Australian junior company Kore Potash plc has signed a non-binding Memorandum of Understanding (MOU) to arrange the financing required to build the Kola potash project in the Sintoukola Basin in the Republic of Congo.
The MOU with Mauritius-based Summit Africa Ltd. outlines a roadmap to optimize, fully finance and construct the project via a mix of debt and royalty financing, Kore Potash said in an April 6 statement.
Summit and its technical partners China’s SEPCO Electric Power Construction Corp. and China Enfi Engineering Corp. which has been subcontracted by SEPCO, will work with Kore Potash to undertake an optimization study to reduce Kola’s capital cost with a target of less than US$1.65 billion.
Kore will contribute US$0.9 million to the optimization study costs, while SEPCO will cover the remaining 50 percent of the estimated costs of the study.
Kore on April 7 announced its intention to raise approximately US$11 million in a proposed fundraise to fund its share of the optimization study, as well as ongoing working capital requirements. The expected split of funds to be raised is approximately US$5.5 million via an unconditional placing; and approximately US$ 5.5 million via a conditional placing and subscriptions.
Under the financing structure proposed under the MOU, Kore would be required to contribute to the capital needed to build the project and would retain 90 percent equity in Kola. The company currently owns 97 percent of Kola where a 2.2 million mt/y mining operation over a 33-year life is being targeted.
Summit is an African strategic advisory, corporate finance, and alternative investment group and in 2016 led and arranged the $50 million financing of the Definitive Feasibility Study for Kola. As part of that financing, both the Oman Investment Authority (then known as the State General Reserve Fund of Oman) and Chile’s SQM each invested $20 million (GM Sept. 1, 2016). As a result, SQM was understood to have acquired an 18.2 percent stake in Kore Potash, while Oman Investment Authority also became an important stakeholder.