Kore Potash says it is focusing on completing financing arrangements for the Kola project in Congo Brazzaville while it had made progress with PowerChina for the engineering, procurement and construction of the mine.

Kore Potash believes that the Kola potash operation will have a lifespan of 33 years under which it will produce up to 2.2 million tons of the commodity per year. In 2021, it announced that it had signed a memorandum of understanding with the Summit Consortium to provide financing for the Kola project.

However, at the time, the project required that an optimisation study on the mine be concluded first. Yesterday, Kore Potash said it is focused on “completing the financing of Kola and moving forward to construction of Kola” as soon as possible.

It had invested $492 000 (R8,947,561) in exploration activities during the quarter to the end of June, with $489 000 of this relating to the Kola project and an additional $3000 on its other DX project in the same country, ending the quarter with $0.96 million in cash resources.

“Kore Potash continues to work with the consortium to provide financing for the total construction cost of Kola, which is intended to be based on royalty and debt finance,” said Kore Potash.

Financing parties under the Summit Consortium had reinforced their ongoing strong interest in financing Kola while they await finalisation of the engineering, procurement and construction (EPC) contract for the mine which the company is pursuing with PowerChina.

“The Consortium has advised that the financing proposal for the total construction cost of Kola will be provided to the company within six weeks of the execution of the EPC contract. Kore Potash maintains that the Consortium members can provide the required financing for Kola’s construction and that pursuing this financing opportunity remains the best path forward for Kore Potash’s shareholders,” it said.

On June 1, Kore Potash successfully completed a $1.2m fundraise, with a further $60 000 conditionally raised subject to shareholder approval at a general meeting of the company to be held later this month.

PowerChina earlier this year delivered the EPC for the Kola mine with the two parties having already commenced further detailed negotiations on the EPC proposal and draft EPC contract.

Kore Potash said agreements for the EPC were now with the respective legal counsels of both parties. PowerChina had subcontracted five technical groups that had already started additional design and engineering works, focusing on the underground mine, mineral processing jetty and transhipment operations, energy transportation and storage, conveyor systems and material handling.

“PowerChina advised the Company that the Works would cost in excess of $10m to complete. PowerChina had however capped Kore Potash’s contribution at a maximum of $5m, with the balance of the costs to be paid by PowerChina.

Kore Potash made payments amounting to $1m last year, adding that the remaining payments “are contingent upon the company completing further fund raises and PowerChina’s delivery of the EPC” contract.

BUSINESS REPORT