Kore Potash Regulatory News (KP2)

29 March 2019

Kore Potash Plc

("Kore Potash" or the "Company")

AUDITED FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018

The Board of Kore Potash plc is pleased to announce the publication of the annual financial report of the Company, the potash exploration and development Group, whose flagship asset is the Sintoukola Potash Project, located within the RoC, for the year ended 31 December 2018.

The full financial report is available online at the Company's website www.korepotash.com

A Glossary of Terms is available at the bottom of this announcement.

Summary of key developments

· On 9 February 2018, the Company through its subsidiary, SPSA, was awarded the Sintoukola 2 Exploration Permit by the government of the RoC. This permit covers areas the Company believes are prospective for sylvinite mineralisation, and is valid for three years, following which it may be renewed twice, each time for a further period of two years.

· On 29 March 2018, Kore Potash completed its listing on AIM as well as the main board of the JSE, in addition to retaining its ASX listing.

· USD 13.14 million was raised through the placing and direct subscription of new ordinary shares in the Company and through a convertible loan note which was subsequently converted into ordinary shares in the Company on 27 July 2018.

· Appointment of Mr José Antonio Merino as a Non-Executive Director on 23 May 2018. José Antonio was nominated by SQM and replaced Pablo Altimiras, whose resignation was announced on 26 April 2018.

· Appointment of Mr Brad Sampson as CEO and Executive Director, effective from 4 June 2018, replacing Mr Sean Bennett, who resigned with effect from the same date.

· On 20 August 2018, a maiden Mineral Resource Estimate for the Dougou Extension Deposit was announced, totalling 232 Mt with an average grade of 38.1% KCl. The Dougou Extension Deposit is located approximately 15 km southwest of the Company's Kola sylvinite Deposit. The Mineral Resource Estimate was reported in accordance with the JORC Code.

· On 30 August 2018, a new DUP, which was previously signed by the Ministry of Land Affairs and Public Domain, was gazetted. The DUP covers the entire Project land area and provides the framework of compensation arrangements required under RoC laws due to the Group's intended activity on the land area.

· A licence to use an offshore area for the transhipment of potash and the discharge of waste brine was authorised by the Minister of Transport, Civil Aviation and Merchant Marine of the RoC and issued on 6 September 2018.

· On 21 November 2018 Kore Potash announced two Exploration Targets for sylvinite. The Exploration Targets were reported in accordance with the JORC Code and are as follows:

o Kola South; the potential southward extension of the Kola deposit has an Exploration Target of 95 to 175 Mt with an average grade of between 34 and 42% KCl.

o Dougou Extension North; the potential northward extension of the Dougou Extension Deposit has an Exploration Target of 320 to 600 Mt with an average grade of between 30 and 38% KCl.

The potential quantity and grade of an Exploration Target is conceptual in nature and is an approximation. There has been insufficient exploration at Kola South and Dougou Extension North to estimate Mineral Resources and it is uncertain if further exploration will result in the estimation of Mineral Resources.

· The Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licenses was gazetted into law on 29 November 2018 following ratification by the Parliament of the RoC.

· The Company completed its review of the Kola DFS and released a summary of results to Shareholders on 29 January 2019. This included the reporting of:

o Proved and Probable Ore Reserves for the Kola Deposit totalling 152.4Mt with an average grade of 32.5% KCl.

o Post-tax, NPV10 (real) of USD 1,452 million and a real ungeared Internal Rate of Return of 17% on an attributable basis at life-of-mine average MoP prices for granular of USD 360 per tonne CFR Brazil and standard of USD 350 per tonne CFR Brazil.

Further details of the summary of the Kola DFS is available on the Company's website.

· The FC who undertook the DFS was contracted to provide the Company with an EPC proposal, for the construction of Kola, within 3 months of the completion of the DFS. The FC submitted the EPC proposal to the Company on 23 March 2019, which was past the due date of 28 February 2019. The Company will now review the options available to it for the way forward with the Kola Project.

· The amended Kola ESIA was completed and submitted to the regulator for review prior to submission to the Minister of Environment for approval.

Summary of financials

· During the year ended 31 December 2018, the Group incurred a loss of USD 6.3 million and experienced net cash outflows from operating and investing activities of USD 23.1 million. Cash and cash equivalents totalled USD 6.2 million as at 31 December 2018.

· The Directors have prepared a cash flow forecast for the period ending 31 December 2020, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period, primarily being corporate costs, exploration expenditure, and DFS costs related to the Kola Project. Please refer to the Note 1 to the financial statements for more detail on the going concern statement.

· Accordingly the Directors have resolved to undertake certain mitigating actions including a capital raise in the second quarter of 2019. The Company has begun discussions with its major shareholders with regards to its near and mid-term funding requirements.

Brad Sampson, Chief Executive Officer of Kore Potash commented:

"I joined as Chief Executive of Kore Potash for one fundamental reason - the extremely high quality of the assets in the Sintoukola basin and the potential to bring an entirely new, globally significant potash district into production.

I firmly believe that this a project that needs to be built, a combination of our high grade, shallow depth, and proximity to the coast means that we can produce MOP at, or amongst, the lowest operating costs anywhere in the world. Combined with the huge size of the resource this means that the basin can supply an increasing global demand for fertiliser for decades, and longer, to come.

I know that our shareholders, the government of the Republic of Congo, and our local communities wholeheartedly share the Company's ambition to see Sintoukola in production as soon as it is possible and I look forward to updating all stakeholders on our progress. While there is still a significant amount of work ahead I am confident that we will achieve our goals."

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

Corporate activities

· On 29 March 2018 the Company successfully completed its admission to AIM and a concurrent secondary listing of its ordinary shares on the main board of the JSE as part of its strategy to better access capital markets where there is a strong understanding of large scale African mining projects and therefore attract a broader investor base.

· The Company also raised gross aggregate proceeds of USD 12.89 million, comprising a total of USD 12.89 million from the Placees through the placing and direct subscription of 83,523,344 ordinary shares in the Company at a placing price of AUD 0.20 per new Ordinary Share. In addition, the Company raised USD 250,000 from the Chairman, Mr David Hathorn, through a convertible loan note that subsequently converted into ordinary shares upon shareholder approval at the AGM of the Company held on 27 June 2018. The Placees and the Chairman were granted 13,144,659 equity warrants on the basis of one equity warrant for every USD 1.00 invested exercisable at AUD 0.30 for one ordinary share with a 3 year subscription period.

· Brad Sampson was appointed as CEO and Executive Director on 4 June 2018. Brad, a mining engineer, has more than 25 years' resources industry experience across numerous locations including West and Southern Africa. In addition to significant mine development and operating experience, Brad has held leadership positions at several publicly listed companies. Brad was most recently CEO of Australian Securities Exchange listed Tiger Resources. Prior to this Brad held senior positions at Newcrest Mining Ltd and was CEO at AIM/ASX listed Discovery Metals Ltd. Other notable positions include General Manager at Goldfields operations in South Africa and Australia.

· Appointment of José Antonio Merino as a Non-Executive Director nominated by SQM. José Antonio joined SQM in 2016 and is currently Mergers and Acquisitions Director, prior to which he worked at EPG partners as head of a mining private equity fund, at Asset Chile, a Chilean boutique investment bank and at Santander Investment. He is a qualified civil engineer having graduated from Pontificia Universidad Catolica de Chile.

· Appointment of SJCS, a London based specialist company secretarial and corporate administration services provider, as interim joint company secretary with effect from 1 October 2018. SJCS joins current Joint Company Secretary, Henko Vos (based in Perth, Western Australia). The Board received and accepted the resignation of Francesca Wilson as Joint Company Secretary of the Company with effect from 30 September 2018.

Operational and exploration activity

Kola Sylvinite Project

Mining Convention

· The Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licenses was gazetted into law on 29 November 2018 following ratification by the Parliament of the RoC. The gazetting of the Mining Convention provides security of title and the right to develop and operate the Kola Project as well as the adjacent Dougou and Dougou Extension deposits. Under the Mining Convention the RoC government will be granted a 10% carried equity interest in the project companies (DPM and KPM, which are wholly owned by SPSA).

· The Mining Convention concludes the framework envisaged in the 25-year renewable Kola and Dougou Mining Licences granted in August 2013 and May 2017, respectively. The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the development and operation of Kola and Dougou Mining Licenses, which amongst other items include import duty and VAT exemptions and agreed tax rates during mine operations. See Note 7 to the financial statements for further details on the terms and conditions of the Mining Convention.

· The Mining Convention provides strengthened legal protection of the Company's investments in the RoC through the settlement of disputes by international arbitration.

ESIA

· The Kola ESIA was performed during 2012 and approved on 10 October 2013 following the issuance of the certificate of environmental compliance by the Minister of Environment of the RoC. This constituted a key regulatory requirement to be granted the Kola Mining License.

· The Kola DFS design has incorporated a number of value-adding design changes since the approval of the ESIA and the Company has undertaken to amend the ESIA accordingly.

· In December 2018, the amended ESIA was submitted to the regulator for review, prior to the Minister of Environment's final approval. The Company anticipates receipt of the approved amended ESIA in H1 2019.

DFS Update

· The Company completed its review of the Kola DFS and released a summary of results to Shareholders on 29 January 2019. As part of the DFS, Met-Chem, a division of DRA Americas Inc., (a subsidiary of the DRA Group) completed an Ore Reserve Estimate for the Kola Sylvinite Deposit. The Ore Reserves total 152.4 Mt with average grade of 32.5% KCl. The estimate of Ore Reserves was completed by Met-Chem DRA Global and was prepared in accordance with the JORC Code. Table 1 on page 13 provides the Proved and Probable Kola Sylvinite Ore Reserves. Further details of the summary of the Kola DFS is available on the Company's website.

· The announcement made on 29 January 2019, which is available on the Company's website, included the following highlights from the Kola DFS:

Business case highlights potential of the Kola asset

o Post-tax, NPV10 (real) of USD 1,452 million and a real ungeared Internal Rate of Return of 17% on an attributable basis at life-of-mine average MoP prices for granular of USD 360 per tonne CFR Brazil and standard of USD 350 per tonne CFR Brazil.

o Operating cash margin averaging 75%.

o Average annual EBITDA of approximately USD 585 million.

o 24% annual free cash return on invested capital.

o Average annual free cash flow, post-tax, post commissioning of approximately USD 500 million.

o 4.3-year post-tax payback period from first production.

Industry leading operating costs and cost of sales

o Mine gate operating cost (pre-transshipment) averaging USD 61.71 per tonne, which is in the lowest cost quartile globally based on equivalent CRU market data.

o Kola forecast to be the lowest cost potash supplier CFR Brazil based on CRU market data.

o Average cost of MoP delivered to Brazil of USD 102.47 per tonne.

Long life and high quality asset

o Nameplate production target of 2.2 Mtpa MoP over a 33 year life, with a scheduled life of 23 years based primarily on Ore Reserves and including 6% Inferred Mineral Resource and a further 10 years based entirely on Inferred Mineral Resources (in each case, reported in accordance with the JORC Code).

o There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resource or that the production target itself will be realised.

o Kola Project Ore Reserves of 152.4 Mt with average KCl grade of 32.5%, reported in accordance with the JORC Code.

Capital program aligned with industry averages

o Pre-production capital cost of USD 2.1 billion (on EPCM basis) which includes USD 110 million contingency, USD 106 million of escalation and USD 89 million EPCM margin.

o Pre-production capital intensity of USD 956 per tonne MoP annual capacity is in second quartile relative to MoP industry peers and suggests that further capital optimisation is possible.

o 46-month construction period, with a commencement date to be determined following advancement of construction contract negotiations and project financing.

Upside potential

o Review of the DFS by Kore and its third party independent consultants have identified opportunities to further improve and optimise the project indicating that the work completed to date by the FC has not fully optimised the Kola Project.

o Due to high operating margin and high free cash return on invested capital the Company's financial advisors (Rothschild & Co) has indicated that the project has a debt carrying potential of up to USD 1.4 billion.

· The FC was contracted to provide the Company with an EPC proposal, for the construction of Kola, within 3 months of the completion of the DFS. The FC submitted the EPC proposal to the Company on 23 March 2019, which was past the due date of 28 February 2019. The Company will now review the options available to it for the way forward with the Kola Project.

Workstreams initiated with RoC stakeholders and authorities

· On 30 August 2018, a new DUP, which was previously signed by the Ministry of Land Affairs and Public Domain, was gazetted. The DUP covers the entire Project land area (mine, over land conveyor, process plant and services corridors) provides the framework of compensation arrangements required under RoC laws due to the Group's activity on the land area.

· On 12 September 2018, the Company announced final approval from the Minister of Transport, Civil Aviation and Merchant Marine for the use of the preferred transhipment zone. This confirms the design assumption on the transhipment arrangement in accordance with the Kola DFS design and costing.

· On 16 October 2018, the Company received a letter of comfort from the Ministry of Energy and Hydraulic of the RoC confirming the Company's exclusive rights to operating the power transmission line when financed and built by the Company for the mining project.

Exploration

Dougou Extension maiden Mineral Resource

Based on the drilling completed in 2017 and interpretation of earlier drilling and seismic survey data the Company declared a maiden Mineral Resource Estimate for the Dougou Extension Deposit, first reported on 20 August 2018 and reported in accordance with the JORC Code.

Total sylvinite Mineral Resources at Dougou Extension are 232 Mt of sylvinite grading 38.1% KCl, comprised of:

· Indicated Mineral Resource of 111 Mt sylvinite grading 37.2% KCl, and

· Inferred Mineral Resource of 121 Mt sylvinite grading 38.9 %KCl.

The sylvinite at Dougou Extension is contained within two seams, the Top Seam (TS) and the Hangingwall Seam (HWS), separated by between 10 and 15 m of rock-salt. The seams are at a depth of between 310 metres and 490 metres below surface. The Mineral Resource Estimate was based upon data for 13 holes within or around the deposit area, drilled by Kore or previous explorers. The interpretation of approximately 160 line km of oil-industry 2D seismic survey data aided modelling of surfaces between the drill-holes. Table 1 includes the Mineral Resource Estimate for Dougou Extension.

Exploration Targets at Dougou Extension North and Kola South

On 20 November 2018, the Company announced Exploration Targets for sylvinite, as follows:

o 'Kola South', the potential southward extension to the Kola Deposit; 95 to 175 Mt with average grade of between 34 and 42% KCl,

o 'Dougou Extension North', the potential northward extension to the Dougou Extension Deposit; 320 to 600 Mt with an average grade of between 30 and 38% KCl,

An Exploration Target is not a Mineral Resource but a statement of exploration potential. The Exploration Targets were based on an interpretation of all available Company and historical drilling and 2D seismic survey data and the Company's understanding of the controls on sylvinite mineralisation.

Changes to Potash Mineral Resources and Ore Reserves between 2017 and 2018

Table 1 provides a comparison of the Company's Mineral Resources and Ore Reserves, year-on-year between 2017 and 2018, as per ASX Listing rule 5.21.4. Since 2017 the Company has added the Dougou Extension sylvinite Mineral Resource and the Kola deposit sylvinite Ore Reserves.

Table 1. Comparison of Potash Mineral Resources and Ore Reserves year-on-year between 2017 and 2018 (including Ore Reserves as announced on 29 January 2019)

Notes: 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 the Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group. The Ore Reserve Estimate for Kola was first reported 29 January 2019 in an announcement titled 'Kola Definitive Feasibility Study' and was prepared by Met-Chem. The Dougou carnallite Mineral Resource Estimate was reported 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 ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH. The Dougou Extension sylvinite Mineral Resource Estimate was reported 20 August 2018 in an announcement titled 'Maiden Sylvinite Mineral Resource at Dougou Extension'. It was prepared by Competent Person Mr. Andrew Pedley a full-time employee of Kore Potash.

New Exploration Permit

SPSA was awarded a new Exploration Licence, Sintoukola 2, by Presidential Decree 2018-34 dated 9 February 2018 granting exploration rights for 3 years which can be renewed twice for periods of 2 years each, covering an area of 294.4km2 adjoining the Dougou Mining Lease, covering prospective ground for sylvinite to the northwest of the latter.

Figure1. Location of the Sintoukola Project showing the Kola, Dougou and Dougou Extension Projects(image available in full report at www.korepotash.com)

Competent person statement

The information relating to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves in this report is based on, or extracted from previous reports referred to herein, and is available to view on the Company's website www.korepotash.com The Kola Mineral Resource Estimate was reported on 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 on 29 January 2019 in an announcement titled 'Kola Definitive Feasibility Study' and was prepared by Met-Chem; the Competent Person for the estimate is Mr. 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 was reported on 20 August 2018 in an announcement titled 'Maiden Sylvinite Mineral Resource at Dougou Extension'. It was prepared by Competent Person Mr. Andrew Pedley a full-time employee of Kore Potash, a registered professional natural scientist with the South African Council for Natural Scientific Professions and member of the Geological Society of South Africa. The Company confirms 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.

Business model

The Company's business strategy for the financial year ahead and, in the foreseeable future, is to continue exploration and development activities on the Company's existing potash mineral projects in the RoC. The Company's current activities do not generate any revenues or positive operating cash flow. Future development necessary to commence production will require significant capital expenditures.

Position and principal risks

The Company's business strategy is subject to numerous risks, some outside the Board's and management's control. These risks can be specific to the Company, generic to the mining industry and generic to the stock market as a whole. The key risks, expressed in summary form, affecting the Group and its future performance include but are not limited to:

o capital requirement and ability to attract future funding;

o country risk in Republic of Congo;

o change in potash commodity prices and market conditions;

o geological and technical risk posed to exploration and commercial exploitation success;

o environmental and occupational health and safety risks;

o government policy changes; and

o retention of key staff.

This is not an exhaustive list of risks faced by the Company or an investment in it. There are other risks generic to the stock market and the world economy as a whole and other risks generic to the mining industry, all of which can impact on the Company. The management of risks is integrated into the development of the Company's strategic and business plans and is reviewed and monitored regularly by the Board. Further details on how the Company monitors, manages and mitigates these risks are included as part of the Audit and Risk Committee Report contained within the Corporate Governance Report.

Key Performance Indicators

Given the nature of the business and that the Group is in an exploration and development phase of operations, the Directors are of the opinion that analysis using KPIs is not appropriate for an understanding of the development, performance or position of our businesses at this time.

Forward-looking statements

This report contains statements that are "forward-looking". Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-looking statements. By their very nature and whilst there is a reasonable basis for making such statements regarding the proposed placement described herein; 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 report regarding the Company's business or proposed business, which are not historical facts, are "forward looking" statements that involve risks and uncertainties, such as resource estimates 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.

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

The accompanying notes from pages 72 to 128 form part of these financial statements.

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

The accompanying notes from pages 72 to 128 form part of these financial statements.

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

The accompanying notes from pages 72 to 128 form part of these financial statements.

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

The accompanying notes from pages 72 to 128 form part of these financial statements.

STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2018

The accompanying notes from pages 72 to 128 form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company is a public company incorporated and registered in England and Wales with primary dual listing on the AIM market and on the ASX, and a secondary listing on the JSE. The consolidated financial statements of the Company as at and for the year ended 31 December 2018 comprise the Company and its subsidiaries which are disclosed in Note 8 (together referred to as the "Group"). The Group is involved in mining exploration activity in the RoC.

On 31 August 2017, Kore Potash Limited announced that it proposed to re-domicile in the United Kingdom by way of a scheme of arrangement (Scheme) between Kore Potash Limited and its shareholders. The Scheme was approved by the shareholders on 27 October 2017 and the Federal Court of Australia on 6 November 2017. On 20 November 2017, the Scheme was implemented and as a result the Company is the new parent and Kore Potash Limited is the wholly-owned subsidiary of the Company.

The registered office of Kore Potash plc's head office in the United Kingdom is 25 Moorgate, London, United Kingdom EC2R 6AY. The registered office Kore Potash Limited in Australia is Level 3, 88 William Street, Perth 6000 WA.

Basis of Preparation

(a) Statement of Compliance

The annual financial statements of the Company and the Group have been prepared in accordance with IFRS as adopted by the European Union. The principal accounting policies adopted by the Group and Company are set out below.

The financial statements were authorised for issue by the Directors on 28 March 2019.

(b) Going Concern

During the year ended 31 December 2018, the Group incurred a loss of USD 6,269,366 (2017: USD 4,344,322) and experienced net cash outflows from operating and investing activities of USD 23,098,170 (2017: USD 33,024,083). Cash and cash equivalents totaled USD 6,187,113 as at 31 December 2018 (USD 16,455,490 as at 31 December 2017). The Group has no current source of operating revenue and is therefore dependent on both existing cash resources and future fund raisings to meet overheads and future exploration requirements as they fall due.

The Directors have prepared a cash flow forecast for the period ending 31 December 2020, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period, primarily being corporate costs, exploration expenditure, and costs related to the Kola Project. Forecast costs in the next 12 months are approximately USD 10 million. However, a significant portion of this cost base is not yet committed, pending completion of the fund raise, and further steps can therefore be taken to reduce forecast overheads if required.

The Directors have therefore considered mitigating actions, which include:

(a) completion of a capital raising; and

(b) managing and deferring costs where applicable to coincide with the capital raising activity outlined above to ensure all obligations can be met.

The Directors are planning to raise additional capital in quarter 2 of 2019 to enable the Group to continue to fund its exploration and development programme and fulfill its working capital requirements. The Directors have identified a number of funding options available to the Group, and have begun discussions with its major shareholders with regards to its near and mid-term funding requirements. The Directors note the Group has a history of successfully raising capital on the ASX and more recently on the AIM and JSE.

The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that there are reasonable grounds to believe that funding will be secured and therefore that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due.

(b) Going Concern (Cont)

The ability of the Group to continue as a going concern is dependent on achieving the matters set out above. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

(c) Basis of Measurement

The consolidated financial statements have been prepared on the basis of historical cost, adjusted for the treatment of certain financial instruments, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

· Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

· Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

· Level 3 inputs are unobservable inputs for the asset or liability.

(d) Functional and Presentation Currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates. The functional currency of the ultimate parent entity (Kore Potash plc) is US dollars. The functional currency of the subsidiaries are:

· Kore Potash Limited - US dollars (USD)

· Sintoukola Potash S.A. - CFA Franc BEAC (XAF)

· Dougou Mining S.A. - CFA Franc BEAC (XAF)

· Kola Mining S.A. - CFA Franc BEAC (XAF)

· Kore Potash South Africa (Pty) Ltd - South African RAND (ZAR)

The presentational currency of the Group is US dollars.

(e) Foreign Currency Transactions and Balances

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Where consideration is received in advance of revenue being recognised the date of the transaction reflects the date the consideration is received. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.

All differences in the consolidated financial report are taken to the Statement of Profit or Loss and Other Comprehensive Income.

(e) Foreign Currency Transactions and Balances (Cont)

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date the fair value was determined.

As at the reporting date, the assets and liabilities of the foreign subsidiaries are translated into the reporting currency of the Company at the rate of exchange ruling at the reporting date and the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income are translated at the weighted average exchange rates for the period. The exchange differences on the retranslation are taken directly to a separate component of equity.

On disposal of a foreign entity, the deferred cumulative amount recognised in equity is recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. The functional currency for Sintoukola is expected to change to US dollars upon the commencement of mining.

(f) Basis of Consolidation

Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

Control is achieved when the Company:

· has power over the investee;

· is exposed, or has rights, to variable returns from its involvement with the investee; and

· has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group, other than in the event of a Group re-organisation as occurred during the year as described below.

The acquisition of Kore Potash Limited by the Company on 20 November 2017 is considered outside the scope of IFRS 3 Business Combinations and accordingly has been accounted for as a common control transaction. The investment in Kore Potash Limited acquired by the Company as a result of the internal reorganisation was recognised at a value consistent with the carrying value of the equity items in the Kore Potash Limited accounts immediately prior to the Scheme. In the Parent entity, the difference between the carrying amount of share capital and options issued by the Company under the Scheme and the investment in Kore Potash Limited has been recognised in a Reorganisation Reserve.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-Group transactions have been eliminated in full.

The acquisition of subsidiaries has been accounted for using the purchase method of accounting, other than in the Group re-organisation described above. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their acquisition.

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated Statement of Profit or Loss and Other Comprehensive Income and within equity in the consolidated Statement of Financial Position.

In the Company's financial statements, investments in subsidiaries are carried at cost. A list of controlled entities is contained in Note 8 to the financial statements.

(g) Income Tax

The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income except where it relates to items that are recognised directly in equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(h) Property, Plant and Equipment

Property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.

The carrying amount of property, plant and equipment is reviewed at each reporting date to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal.

Depreciation

The depreciable amount of all fixed assets is depreciated on a straight line basis over their estimated useful lives to the Group commencing from the time the asset is held ready for use. The depreciation rates used for the plant and equipment is in the range of 20% - 40%. The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Depreciation of property, plant and equipment in SPSA is included in Capitalised Exploration and Evaluation Expenditure.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(i) Financial Instruments

Financial assets and financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provisions of the instrument. See Note 1(m) for further details on the recognition and measurement of trade and other receivables and cash and cash equivalents.

(i) Financial Assets

Investments other than investments in subsidiaries are classified as either held-for-trading or not at initial recognition. At the year-end date all investments are classified as not held for trading. An irrevocable election has been made to recognise changes in fair value in other comprehensive income.

Trade and other receivables are initially measured at fair value plus any direct attributable transaction costs. Subsequent to initial recognition, trade and other receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Trade receivables are held in order to collect the contractual cash flows and are initially measured at the transaction price as defined in IFRS 15, as the contracts of the Group do not contain significant financing components. Impairment losses are recognised based on lifetime expected credit losses in profit or loss.

Other receivables are held in order to collect the contractual cash flows and accordingly are measured at initial recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment due to their short term nature. A provision for impairment is established based on 12-month expected credit losses unless there has been a significant increase in credit risk when lifetime expected credit losses are recognised. The amount of any provision is recognised in profit or loss.

(ii) Financial Liabilities and Equity

Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

All other loans including convertible loan notes are initially recorded at fair value, which is ordinarily equal to the proceeds received net of transaction costs. These liabilities are subsequently measured at amortised cost, using the effective interest rate method.

(iii) Effective Interest Rate Method

The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

(j) Impairment of Non-Financial Assets Other Than Exploration and Evaluation Assets

The carrying amounts of the Group's non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exist. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.

(k) Revenue Recognition

Revenue is measured at the transaction price received or receivable allocated to the performance obligation satisfied and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT, GST and other sales related taxes. As the expected period between transfer of a promised good or service and payment from the customer is one year or less then no adjustment for a financing component has been made.

Sales of goods are recognised when goods are delivered and control has passed.

Revenue arising from the provision of services is recognised when and to the extent that the customer simultaneously receives and consumes the benefits of the Group's performance or the Group does not create an asset with an alternative use but has an enforceable right to payment for performance completed to date.

Interest income is recognised in the Statement of Profit or Loss and Other Comprehensive Income using the effective interest method.

(l) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the entity prior to the end of the financial year and which are unpaid. Trade and other payables are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, trade and other payables are measured at amortised cost using the effective interest rate method.

(m) Cash and Cash Equivalents

For purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value.

(n) Fair Value Estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the entity is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the entity for similar financial instruments.

(o) Value-Added Tax ("VAT") / Goods and Services Tax ("GST")

Revenues, expenses and assets are recognised net of the amount of VAT / GST, except where the amount of VAT / GST incurred is not recoverable from the relevant jurisdiction's Tax Office. In these circumstances the VAT / GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of VAT / GST.

Cash flows are presented in the Statement of Cash Flow on a gross basis, except for the VAT / GST component of investing and financing activities, which are disclosed as operating cash flows.

(p) Capitalisation of Exploration and Evaluation Expenditure

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied:

· the rights to tenure of the area of interest are current; and

· at least one of the following conditions is also met:

o the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or

o exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount at the reporting date. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is assessed for impairment and the balance is classified as a development asset. The point at which an area of interest is considered developmental is based on finalisation of a definitive feasibility study, a bankable feasibility study and the finalisation of appropriate funding.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining or petroleum permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(q) Share Based Payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value grant rate is independently determined using the different option pricing models that takes into account the exercise price, the term of the option, the market and non-market based vesting and performance criteria, the impact of dilution, the tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity.

When share options and performance rights are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

(r) Employee Benefits

(i) Wages, salaries and annual leave

Liabilities for wages, salaries and annual leave are recognised in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

(ii) Pension contributions

Contributions are made by the Group to pension funds as stipulated by statutory requirements and are charged as expenses when incurred.

(iii) Employee benefit on costs

Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs when the employee benefits to which they relate are recognised as liabilities.

(s) Earnings per Share

(i) Basic earnings per share

Basic earnings per share is determined by dividing the net profit after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

(t) Issued Capital

Ordinary shares and CDIs are classified as equity.

Costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Costs directly attributable to the issue of new shares or options incurred in connection with a business combination, are included in the cost of the acquisition as part of the purchase consideration.

(u) Critical Accounting Judgements and Estimates

In the application of the Group's accounting policies, which are described in this note, the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas involving significant accounting judgment are set out in the tables below:

(u) Critical Accounting Judgements and Estimates (Cont)

(v) Assumptions and Estimation Uncertainties

Information about assumptions and estimation uncertainties at 31 December 2018 that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities are set out in the table below.

(w) Segment Reporting

Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors, which is responsible for allocating resources and assessing performance of the operating segments.

(x) New and Revised Accounting Standards and Interpretations Adopted

From 1 January 2018 the following standards and amendments are effective in the Group's financial statements:

· IFRS 9 Financial instruments; and

· IFRS 15 Revenue from contracts with customers.

The impact of adoption of these standards and the key changes to the accounting policies are disclosed below. Other amendments to IFRSs that became effective for the period beginning on 1 January 2018 did not have any impact on the Group's accounting policies.

(y) New and Revised Accounting Standards and Interpretations on Issue but not yet Adopted

Certain new accounting standards and interpretations have been published that are not mandatory for the 31 December 2018 reporting period. Those which may have a significant impact to the Group are set out below. The Group does not plan to adopt these standards early.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Total staff costs for the Group in the year ended 31 December 2018 were USD 2,279,499 (2017: USD 3,433,660). The staff costs incurred during the year at a subsidiary, SPSA, of USD 1,869,975 has been capitalised as Exploration and Exploration Asset (2017: USD 2,714,279).

The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in the financial statements as follows:

The statutory tax rate of Kore Potash plc is 19% (2017: 19.25%), representing the UK corporation tax rate. The Group is subject to varying statutory rates, primarily being Australia (30%), Congo (see Note 7 regarding corporate tax concessions applicable under the new mining convention) and South Africa (28%). The current tax expense of USD 17,039 (2017: USD 42,969) arose on the pre-tax income generated in South Africa for intercompany management services.

No deferred tax has been recognised in respect of the Group's tax losses of USD 11,499,637 (2017: USD 9,189,501) that are available for offset against any future taxable profits in the companies in which the losses arose. Of these tax losses, USD 10,801,215 arose from the Australian entity and USD 698,422 arose from the parent entity (2017: USD 9,178,133 from the Australian entity and USD 11,368 from the parent entity).

The tax losses which arose from the Australian entity can be carried forward indefinitely to be offset against future years' profits. A deduction for prior years' losses will be denied where the Company cannot satisfy a 'continuity of ownership' test or, failing this, the alternative 'same business test'.

With effect from 1 April 2017, new tax legislation has been introduced in the UK with regard to the use of brought forward tax losses. The impact of these rules means that the tax treatment of brought forward losses may be different for losses arising before and after 1 April 2017. The majority of the tax losses which arose from the Parent entity arose after 1 April 2017, and therefore there is a potential restriction on how much these can be used to offset against any future years' profits. Generally, the amount of profit which can be offset against losses carried forward is restricted to 50% of the amount of profits in excess of GBP 5 million. Profits under the annual GBP 5 million group deduction allowance can be offset by losses in full. Where a company is in a group the USD 5 million allowance will apply to the group. Based on the Parent entity's current income tax position the majority of its tax losses can be offset against any future income in the Parent, or can be group relieved.

Deferred tax assets have not been recognised in respect of the losses arising from the Australian entity or the parent entity due to the uncertainty around timing of generating sufficient taxable profits in future to utilise the losses. These losses may also not be utilised to offset taxable profits elsewhere in the group

The amount due to a subsidiary is interest-free and is repayable on demand.