and forecast financial information are based have been included in this release and are disclosed in the table below.

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