Projects Update

RNS Number : 0176X

Kore Potash PLC

17 December 2019

 

 17 December 2019

Kore Potash Plc

("Kore Potash" or the "Company")

Projects Update

Kore Potash, the potash exploration and development company whose flagship asset is the 97%-owned Sintoukola Potash Project ("Kola" or the "Project"), located within the Republic of Congo ("RoC"), provides the following update on the development of its potash projects.

Highlights:

·    Dougou Extension ("DX") Pre-feasibility Study

o  Pre-feasibility study (PFS) on track to be completed on budget in April 2020 with potentially improved financial outcomes.

o  Technical studies completed to date have identified a number of improvements over the scoping study with potential to reduce both the capital cost and the operating cost of the project compared to the scoping study. These include:

o  Circulating brine flow rates can be reduced by approximately 40%

o  Potential to reduce electrical power requirement by up to 8%

o  Potential to reduce gas requirements by up to 40%

o  Cavern footprint is able to be increased by up to 27%

o  Life of project extraction ratio may be increased with potential to increase initial project life to 25 years.

o  Processing of the 2D seismic survey data has reinforced and improved upon earlier interpretations of the sylvinite boundaries within the deposit.

·    Kola project optimisation

o  Kola Bill of Quantities ("BoQ") exercise identified capital savings in excess of $300 million in comparison to the Definitive Feasibility Study capital cost.

o  Discussions with European engineering and construction groups indicates that further optimisation activity (including design revisions) is likely to generate additional capital cost reductions.

o  With current focus on the development of the lower capital cost DX project, the Company will continue to explore options to reduce the Kola capital cost but is not planning further expenditure on the optimisation of Kola in the near term.

Brad Sampson, Chief Executive of Kore Potash, said:

"This positive progress on the DX pre-feasibility study is very pleasing to see, the Company is progressing high quality work to improve our understanding of the deposit and the chosen processing route.

Shifting Kore's focus onto a smaller, less capital intensive project within the wider Sintoukola basin should allow the Company to get to production faster and preserves optionality on the other deposits.

We believe that DX is one of the highest grade potash deposits anywhere in the world. This is part of the reason why we will have extremely competitive operating costs, further reinforced by our proximity to the coast and commensurately lower shipping costs to target markets than Northern Hemisphere producers.

Our focus continues to centre on building a project that is environmentally and economically sustainable, which is particularly important as we work on issues related to project design."

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

Kore Potash Brad Sampson - CEO		Tel: [phone]
Tavistock Communications Jos Simson Edward Lee		Tel: [phone]
Canaccord Genuity - Nomad and Broker James Asensio Henry Fitzgerald-O'Connor		Tel: [phone]
Shore Capital - Joint Broker Jerry Keen Toby Gibbs Mark Percy		Tel: [phone]

DX Pre-feasibility Study

The Company reports the following progress on the pre-feasibility study:

·    The DX PFS is on track for completion in April 2020 within budget.

·    Test work and brine concentration improvement:

o  Dissolution test work was performed by Agapito Associates Inc. ("Agapito") in their laboratory in Grand Junction, Colorado. The dissolution tests were conducted on 72 quarter-core samples, acquired from the DX Potash Project site.

o  Testing was performed using selective dissolution (of KCl) at solvent temperatures of 50, 70 and 90°C, with pre-concentrated solvents of 100, 120, 140, and 160 g/l KCl and saturated NaCl.  These tests established the relationship between dissolution rate and solvent KCl concentration, enabling the prediction of expected production brine concentrations during commercial solution-mining operations.

o  A production brine concentration of 165 g/l KCl has been recommended by Agapito as the optimum brine concentration for the PFS design.

o  At a brine concentration of 165 g/l it is estimated that the circulating brine flow required for 400ktpa production is reduced by approximately 30% compared to the scoping study).

o  Further modelling of brine behaviour is in progress to improve confidence in the optimum production brine concentration. Additional dissolution testing at higher brine KCl concentrations is planned to be included in the DFS scope of work.

·    Expected reduction in minimum brine temperature:

o  Mechanical chillers have been selected over absorption chillers facilitating increased cooling in comparison to the scoping study assumption.

o  Increased cooling is expected to improve the quantity of KCl harvested per litre of brine pumped into the processing facility and is estimated to reduce the required flow rates for 400ktpa KCl production by a further 10%.

o  The lower mine and plant brine circulation rate creates potential to reduce the electrical power and natural gas requirement for the project reducing both capital and operating cost which will be further assessed during the remainder of the PFS.

·    Potential to increase cavern size

o  Geo-mechanical modelling and analyses of cavern stability and associated surface subsidence was performed by Agapito Associates Inc. The analyses incorporated FLAC3D™ numerical models constructed by Agapito.  Surface subsidence, strains, and slopes were predicted for multiple cavern dimension scenarios during selective solution mining of both targeted potash seams.

o  Agapito has recommended a cavern layout with 70m cavern radius and 57m pillar width. This geometry represents a 26% increase in cavern footprint over that assumed in the scoping study. Geo-mechanical modelling predicts that the larger cavern footprint remains conservative. The increase in cavern footprint and is anticipated to contribute to reductions in both initial and sustaining capital for the DX project.

o  Additional geo-mechanical modelling is being carried out as part of the PFS scope to further improve understanding of the acceptable upper limits of cavern dimensions (beyond those currently assumed for the PFS).

·    Potential to improve extraction ratio

o  Agapito also used the geo-mechanical modelling to cavern and ground stability at various extraction ratios.

o  Agapito has recommended that the extraction ratio can be increased to 48.7% while maintaining cavern stability during solution mining. This represents a 62% increase on the scoping study assumption.

o  The possibility to increase extraction ratio offers potential to extend the initial DX project life to more than 25 years.

·    2D Seismic Survey Program

o  During September 2019 DMT GmbH & Co. KG (DMT) of Germany acquired over 60 line-kilometres of 2D seismic reflection data on a grid covering approximately a 4 km by 6 km area of the DX Potash Project. This covers the area of the deposit that was the focus of the Scoping Study and remains the focus of the current PFS.

o  The 2D seismic survey data is an important input for the modelling of the host evaporite rocks and the distribution of the sylvinite of the two target seams hosting high grade sylvinite mineralisation; the Hanging Wall Seam (HWS) and the Top Seam (TS).

o  The acquisition of this data added to and improved the quality of the data set the Company already had acquired from previous seismic studies across the area.

o  The 2D seismic data was processed by DMT Petrologic GmbH & Co. KG (Petrologic) of Germany. Processing was completed during November 2019.

o  Petrologic also provided interpretation of key reflectors within the evaporite.

·    Geological modelling

o  An update of the 3D geological model is in progress and being carried out by CSA Global South Africa, incorporating the new 2D seismic data.

o  It is planned that the updated geological model will be used to re-estimate the Mineral Resources at DX within the current PFS work programme.

·    Infill drilling program

o  Additional drill-holes DX_07 and DX_09 are currently being drilled within the existing DX Mineral Resources envelope.

o  Both holes have been drilled to the top of the Anhydrite Member and are being cased.

o  Coring of the Salt Member beneath the anhydrite is planned to commence early in January.

o  Drilling to date has confirmed that the depth of the main contacts in the rocks above the Salt Member are accurately modelled by the new geological model.

The Kola Potash Project

·    A workshop was held with the French consortium (FC) between 30 September and 2 October 2019 to improve the Company's understanding of the capital cost savings identified by the FC. This workshop yielded a list of further opportunities to optimise project capital cost. Further Company expenditure would be required to further develop these opportunities in conjunction with the FC. The opportunities included options to further reduce the timeframe of the construction schedule, potential reductions in construction rates and changes in scope/design that could deliver capital cost savings.

·    The pricing of the Kola DFS BoQ by alternative contractors was concluded in September with receipt of proposals from 5 construction groups and indicated a potential of rates-based savings of more than $300 million on the DFS capital cost.

·    Discussions with other EPC groups and capital optimisation consultants, indicate that with further Company expenditure on capital optimisation incorporating identified design changes the overall project capital costs may be significantly further reduced.

·    The Company is currently focused on development of lower capital cost DX project and will continue to explore options to reduce the Kola capital cost but is not planning further expenditure on the optimisation of Kola in the near term. 

ENDS

Forward-Looking Statements

This report contains statements that are "forward-looking". Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-looking statements. By their very nature and whilst there is a reasonable basis for making such statements regarding the proposed placement described herein; forward-looking statements are subject to known and unknown risks and uncertainties that may cause our 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. Statements in this report regarding the Company's business or proposed business, which are not historical facts, are "forward looking" statements that involve risks and uncertainties, such as resource estimates 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.

Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.

 

END

 

 

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