Financial Results for Half Year Ended 30 June 2023

Kore Potash PLC

12 September 2023

 

12 September 2023

Kore Potash Plc

("Kore Potash" or the "Company")

(The "Group" refers to Kore Potash Plc and its subsidiaries)

Financial Results for Half Year Ended 30 June 2023

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 ("RoC"), today reports its unaudited financial results and operational highlights for the half year ended 30 June 2023 ("the Period").

The full financial report is available online at the Company's website at https://korepotash.com/wp-content/uploads/2023/09/20230911-Half-Year-Interim-Report-2023.pdf The financial statements contained within this announcement should be read in conjunction with the notes contained within the full financial report.

Highlights

·    Discussions continue towards finalising terms for the Engineering, Procurement and Construction ("EPC") contract at the Kola Project.

·    PowerChina International Group Limited ("PowerChina") and SEPCO Electric Power Construction Corporation ("SEPCO") have commenced work to support the provision of guarantees regarding an EPC contract for Kola.

·     Summit Consortium has confirmed that the financing proposal for the full capital cost of Kola will be provided within six weeks of finalisation of EPC contract terms.

·     On 24 January 2023, the Company announced an update of the JORC (2012) compliant Mineral Resource, Ore Reserve, Pre Feasibility Study ("PFS") information and Production Target at the DX Project. The updated Mineral Resource incorporates the most recent drilling results and interpretation of the geophysical data.

·      Cash and cash equivalents, at 30 June 2023 was USD 2,555,254.

·    The exploration and evaluation assets at 30 June 2023 was USD 167,201,357, an increase of USD 4,472,163 from USD 162,729,194 at 31 December 2022. During the Period the Company capitalised USD 1,882,884 in exploration and evaluation expenditure and the expenditure increased by USD 2,589,279 as a result of the weakening of the USD against the currency of the RoC.

·      Despite the on-going Russian/Ukraine conflict and increasing fuel prices, the Group's operations have not been materially impacted during the Period.

Kola Potash Project

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 to provide a debt and royalty financing proposal for the full construction cost of Kola.

The results of the Optimisation Study announced on 27 June 2022 supported moving to the next phase of Kola's development.

On 28 June 2022, the Company announced that it had signed a Head of Agreement ("HoA") for the construction of Kola with SEPCO.

Under the HoA, SEPCO undertook to continue negotiations with Kore Potash towards an EPC contract for the construction of Kola. Importantly, the HoA recognises the outcomes of the Optimisation Study, and confirmed the capital cost of Kola, the construction period and related EPC contract terms.

Discussions with SEPCO to finalise key EPC terms continue.

Recognising the world-class scale of Kola, the length of the proposed construction period and the total financing requirement, Kore Potash has requested that SEPCO's parent company, PowerChina, provides the typically required EPC contract guarantees, including performance and retention bonds supporting the completion of construction and the operating performance of Kola.

PowerChina is now actively involved in the process to finalise the EPC contract terms. As part of this process, PowerChina is reviewing aspects of the Kola design and the planned construction schedule and has had direct communications with the management of Kore Potash.

PowerChina's review has generated a number of potential design improvements to the Kola Project that identify potential opportunities to further reduce the capital cost and the construction schedule. Discussions on incorporating these design improvements into the EPC contract continue.

PowerChina has engaged a number of external experts to support its review of the Kola design and they require completion of this review to support the provision of the required EPC contract guarantees.

Kore Potash 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 successful outcomes of the Optimisation Study were in line with the Consortium's requirements and supported the ongoing financing discussions. The financing parties of the Consortium have again reinforced their ongoing strong interest in financing Kola and await finalisation of the EPC contract terms.

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

Kore Potash continues to hold the view that the members of the Consortium have the capability to provide the required financing to commit to the construction of Kola and that pursuing this financing opportunity currently remains the best strategy for Kore Potash's shareholders.

Key members of the Kore Potash Board and the Summit Consortium, including SEPCO and PowerChina, met with the Ministry of Mines during the period. The Ministry of Mines feedback from the visit was positive and that it improved the Ministry's understanding of the financing process.

Dougou Extension ("DX") Sylvinite Defined Feasibility Study Phase 1

The DX Project update of the JORC (2012) compliant Mineral Resource, Ore Reserve, PFS information and Production Target was announced on the 24 January 2023. The updated Mineral Resource incorporates the most recent drilling results and interpretation of the geophysical data. A summary of the results is presented below:

o  Production Target of 15.5Mt sylvinite at a grade of 30.63 % KCl demonstrates initial project life of 12 years at a production rate of 400,000 tpa Muriate of Potash ("MoP").

o  Production Target based on Proven and Probable Ore Reserves and 13% of the Inferred Mineral Resources that represents 30% of the life of project MoP production.

o  NPV10 (real) of USD 275 million and 27% IRR on a real post tax basis at life of project average granular MoP price of USD 450/t.

o  Approximately 2.9 years post-tax payback period from first production.

o  Proven and Probable Ore Reserve of 9.31 Mt sylvinite at an average grade of 35.7% KCl.

o  Mineral Resource of 129 Mt at an average grade of 24.8% KCl.

o  Higher confidence in the distribution of Sylvinite within the Top Seams and improved understanding of the Sylvinite/Carnallite boundary within the Hanging Wall Seam.

The updated information confirms that the DX Project is a financially attractive, low capital cost project with a shorter construction period than Kola.

At present, the Company remains focused on completing the financing of Kola and moving forward to construction of Kola as soon as possible. The Company is now exploring what strategic options are available for the DX project.

The financial statements below should be read in conjunction with the notes contained within the full financial report which is available online at the Company's website at https://korepotash.com/wp-content/uploads/2023/09/20230911-Half-Year-Interim-Report-2023.pdf

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE 6 MONTHS ENDED 30 JUNE 2023

		6 months ended		6 months ended		Year ended
		30 June 2023		30 June 2022		31 Dec 2022
		USD		USD		USD
		Unaudited		Unaudited		Audited
Directors' remuneration		(151,769)		(198,521)		(418,962)
Equity compensation benefits		-		(8,523)		(9,412)
Salaries, employee benefits and consultancy expense		(95,704)		(207,766)		(293,292)
Administration expenses		(273,020)		(222,798)		(546,507)
Interest income		51,348		17,029		66,956
Interest and finance expenses		(1,395)		(2,182)		(3,935)
Net realised and unrealised foreign exchange gain (loss)		5,557		(280,449)		(308,801)
Loss before income tax expense		(464,983)		(903,210)		(1,513,953)
Income tax income/(expense)		-		-		-
Loss for the period		(464,983)		(903,210)		(1,513,953)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss Exchange differences gain/(loss) on translating
operations		2,540,490		(11,887,165)		(8,660,408)
Other comprehensive profit/(loss) for the period		2,540,490		(11,887,165)		(8,660,408)
Total comprehensive profit/(loss) for the period		2,075,507		(12,790,375)		(10,174,361)
Loss attributable to:
Owners of the Company		(464,474)		(903,210)		(1,513,822)
Non-controlling interest		(509)		-		(131)
		(464,983)		(903,210)		(1,513,953)
Total comprehensive profit/(loss) attributable to:
Owners of the Company		2,076,016		(12,790,375)		(10,174,230)
Non-controlling interest		(509)		-		(131)
		2,075,507		(12,790,375)		(10,174,361)
Loss per share
Basic and diluted loss per share (cents per share)		(0.01)		(0.03)		(0.04)

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023

		30 June 2023 USD		30 June 2022 USD		31 Dec 2022 USD
		Unaudited		Unaudited		Audited
ASSETS
Current Assets
Cash and cash equivalents		2,555,254		7,628,417		5,046,629
Trade and other receivables		140,479		145,458		200,251
Total Current Assets		2,695,733		7,773,875		5,246,880
Non-Current Assets
Trade and other receivables		39,218		99,562		38,597
Property, plant and equipment		373,633		433,385		385,103
Exploration and evaluation expenditure		167,201,357		157,518,638		162,729,194
Total Non-Current Assets		167,614,208		158,051,585		163,152,894
TOTAL ASSETS		170,309,941		165,825,460		168,399,774
LIABILITIES
Current Liabilities
Trade and other payables		572,417		803,064		749,469
Derivative financial liability		26		26		26
Total Current Liabilities		572,443		803,090		749,495
Non-Current Liabilities
Total Non-Current Liabilities		-		-		-
TOTAL LIABILITIES		572,443		803,090		749,495
NET ASSETS		169,737,498		165,022,370		167,650,279
EQUITY
Issued share capital - Ordinary Shares		3,421,937		3,420,177		3,420,177
Reserves		223,948,269		218,347,816		221,586,467
Accumulated losses		(57,069,485)		(56,183,040)		(56,793,651)
Equity attributable to the shareholders of Kore Potash plc		170,300,721		165,584,953		168,212,993
Non-controlling interests		(563,223)		(562,583)		(562,714)
TOTAL EQUITY		169,737,498		165,022,370		167,650,279

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED 30 JUNE 2023

	Ordinary Shares	Share Premium Reserve	Merger Reserve	Accumulated	Option Reserve	Foreign Currency	Owners of the Parent	Non- controlling Interest	Total Equity
	USD	USD	USD	Losses	USD	Translation Reserve	USD	USD	USD
				USD		USD
Balance as at 1 Jan 2023	3,420,177	44,537,309	203,738,800	(56,793,651)	734,259	(27,423,901)	168,212,993	(562,714)	167,650,279
Loss for the period	-	-	-	(464,474)	-	-	(464,474)	(509)	(464,983)
Other Comprehensive (loss)/gain
	-	-	-	-	-	2,540,490	2,540,490	-	2,540,490
Total Comprehensive (loss)/gain
	-	-	-	(464,474)	-	2,540,490	2,076,016	(509)	2,075,507
Transactions with owners:
Issue of Shares	1,760	-	-	-	-	-	1,760	-	1,760
Conversion of performance rights	-	-	-	188,640	(188,640)	-	-	-	-
Share Based payments	-	-	-	-	9,952	-	9,952	-	9,952
Balance at 30 June 2023	3,421,937	44,537,309	203,738,800	(57,069,485)	555,571	(24,883,411)	170,300,721	(563,223)	169,737,498
	Ordinary Shares	Share Premium Reserve	Merger Reserve	Accumulated	Option Reserve	Foreign Currency	Owners of the Parent	Non- controlling Interest	Total Equity
	USD	USD	USD	Losses	USD	Translation Reserve	USD	USD	USD
				USD		USD
Balance as at 1 Jan 2022	3,375,494	44,205,971	203,738,800	(55,422,779)	708,486	(18,623,503)	177,982,470	(562,583)	177,419,887
Loss for the period	-	-	-	(903,210)	-	-	(903,210)	-	(903,210)
Other Comprehensive (loss)/gain
	-	-	-	-	-	(11,887,165)	(11,887,165)	-	(11,887,165)
Total Comprehensive (loss)/gain
	-	-	-	(903,210)	-	(11,887,165)	(12,790,375)	-	(12,790,375)
Kore Potash Ltd Southt Africa wound down	-	-	-	138,500	-	(139,989)	(1,489)	-	(1,489)
Transactions with owners:
Issue of Shares	44,683	331,338	-	-	-	-	376,021	-	376,021
Conversion of performance rights	-	-	-	4,449	(4,449)	-	-	-	-
Share Based payments	-	-	-	-	18,327	-	18,327	-	18,327
Balance at 30 June 2022	3,420,177	44,537,309	203,738,800	(56,183,040)	722,364	(30,650,657)	165,584,953	(562,583)	165,022,370
	Ordinary Shares	Share Premium Reserve	Merger Reserve	Accumulated Losses	Option Reserve	Foreign Currency	Owners of the Parent	Non- controlling Interest	Total Equity
				Losses		Translation Reserve
	USD	USD	USD	USD	USD	USD	USD	USD	USD
Balance at 1 Jan 2022	3,375,494	44,205,971	203,738,800	(55,422,779)	708,486	(18,623,503)	177,982,470	(562,583)	177,419,887
Loss for the period:	-	-	-	(1,513,822)	-	.-	(1,513,822)	(131)	(1,513,953)
Other comprehensive (loss)/gain	-	-	-	-	-	(8,660,408)	(8,660,408)	-	(8,660,408)
Total comprehensive (loss)/gain	-	-	-	(1,513,822)	-	(8,660,408)	(10,174,230)	(131)	(10,174,361)
Kore Potash Ltd SA Divestment	-	-	-	138,501	-	(139,989)	(1,488)	-	(1,488)
Transactions with owners:
Conversion of performance rights	-	-	-	4,449	(4,449)	-	-	-	-
Share issues	44,683	331,338	-	-	-	-	376,021	-	376,021
Share issue costs	-	-	-	-	11,895	-	11,895	-	11,895
Share based payments	-	-	-	-	18,327	-	18,327	-	18,327
Balance at 31 Dec 2022	3,420,177	44,537,309	203,738,800	(56,793,651)	734,259	(27,423,901)	168,212,993	(562,714)	167,650,279

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 6 MONTHS ENDED 30 JUNE 203

		6 months ended 30 June 2023		6 months ended 30 June 2022		Year ended 31 Dec 2022
		USD		USD		USD
		Unaudited		Unaudited		Audited
Cash Flows from Operating Activities
Payments to suppliers and employees		(577,006)		(697,416)		(1,236,245)
Net cash flows (used in) operating activities		(577,006)		(697,416)		(1,236,245)
Cash Flows from Investing Activities
Payments for plant and equipment		-		(658)		(633)
Payments for exploration and evaluation		(1,984,021)		(2,497,533)		(4,574,363)
Interest received		51,348		17,029		66,956
Net cash flows (used in) investing activities		(1,932,673)		(2,481,162)		(4,508,040)
Cash Flows from Financing Activities
Proceeds from issue of shares		1,760		550		550
Net cash flows generated from
financing activities		1,760		550		550
Net decrease in cash and cash
Equivalents		(2,507,919)		(3,178,028)		(5,743,735)
Cash and cash equivalents at beginning of period		5,046,629		11,092,509		11,092,509
Foreign currency differences		16,544		(286,064)		(302,145)
Cash and Cash Equivalents at Period End		2,555,254		7,628,417		5,046,629

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.

This announcement has been approved for release by the Board of Kore Potash.

END

For further information, please visit www.korepotash.com or contact:

Kore Potash Brad Sampson - CEO		Tel: [phone]
Tavistock Communications Nick Elwes Adam Baynes		Tel: [phone]
SP Angel Corporate Finance - Nomad and Joint Broker Ewan Leggat Charlie Bouverat		Tel: [phone]
Shore Capital - Joint Broker Toby Gibbs James Thomas		Tel: [phone]

Forward-Looking Statements

This release contains certain statements that are "forward-looking" with respect to the financial condition, results of operations, projects and business of the Company and certain plans and objectives of the management of the Company. Forward-looking statements include those containing words such as: "anticipate", "believe", "expect," "forecast", "potential", "intends," "estimate," "will", "plan", "could", "may", "project", "target", "likely" and similar expressions identify forward-looking statements. By their very nature forward-looking statements are subject to known and unknown risks and uncertainties and other factors which are subject to change without notice and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct, which may cause the Company's actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance.

Neither the Company, nor any other person, gives any representation, warranty, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statement will occur.  Except as required by law, and only to the extent so required, none of the Company, its subsidiaries or its or their directors, officers, employees, advisors or agents or any other person shall in any way be liable to any person or body for any loss, claim, demand, damages, costs or expenses of whatever nature arising in any way out of, or in connection with, the information contained in this document.

In particular, statements in this release regarding the Company's business or proposed business, which are not historical facts, are "forward-looking" statements that involve risks and uncertainties, such as Mineral Resource estimates market prices of potash, capital and operating costs, changes in project parameters as plans continue to be evaluated, continued availability of capital and financing and general economic, market or business conditions, and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Shareholders are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. The forward-looking statements are based on information available to the Company as at the date of this release. Except as required by law or regulation (including the ASX Listing Rules), the Company is under no obligation to provide any additional or updated information whether as a result of new information, future events, or results or otherwise.

 

END