9 February 2024
Kore Potash Plc
("Kore Potash" or "the Company")
EPC Update
Kore Potash plc (AIM: KP2, ASX: KP2, JSE:KP2),
the potash development company with 97%ownership of the Kola and DX
Potash Projects in the Sintoukola Basin, located in the Republic of
Congo ("RoC"), is pleased
to announce that, in line with expectations,
PowerChina International Group Limited ("PowerChina") delivered its Engineering,
Procurement and Construction ("EPC") proposal and draft EPC contract
on the 6th of February 2024.
Kola Construction Contract
In April 2021, Kore Potash established a
Memorandum of Understanding ("MoU") with the Summit Consortium
("Consortium") for
optimisation and EPC services, alongside a debt and royalty
financing proposal of the Kola Project ("Kola"). The Optimisation Study
("Study") results, released
on 27 June 2022, supported advancing to Kola's next developmental
phase. On 28 June 2022, Kore Potash entered into a Heads of
Agreement ("HoA") with
SEPCO Electric Power Construction Corporation ("SEPCO"). The HoA acknowledged the
Study's verification of Kola's capital costs and construction
timeframe and initiated further EPC contract
negotiations.
Due to Kola's significant scale, lengthy
construction period, and extensive financing needs, Kore Potash
sought from SEPCO's holdings company, PowerChina, the customary EPC
contract assurances, including performance and retention bonds to
ensure construction and operational efficacy. On 8 August 2023,
Kore Potash and SEPCO reached a revised agreement to furnish an EPC
contract for the Kola Project, contingent on completing further
engineering designs resulting from PowerChina's review, leading to
a joint EPC proposal and contract presentation by PowerChina and
SEPCO to Kore Potash.
During the past five months, PowerChina led
five external technical groups that completed additional design and
engineering work. Specific design areas included the underground
mine, mineral processing jetty and transhipment operations, energy
transportation and storage, conveyor systems and material handling
(the "Works").
SEPCO had personnel living in the RoC for the
past 24 months who continued dialogue with potential in-country
service providers and conducted several Kola site visits collecting
information for both the Study and the Works. Additionally, SEPCO
mobilised a larger team to Kola for four months in the second half
of 2023 to source additional information to enable finalisation of
the Works, including the planned service corridors, conveyor route,
and geomechanical information on foundation materials. These
findings were presented to PowerChina in early December
2023.
In line with the expectations PowerChina has
now delivered the EPC Proposal and draft EPC contract offer. The
initial EPC contract price aligns with expectations and reconfirms
the capital cost detailed in the Study. Kore Potash and
SEPCO/PowerChina will now further negotiate the EPC proposal and
draft the EPC contract, targeting signing full EPC documentation by
the end of April 2024. The Summit Consortium has
advised that the financing proposal for the total construction cost
of Kola will be provided to the Company within six weeks of EPC
documentation terms finalisation.
This announcement has been approved for release
by the Board of Kore Potash.
Market Abuse Regulation
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under
Article 17 of MAR.
ENDS
For further information, please
visit
www.korepotash.com or
contact:
Kore Potash
David Hathorn - Chairman & Interim
CEO
Andrey Maruta - CFO
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Tel: +44 (0) 20 3963 1776
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