Kore Potash (ASX:KP2) is trading 20% higher on the Australian Securities Exchange (ASX) today, following the release of its latest quarterly report on 18 January 2024.
The company’s share price was trading at $0.012 as of 2.30pm AEDT.
The potash development company, which has 97% ownership of the Kola Potash Project and Dougou Extension Potash Project in the Sintoukola Basin, in the Republic of Congo, says PowerChina International Group continues to review the Engineering, Procurement and Construction (EPC) proposal announced in December 2023.
Kore Potash signed a memorandum of understanding with the Summit Consortium in April 2021 for the optimisation of Kola, the provision of an EPC contract proposal, and a debt and royalty financing proposal for Kola’s construction costs.
The results of the optimisation study support moving to the next phase of Kola’s development. On 28 June 2022, the company announced that it had signed a heads of agreement with SEPCO for the construction of Kola.
Under the agreement, SEPCO undertook to continue negotiations with Kore Potash towards an EPC contract. Importantly, Kore says the agreenment recognised that the study’s outcomes confirmed the capital cost of Kola, the construction period and related EPC contract terms
Recognising the world-class scale of Kola, the length of the proposed construction period and the total financing requirement, Kore Potash requested that SEPCO’s parent company, PowerChina, provide the typically required EPC contract guarantees, including performance and retention bonds supporting the completion of construction and the operating performance of Kola.
On 8 August 2023, Kore Potash entered into a revised agreement with SEPCO to provide the company with an EPC contract for the Kola Project. Following the completion of the review, one of the agreed outcomes was that further engineering design works must be completed before PowerChina and SEPCO jointly present an EPC proposal and EPC contract to the company.
PowerChina subcontracted 5 technical groups which started additional design and engineering works. Specific design areas included the underground mine, mineral processing jetty and transhipment operations, energy transportation and storage, conveyor systems and material handling.
Kore says PowerChina advised that the works would cost in excess of US$10 million to complete. It capped Kore Potash’s contribution at a maximum of US$5 million, with the balance of the costs to be paid by PowerChina.
Two payments of US$1 million each were made in August and November 2023 as required under the agreement. Kore notes the remaining payments are contingent upon the company completing further fund raises and PowerChina and SEPCO’s delivery of the EPC contract.
The remaining payments are planned to be paid in two tranches 12 months from date of the execution of the EPC contract.
Write to Adam Orlando at Mining.com.au
Images: Kore Potash