Kore Potash, which completed a $1.2 million (R21.3m) fundraising at the beginning of July, closed the half year to June 2024 with cash and cash equivalents worth nearly $1m, against $1.5m in the contrasting period a year ago, while its exploration and evaluation assets dipped by $3.6m.
The company is pursuing the Sintoukola Potash Project, including the Kola and Dougou potash permits in the Republic of Congo Brazzaville. It said on Friday that exploration and evaluation assets, as at June 30, 2024, amounted to $172.7m compared to $176.3m a year ago.
This was after capitalising $1.3m in exploration and evaluation expenditure. Expenditure had, however, decreased by $4.9m as a result of the strengthening of the US dollar against the Congo-Brazzaville’s currency.
This tipped the company into an interim net loss of $528 636, leaving it with a net working capital position of $393 998. Kore Potash had net cash outflows from operating activities for the period of $185 492.
“Our globally-significant potash deposits in the Republic of Congo are ideally located to supply the important Brazilian agricultural market and high-growth African markets. The potash deposits being high grade, shallow and situated only 35 km from the Atlantic coast, with easy access to infrastructure and immense up-scaling potential (six billion tons of resources), are ideal for a competitive mining project,” the company said on Friday.
Increasing demand for potash and the resulting higher market price, as well as the potential for its Congolese tenements to be become one of the lowest-cost suppliers of potash, puts Kore Potash in a perfect position to increase business value, it added.
At the end of June, Kore Potash completed an optimisation study for its project in the Republic of Congo. The study put an optimised construction cost estimate of $1.8bn and a shortened construction schedule of 40 months on the project.
PowerChina had already delivered a draft engineering, procurement and construction (EPC) contract earlier this year. Negotiations are now underway with directors between PowerChina and Kore Potash for the construction of the Kola Project.
“The negotiations with PowerChina are advanced, and based on the status of the negotiations and the planned activity to finalise the contract, it is the directors expectation that the group will sign the EPC contract not later than by the end of October 2024,” said Kore Potash.
Should the contract not be signed by the end of next month, as expected, Kore Potash said it would unlikely be able to seek alternative contract partners before current cash reserves are utilised. It would also not be able to generate sufficient cash to fund its normal business activities, as projected.
Kore Potash believes that the Kola potash operation will have a lifespan of 33 years, during which it will produce up to 2.2 million tons of the commodity per year. In 2021, it announced it had signed a memorandum of understanding with the Summit Consortium to provide financing for the Kola project.
However, at the time, the project required an optimisation study on the mine be concluded first. On Friday, Kore Potash said it is focused on “completing the financing of Kola and moving forward to construction of Kola” as soon as possible.
BUSINESS REPORT