Kore raises $1m, signs revised agreement with Sepco for Kola project

Potash development company Kore Potash has entered into a revised agreement with Chinese construction and engineering company Sepco Electric Power Construction Corporation for the provision of engineering, procurement and construction (EPC) services for the construction of the company’s Kola potash project.

Kore has 97% ownership of the Kola and DX potash projects in the Sintoukola Basin, in Congo-Brazzaville.

Following completion of Sepco’s parent company PowerChina International’s review of the Kola design and construction schedule, one of the agreed outcomes is that further engineering design works must be completed prior to PowerChina and Sepco jointly presenting an EPC proposal and EPC contract to Kore Potash.

To assist in advancing these works as rapidly as possible, PowerChina has subcontracted five technical groups that have commenced additional design and engineering works.

Specific design areas include the underground mine, mineral processing jetty and transshipment operations, energy transportation and storage, conveyor systems and material handling.

PowerChina has advised Kore Potash that the works will cost in excess of $10-million to complete, Kore reports.

Illustrating PowerChina’s commitment to Kola, it has capped Kore’s contribution at a maximum of $5-million of these costs, with the balance of the cost to be paid by PowerChina.

Under the terms of the revised agreement, Kore is required to make an initial payment of $1-million within three days of signing this agreement and the remainder, which is contingent upon the company completing further fundraises and Sepco’s delivery of the EPC contract, is planned to be paid in three tranches between  October 25 this year and 12 months from the date that Kore signs the EPC contract.

The company has been advised that PowerChina, Sepco and the subcontractors are well progressed with the works, having commenced immediately following the direction from PowerChina that further work was required, and in advance of reaching this agreement with Kore on costs. 

Sepco has had personnel living in Congo-Brazzaville for the past six months who continue dialogue with potential service providers, and who have conducted site visits to Kola collecting information to further enable the works.

“Sepco plans to mobilise a larger team to Kola during the second half of August for a period of up to eight weeks. The team is expected to collect additional information on the planned service corridors, planned conveyor route and geomechanical information on foundation materials in the proposed processing plant and infrastructure areas”.

Sepco has committed to a work schedule that provides for several factors.

This includes site visits during August and September this year, as well as completion of all the engineering design works before the end of December.

This comes in addition to the EPC contract offer to be made to Kore before January and the company and Sepco are scheduled to sign the EPC contract before the end of January.

“PowerChina and Sepco have confirmed that, on completion of the works, they will have all of the information required to issue an EPC contract to the company.

“Importantly, PowerChina and Sepco have indicated that certain of the works to be completed now would have formed part of front end design and engineering works which would have been completed at the inception of the project, which assist with reducing certain timelines during the construction phase,” adds Kore.

Kore also states that the company and the intended financiers within the Summit Consortium are highly supportive, and recognise that undertaking these works now should further de-risk the design of Kola to the benefit of the company, the financiers, and the constructor.  

Kore continues to work with the Summit Consortium to provide financing for the full construction cost of Kola, which is intended to be based on royalty and debt finance.

The Summit Consortium has advised that the financing proposal for the full construction cost of Kola will be provided to Kore within six weeks of EPC terms being finalised. 

FUNDRAISING

Meanwhile, Kore has also announced the successful completion of a share subscription, which has raised $800 000 and the issue of convertible loans with an aggregate value of $200 000.

The gross proceeds of the fundraising of $1-million will be used to further advance work that is expected to lead to the delivery of the EPC contract for the Kola project.

Kore's two largest shareholders, the Oman Investment Authority (OIA) and Sociedad Quimica y Minera (SQM) will be offered the opportunity to subscribe for new ordinary shares at the subscription price, as is required under their investment agreements with Kore.

OIA and SQM have up to 21 business days to inform Kore if they intend to subscribe, and any such participation will be deemed a related party transaction.

Any participation by OIA and SQM would be in addition to funds raised through the fundraising and announced.

Kore chairperson David Hathorn has participated in the fundraising, by way of two convertible loans of $100 000 each, through two separate trusts.

A general meeting will be held in due course to seek approval of the conversion of the convertible loans from both trusts which are associated with Hathorn, a related party of the company, following which (if approved) 15.55-million new ordinary shares of $0.001 each will be issued to each trust.

This will result in 31.1-million new ordinary shares being issued in aggregate.