Kore Potash the potash development company with 97% ownership of the Kola and DX Potash Projects in the Sintoukola Basin, located within the Republic of Congo has announced that the Company and Summit Africa Limited, on behalf of a consortium of investors and engineering firms, have signed a non-binding Memorandum of Understanding (MoU) to arrange the total financing required for the construction of the Kola Potash Project.
Key terms of the MoU
The MoU provides the Summit Consortium with a 9 month period to present a financing proposal to
fully finance the construction of Kola via a combination of debt and royalty financing. This means that
the Company would not be required to raise equity to fund the capital cost of construction as the
equity portion will be covered by the royalty funding with the Company retaining its 90% interest in
the project. The Company retains the right not to accept the finance proposal to be presented by
Summit.
The results of the definitive feasibility study for Kola were announced to shareholders in January 2019. During its review of the DFS the Company and its independent consultants identified several opportunities to achieve a material reduction in the capital cost of Kola. The realisation of these opportunities requires further capital optimisation studies.
Having already completed a preliminary review of the DFS and the potential optimisation opportunities identified, the technical partners in the Summit Consortium (SEPCO and ENFI) have confirmed a target capital cost for the optimisation study of US $1.65bn. Reducing the capital cost of Kola will reduce the size of the financing required for construction and improve returns for the Company’s shareholders. The Summit Consortium has set out in the MoU that achieving the Target Capex in the optimisation study is a condition for Kore to receive the financing proposal.
The specific scope of works of the Optimisation Study will be agreed via an Optimisation Agreement
to be signed within 4 weeks of signing the MoU and is expected to have a cost of US $1.7–US $1.9m.
The Company has committed to paying for 50% of the cost (US $900,000) of the Optimisation
Study with the balancing 50% to be met by SEPCO.
The MoU provides for the Summit Consortium to present an EPC proposal to construct Kola in
conjunction with the financing proposal but there is no guarantee that legally binding agreements will
be forthcoming.
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Kola Potash Project
Kola is a high grade, high quality, shallow sylvinite potash deposit situated on an existing mining
licence, approximately 35 km from the coast, and only 65km north of the harbour city of Pointe Noire.
The permitting and agreements required for construction are in place including the environmental
permit, trans-shipment permit and the Mining Convention with the Government.
Once in production Kola is anticipated to be one of the lowest cost potash producers globally, ideally
located to supply nearby African and South American markets
