Proposed Fundraise to raise approximately US$11 million

Kore Potash, the potash exploration and development company whose flagship asset is the 97%-owned Sintoukola Potash Project (“Kola” or the “Kola Project”), located within the Republic of Congo (“RoC”), today announces its intention to raise approximately US$11 million, before expenses, by way of an unconditional placing (the “Unconditional Placing”), a conditional placing (the “Conditional Placing”) (the Unconditional Placing and the Conditional Placing, together “the Placing”) and direct subscriptions (“Subscriptions”) of new ordinary shares (“New Ordinary Shares”) in the Company at a price of 1.1 pence (equivalent to 2.0 Australian cents) (the “Placing Price”) with certain eligible existing shareholders and new institutional and other investors (the Placing and the Subscriptions together being the “Proposed Fundraise”).

Shore Capital Stockbrokers Limited (“Shore Capital”) are acting as sole UK bookrunner (” Bookrunner”) in connection with the Proposed Fundraise.

Highlights

• The Company intends to raise approximately US$11 million in the Proposed Fundraise. The expected split of funds raised in the Proposed Raising is:
  • approximately US$5.5 million via the Unconditional Placing; and
  • approximately US$ 5.5 million via the Conditional Placing and Subscriptions.
• The Unconditional Placing and the Conditional Placing are together being conducted via an accelerated bookbuild expected to close later today. The accelerated bookbuild will be launched immediately following this announcement and the Placing is subject to the terms and conditions set out in the appendix to this announcement.
• The Australian element of the Proposed Fundraise is being coordinated by 180 Markets Pty Ltd.
• The Company has also received indications of support from a number of its existing shareholders that they will participate in the Proposed Fundraise, subject to any necessary shareholder approval.
• Allocations of New Ordinary Shares to investors as between the Unconditional Placing and the Conditional Placing will be determined by agreement between 180 Markets and Shore Capital, in consultation with the Company, and investors will be notified shortly after the completion of the bookbuild, of how many New Ordinary Shares they shall receive upon First Admission (closing of the Unconditional Placing) and how many they shall receive upon Second Admission, following the General Meeting (assuming the Resolutions are passed).
• The net proceeds of the Proposed Fundraise will allow the Company to fund the work it wants to undertake in relation to its planned Optimisation Study of the Kola Project and the Company’s ongoing working capital requirements.
• The Directors believe the net proceeds of the Proposed Fundraise will provide sufficient working capital for the Company to implement its strategy for at least the next 12 months.
• The New Ordinary Shares proposed to be issued pursuant to the Unconditional Placing will be issued within the Company’s existing ASX Listing Rule 7.1 capacity. Completion of the Conditional Placing and the Subscriptions are subject to, inter alia, shareholder approval of certain resolutions (including for the purposes of ASX Listing Rule 7.1 and ASX Listing Rule 10.11) to authorise the issue of the New Ordinary Shares (“Resolutions”) which will be sought at a general meeting of the Company to be convened for that purpose (the “General Meeting”), details of which can be found below.
• Certain South African investors, who fall within the exemptions set out in section 96(1)(a) and/or (b) of the South African Companies Act 71 of 2008 (“South African Companies Act”) intend to participate in the Subscriptions, and this is conditional on South African Reserve Bank approval being received (“SARB Approval”). Completion of the Proposed Fundraise shall not be subject to SARB Approval. Should SARB approval not be forthcoming then the Company will not be able to accept the funds from South African investors and the gross proceeds of the Proposed Fundraise will be lowered accordingly.
• David Stevens, an associated person to Harlequin Investments (a Substantial Shareholder as defined under the AIM Rules) has indicated his intention to participate in the Proposed Fundraise, such participation would be a related party transaction for the purposes of AIM Rule 13.
• David Hathorn has communicated his intention to participate in the Proposed Fundraise once the Company is not in a closed period.
• The Company’s two largest shareholders, the Oman Investment Authority (“OIA”) and Sociedad Quimica y Minera (“SQM”) will be offered the opportunity to subscribe for New Ordinary Shares at the Placing Price, in order to preserve their respective shareholdings in the Company. OIA and SQM have up to 20 business days to inform the Company if they intend to subscribe and such participation would be a related party transaction for the purposes of AIM Rule 13. Any participation by OIA and SQM would be in addition to funds raised via the Proposed Fundraise.
• The New Ordinary Shares will rank equally with the Company’s existing ordinary shares.
• The Placing is not conditional on either receiving SARB approval or the Subscriptions completing. Should SARB approval not be forthcoming and/or the Subscriptions otherwise not complete, the gross proceeds of the Proposed Fundraise will be lowered accordingly.

Background

On 6 April 2021, the Company announced that it had signed a non-binding memorandum of understanding (“MoU”) with Summit Africa Limited (“Summit”) which outlines a roadmap to optimise, fully finance and construct the Kola Project via a mix of debt and royalty financing. Summit and its technical partners SEPCO Electric Power Construction Corporation (“SEPCO”) and China ENFI Engineering Corporation (“ENFI”), which has been subcontracted by SEPCO, will work with Kore to undertake an optimisation study to reduce Kola’s capital cost with a target of less than US$1.65 billion (“Target Capex”). Summit will work with potential financing partner BRP Global Limited (together SEPCO and ENFI, the “Summit Consortium”) to, subject to completion of their due diligence and achieving the Target Capex through the optimisation study, present a financing proposal on behalf of the Summit Consortium based on debt and royalty funding for 100% of the Kola construction capital costs. Under the proposed financing structure, the Company would not be required to contribute to the capital needed to build the project and would retain a 90% equity interest in Kola. The MoU was signed in the Minister of Mines offices in Brazzaville with the Minister and his key staff present. Under the proposed financing arrangements, the RoC Government would retain their 10% shareholding in the Kola Project. The Company will contribute approximately US$900,000 to the optimisation study costs. SEPCO will cover the remaining 50% of the estimated costs of the study. Kola remains one of the most attractive potash projects in the world, with market low-operating costs.

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