Kore Potash: Updated DX Pre-Feasibility Study

9th November 2020

Updated Dougou Extension (DX) Pre-Feasibility Study Production Target

Kore Potash plc, 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”), is pleased to announce an update to the Dougou Extension (“DX”) Pre-Feasibility Study (“PFS”) published on 13 May 2020 (the “Original PFS”) following the completion of a review of the Production Target by independent consultants Agapito Incorporated(the “Updated PFS”). A summary of the results is presented herein.

Highlights:

Updated Production Target

  • Kore completed a PFS on the DX Project in May 2020 and released the key outcomes in AIM/JSE/ASX release dated 13 May 2020. The PFS mine schedule was comprised solely of declared Sylvinite Ore Reserves of 17.7 Mt at a grade of 41.7% KCl. The Ore Reserve estimate for the DX Project is unchanged and all key assumptions and modifying factors remain valid.
  • The process of completing this Updated PFS has involved application of all modifying factors to that portion of Indicated Resources that were not converted to Ore Reserves and to Inferred Resources. Kore has sufficiently advanced all modifying factors on this material such as to have a reasonable basis for the view that eventual conversion to Ore Reserves is likely for a significant portion of this material. As a result, the production schedule in this Updated PFS includes 2.43 Mt of MoP from Indicated Mineral Resources and 2.31 Mt MoP from Inferred Mineral Resources that were not part of the PFS mine schedule.
  • While each of the modifying factors was considered and applied to this additional material, there is no certainty of eventual conversion of this material to Ore Reserves or that the production target in the Updated PFS will be realised.

Updated Financial Outcomes

  • The Updated Production Target extends the project life from 18.4 years to 30 years at a production rate of 400,000 ktpa MOP based on Probable Ore Reserves, Indicated Mineral Resources and a portion of Inferred Mineral Resources (the “Production Target”). The scheduled extraction includes 34.5% of the Inferred Mineral Resources which contributes 20% of the life of project MoP production.
  • Approximately 4.3 years post-tax payback period from first production.
  • Attributed NPV10 (real) of US$412 million and 23.4% IRR on a real post tax basis at life of project average granular MoP price of US$422/t (Argus Media’s price forecast CFR for DX Project’s target markets).

High quality Ore Reserves and Mineral Resources

  • The Sylvinite Ore Reserves of 17.7 Mt at a grade of 41.7% KCl, have not changed from the Original PFS.
  • Grade of the Ore Reserves is in the top quartile of all operating potash mines and potash development projects globally.
  • The total sylvinite Mineral Resources of 145 Mt at a grade of 39.7% KCl, remain unchanged.

Cautionary Statement

  • There is a low level of geological confidence associated with Inferred Mineral Resources. There is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target itself will be realised.
  • The Updated PFS referred to in this announcement has been undertaken to further investigate the potential for a new potash development in the Republic of Congo.
  • The Updated PFS is a preliminary technical and economic study of the potential viability of the DX project and is based on low level technical and economic assessments (AACE Class IV estimate).
  • The PFS Production Target is based on Probable Ore Reserves of 17.7 Mt sylvinite at an average grade of 41.7% KCl, plus production from Indicated Mineral Resources not included in Ore Reserves, plus production from 34.5% Inferred Resources totalling 20% of LOM production.
  • The DX Sylvinite Production Target is 30.6 Mt of Sylvinite at 39% KCl, with an equivalent contained MoP of 12.1 Mt with a KCl grade of 98.5%.
  • The PFS Production Target is not reliant on any exploration targets or qualifying foreign estimates.
  • The Updated PFS is based on the material assumptions outlined in the announcement “Dougou Extension (DX) Pre Feasibility Study” dated 13th May 2020 and updated in this announcement and Appendix B of this announcement. These include assumptions on availability of funding. While the Company considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the PFS will be achieved.
  • To achieve the range of outcomes indicated in both the Original PFS and the Updated PFS, base case funding in the order of US$286 million will likely be required. Investors should note that there is no certainty that the Company will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of the Company’s existing shares.
  • It is also possible that the Company could pursue other ‘value realisation’ strategies such as a sale, partial sale or joint venture of the project. If it does, this could materially reduce the Company’s proportionate ownership of the project.
  • Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Original PFS or the Updated PFS.
  • The Mineral Resources and Ore Reserves underpinning the production target and forecast financial information in this combined AIM/JSE/ASX Release were prepared by independent expert Dr Michael Hardy, Competent Persons in accordance with the requirements of the JORC Code 2012 edition (JORC).

Brad Sampson, CEO of Kore, commented:

“We are very pleased to be able to provide updated outcomes for the DX PFS.”

“We were already confident that DX is a world class asset, with very high grades and very low costs; and this update improves that confidence.”

“The DFS for DX is already underway and we fully expect it to confirm the first-rate results we have published today. As we move towards the second phase of the DFS and to production we will be able to further de-risk the Project and demonstrate DX’s investment case.”

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