Last checked at 31 Jul 2019 07:00
31 July 2019
Kore Potash Plc
("Kore Potash" or the "Company")
Review of Operations for the Quarter Ended 30 June 2019
Kore Potash, the potash exploration and development company whose flagship asset is the 97%-owned Sintoukola Potash Project ("Kola" or the "Project"), located within the Republic of Congo ("RoC"), provides the following quarterly update, for the period to 30 June 2019 (the "Quarter").
Corporate Activities
·; At 30 June 2019, the Company held USD 1.7 million cash at bank.
·; On 19 July 2019, an additional USD 13.1 million was raised through the placing and direct subscription of new ordinary shares in the Company.
Operational activities
Dougou Extension Sylvinite Scoping Study
·; During the quarter, the Company finalised planning for a Pre-feasibility Study (PFS) on the DX project. The PFS work programme includes a 2D seismic survey, a 4-hole, diamond drill programme and a series of technical studies that collectively should satisfy the requirements for a pre-feasibility study. The prefeasibility study is scheduled for completion in Q1 2020.
The Kola Potash Project
·; The Company continued discussions with the French consortium of engineering companies ("FC") to explore options to reduce the capital cost and shorten the construction schedule for Kola.
·; In July 2019, the Company received a proposal from the FC that identifies opportunity to reduce the capital cost of the Kola project by $415M below that indicated in the Kola Definitive Feasibility Study.
·; Kola project optimisation discussions are planned to continue with the FC through the next quarter.
·; The Company invited a number of international engineering and construction companies to provide pricing against the bills of quantities for the Kola project. It is anticipated that this pricing information will be received by the Company in the quarter ahead. Receipt of this competitive pricing information forms part of the Company's plan for capital optimisation of the Kola project.
Environmental and social impact assessment for Kola ("ESIA")
·; The regulator in the Republic of the Congo previously requested the Company to reformat the amended Kola ESIA document. No further technical studies or report content are required. During the quarter, further discussions with the regulator took place to clarify their requirements and the amended Kola ESIA is now planned to be submitted for approval in Q3 2019.
Mining Convention and Research Convention
·; The Company continues to engage with the RoC Government on the implementation of commitments contained within the Mining Convention. This includes the intra-group transfer of the Dougou Mining License from Sintoukola Potash S.A. to the operating entity Dougou Potash Mining S.A. and the transfer of a 10% shareholding in Kola Potash Mining S.A. and Dougou Potash Mining S.A. to the State.
·; The Company further progressed discussion with the Government on terms and conditions for a Mining Research Convention covering the Sintoukola 2 exploration license. This convention is required to be negotiated in advance of any exploration activity.
Exploration activity
·; No field-work exploration activities were undertaken during the period.
ENDS
For further information, please visit www.korepotash.com or contact:
Kore Potash | Tel: +27 11 469 9140 |
Brad Sampson - CEO
| |
Canaccord Genuity - Nomad and Joint Broker | Tel: +44 (0) 20 7523 4600 |
Henry Fitzgerald-O'Connor James Asensio
| |
Shore Capital - Joint Broker | Tel: +44 (0) 20 7408 4050 |
Jerry Keen Toby Gibbs Mark Percy
| |
Tavistock - Financial PR & IR | Tel: +44 (0) 20 7920 3150 |
Jos Simson Edward Lee Emily Fenton |
Tenement Details and Ownership
The Company is incorporated and registered in England and Wales and wholly owns Kore Potash Limited of Australia. Kore Potash Limited has a 97% holding in SPSA in the RoC. SPSA is the 100% owner of Dougou Potash Mining S.A. which will hold the Dougou Mining Lease (Table 1) upon the transfer from SPSA to Dougou Potash Mining S.A. through the issue of a Presidential Decree. In addition, SPSA were recently awarded the Sintoukola 2 Exploration Permit. The Kola Deposit is located within the Kola Mining Lease. The Dougou Mining lease hosts the Dougou Deposit and the Dougou Extension Deposit.
Table 1: Schedule of mining tenements (Republic of Congo)
Project & Type
|
Tenement |
Company Interest |
Title Registered to |
Kola - Mining
|
Decree 2013-412 of 9 August 2013
|
100% potassium rights only |
Kola Potash Mining S.A. |
Dougou - Mining
|
Decree 2017-139 of 9 May 2017
|
100% potassium rights only |
Sintoukola Potash S.A. |
Sintoukola 2 - Exploration
|
Decree 2018-34 of 9 February 2018
|
100% potassium rights only |
Sintoukola Potash S.A. |
About Kore Potash's Projects
Kore Potash is an advanced stage mineral exploration and development company whose primary asset is 97%-owned interest in the Sintoukola project, a potash project located in the Republic of Congo. The Sintoukola project comprises the Kola sylvinite and carnallite Deposits, the Dougou Extension sylvinite Deposit and the Dougou carnallite Deposit (Table 2). These deposits are within the Kola and Dougou Mining Licenses. The Sintoukola project also includes the Sintoukola 2 Exploration License.
Sintoukola is located approximately 80 km to the north of the city of Pointe Noire which has a major port facility, and within 30 km of the Atlantic coast. Sintoukola has the potential to be among the world's lowest-cost potash producers and its location near the coast offers a transport cost advantage to global fertilizer markets.
The Kola sylvinite Deposit has a Measured and Indicated sylvinite Mineral Resource Estimate of 508 million tonnes grading 35.4 % KCl. The results of a Definitive Feasibility Study ("DFS") were announced on 29 January 2019, which determined Ore Reserves of 152.4 Mt with an average grade of 32.5% KCl. The deposit is open laterally; an Exploration Target for the Southward extension of sylvinite was announced on the 21 November 2018.
The Dougou Extension sylvinite Deposit contains a total sylvinite Mineral Resource Estimate of 232 Mt grading 38.1% KCl, hosted by two seams. The Mineral Resource includes 67 Mt grading 60.1 % KCl. Dougou Extension is located 15 km southwest of Kola. The deposit is open laterally; an Exploration Target for the northward extension of sylvinite was announced on the 21 November 2018.
The Kola and Dougou Extension sylvinite Deposits are considered high grade relative to most potash deposits globally and have the advantage of having very low content of insoluble material, less than 0.3% which provides a further processing advantage.
The Dougou carnallite Deposit has a Measured and Indicated Potash Mineral Resource of 1.1 billion tonnes grading 20.6% KCl (at a depth of between 400 and 600 meters) hosted by 35-40 meters of carnallitite within 4 flat-lying seams. A Scoping Study was completed in February 2015. This Study indicated that a Life of Mine operating cost of US$68 per tonne MoP was achievable.
·; Muriate of Potash (MoP) is the saleable form of potassium chloride (KCl), comprising of a minimum 95% KCl.
·; Sylvinite is a rock type comprised predominantly of the potash mineral sylvite (KCl) and halite (NaCl).
·; Carnallitite is a rock type comprised predominantly of the potash mineral carnallite (KMgCl3·;6H2O) and halite (NaCl).
Table 2: Kore's Potash Mineral Resources and Ore Reserves, provided as Gross and Net Attributable (to Kore's 97% holding), prepared and reported according to the JORC Code, 2012 edition.
SYLVINITE DEPOSITS
KOLA SYLVINITE DEPOSIT | ||||||
Gross | Net Attributable (97%) | |||||
Mineral Resource Category | Million Tonnes | Grade KCl % | Contained KCl million tonnes | Million Tonnes | Grade KCl % | Contained KCl million tonnes |
Measured | 216 | 34.9 | 75 | 209 | 34.9 | 73 |
Indicated | 292 | 35.7 | 104 | 283 | 35.7 | 101 |
Sub-Total Measured + Indicated | 508 | 35.4 | 180 | 492 | 35.4 | 174 |
Inferred | 340 | 34.0 | 116 | 330 | 34.0 | 112 |
TOTAL | 848 | 34.8 | 295 | 822 | 34.8 | 286 |
Gross | Net Attributable (97%) | |||||
Ore Reserve Category | Million Tonnes | Grade KCl % | Contained KCl million tonnes | Million Tonnes | Grade KCl % | Contained KCl million tonnes |
Proved | 62 | 32.1 | 20 | 60 | 32.1 | 19 |
Probable | 91 | 32.8 | 30 | 88 | 32.8 | 29 |
TOTAL | 152 | 32.5 | 50 | 148 | 32.5 | 48 |
Ore Reserves are not in addition to Mineral Resources but are derived from them by the application of modifying factors | ||||||
DOUGOU EXTENSION SYLVINITE DEPOSIT | ||||||
Gross | Net Attributable (97%) | |||||
Mineral Resource Category | Million Tonnes | Grade KCl % | Contained KCl million tonnes | Million Tonnes | Grade KCl % | Contained KCl million tonnes |
Measured | - | - | - | - | - | - |
Indicated | 111 | 37.2 | 41 | 108 | 37.2 | 40 |
Sub-Total Measured + Indicated | 111 | 37.2 | 41 | 108 | 37.2 | 40 |
Inferred | 121 | 38.9 | 47 | 117 | 38.9 | 46 |
TOTAL | 232 | 38.1 | 88 | 225 | 38.1 | 86 |
DOUGOU CARNALLITE DEPOSIT | ||||||
Gross | Net Attributable | |||||
Mineral Resource Category | Million Tonnes | Grade KCl % | Contained KCl million tonnes | Million Tonnes | Grade KCl % | Contained KCl million tonnes |
Measured | 148 | 20.1 | 30 | 144 | 20.1 | 29 |
Indicated | 920 | 20.7 | 190 | 892 | 20.7 | 185 |
Sub-Total Measured + Indicated | 1,068 | 20.6 | 220 | 1,036 | 20.6 | 214 |
Inferred | 1,988 | 20.8 | 414 | 1,928 | 20.8 | 401 |
TOTAL | 3,056 | 20.7 | 634 | 2,964 | 20.7 | 615 |
KOLA CARNALLITE DEPOSIT | ||||||
Gross | Net Attributable | |||||
Mineral Resource Category | Million Tonnes | Grade KCl % | Contained KCl million tonnes | Million Tonnes | Grade KCl % | Contained KCl million tonnes |
Measured | 341 | 17.4 | 59 | 331 | 17.4 | 58 |
Indicated | 441 | 18.7 | 83 | 428 | 18.7 | 80 |
Sub-Total Measured + Indicated | 783 | 18.1 | 142 | 760 | 18.1 | 138 |
Inferred | 1,266 | 18.7 | 236 | 1,228 | 18.7 | 229 |
TOTAL | 2,049 | 18.5 | 378 | 1,988 | 18.5 | 367 |
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.
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 available to view on the Company's website www.korepotash.com The Kola Mineral Resource Estimate was reported 6 July 2017 in an announcement titled 'Updated Mineral Resource for the High Grade Kola Deposit'. It was prepared by Competent Person Mr. Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia. The Ore Reserve Estimate for sylvinite at Kola was first reported 29 January 2019 in an announcement titled 'Kola Definitive Feasibility Study' and was prepared by Met-Chem; the Competent Person for the estimate is Mr. Molavi, member of good standing of Engineers and Geoscientists of British Columbia. 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 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 20 August 2018 in an announcement titled 'Maiden Sylvinite Mineral Resource at Dougou Extension'. It was prepared by Competent Person Mr. Andrew Pedley when he was 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.
+Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity | ||
KORE POTASH plc | ||
ARBN | Quarter ended ("current quarter") | |
621 843 614 | 30 June 2019 | |
Consolidated statement of cash flows | Current quarter $US'000 | Year to date(6 months)$US'000 | ||
1. | Cash flows from operating activities | - | - | |
1.1 | Receipts from customers | |||
1.2 | Payments for | (929) | (1,855) | |
(a) exploration and evaluation | ||||
(b) development | - | - | ||
(c) production | - | - | ||
(d) staff costs | (654) | (1,204) | ||
(e) administration and corporate costs | (667) | (1,345) | ||
1.3 | Dividends received (see note 3) | - | - | |
1.4 | Interest received | 5 | 23 | |
1.5 | Interest and other costs of finance paid | - | - | |
1.6 | Income taxes paid | - | (21) | |
1.7 | Research and development refunds | - | - | |
1.8 | Other (provide details if material) | - | - | |
1.9 | Net cash from / (used in) operating activities | (2,245) | (4,402) | |
2. | Cash flows from investing activities | (6) | (17) | |
2.1 | Payments to acquire: | |||
(a) property, plant and equipment | ||||
(b) tenements (see item 10) | - | - | ||
(c) investments | - | - | ||
(d) other non-current assets | - | - | ||
2.2 | Proceeds from the disposal of: | - | - | |
(a) property, plant and equipment | ||||
(b) tenements (see item 10) | - | - | ||
(c) investments | - | - | ||
(d) other non-current assets | - | - | ||
2.3 | Cash flows from loans to other entities | - | - | |
2.4 | Dividends received (see note 3) | - | - | |
2.5 | Other (provide details if material) | - | - | |
2.6 | Net cash from / (used in) investing activities | (6) | (17) | |
3. | Cash flows from financing activities | 2 | 2 | |
3.1 | Proceeds from issues of shares | |||
3.2 | Proceeds from issue of convertible notes | - | - | |
3.3 | Proceeds from exercise of share options | - | - | |
3.4 | Transaction costs related to issues of shares, convertible notes or options | - | - | |
3.5 | Proceeds from borrowings | - | - | |
3.6 | Repayment of borrowings | - | - | |
3.7 | Transaction costs related to loans and borrowings | - | - | |
3.8 | Dividends paid | - | - | |
3.9 | Other (provide details if material) | - | - | |
3.10 | Net cash from / (used in) financing activities | 2) | 2) | |
4. | Net increase / (decrease) in cash and cash equivalents for the period | 4,002 | 6,187 | |
4.1 | Cash and cash equivalents at beginning of period | |||
4.2 | Net cash from / (used in) operating activities (item 1.9 above) | (2,245) | (4,402) | |
4.3 | Net cash from / (used in) investing activities (item 2.6 above) | (6) | (17) | |
4.4 | Net cash from / (used in) financing activities (item 3.10 above) | 2 | 2 | |
4.5 | Effect of movement in exchange rates on cash held | (28) | (45) | |
4.6 | Cash and cash equivalents at end of period | 1,725 | 1,725 | |
5. | Reconciliation of cash and cash equivalentsat the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts | Current quarter$US'000 | Previous quarter$US'000 |
5.1 | Bank balances | 1,725 | 4,002 |
5.2 | Call deposits | - | - |
5.3 | Bank overdrafts | - | - |
5.4 | Other (provide details) | - | - |
5.5 | Cash and cash equivalents at end of quarter (should equal item 4.6 above) | 1,725 | 4,002 |
6. | Payments to directors of the entity and their associates | Current quarter$US'000 |
6.1 | Aggregate amount of payments to these parties included in item 1.2 | 354 |
6.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | - |
6.3 | Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 | |
All transactions included in item 6.1 are for payment of directors fees.
| ||
7. | Payments to related entities of the entity and their associates | Current quarter$US'000 |
7.1 | Aggregate amount of payments to these parties included in item 1.2 | - |
7.2 | Aggregate amount of cash flow from loans to these parties included in item 2.3 | - |
7.3 | Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2 | |
| ||
8. | Financing facilities availableAdd notes as necessary for an understanding of the position | Total facility amount at quarter end$US'000 | Amount drawn at quarter end$US'000 |
8.1 | Loan facilities | - | - |
8.2 | Credit standby arrangements | - | - |
8.3 | Other (please specify) | - | - |
8.4 | Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. | ||
9. | Estimated cash outflows for next quarter | $US'000 |
9.1 | Exploration and evaluation | 612 |
9.2 | Development | - |
9.3 | Production | - |
9.4 | Staff costs | 510 |
9.5 | Administration and corporate costs | 744 |
9.6 | Other (provide details if material) | - |
9.7 | Total estimated cash outflows | 1,866 |
10. | Changes in tenements(items 2.1(b) and 2.2(b) above) | Tenement reference and location | Nature of interest | Interest at beginning of quarter | Interest at end of quarter |
10.1 | Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced | - | - | - | - |
10.2 | Interests in mining tenements and petroleum tenements acquired or increased | - | - | - | - |
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: ........(signed electronically) ........................... Date: 31 July 2019
Joint Company Secretary
Print name: Henko Vos.
Notes
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.