Kore Potash (LON: KP2) unveiled plans on Thursday to raise around $11 million, which will be used in part for a planned optimisation of its Kola potash project.
Of the $11 million, approximately $5.5 million will come from an unconditional placing and the other $5.5 million from a conditional placing and subscriptions. Existing shareholders have already indicated their support and plan to take part in the fundraise.
This is an important step for Kore, as it means great things for its exciting Kola project, located in the Republic of Congo’s (“RoC”) Sintoukola Basin.
The firm’s largest shareholders, the Oman Investment Authority and Sociedad Quimica y Minera will each have the opportunity to subscribe for shares in order to maintain their shareholdings.
An associate of substantial shareholder Harlequin Investments, David Steven, intends to take part in the fundraise, while David Hathorn plans to participate once Kore is not in a closed period.
Earlier this week, the firm reported that it had signed a non-binding memorandum of understanding (“MOU”) for full financing of Kola. This was huge news for Kore, which signed the MOU with Summit Africa, on behalf of a consortium of engineering companies and investors.
The MOU set out a roadmap for Kola, all the way through to construction, which involves combined debt and royalty financing.
This is conditional on completion of an optimisation study for Kola, which is aimed at cutting the project’s capital cost to less than $1.65 billion.
Under the currently proposed financing structure, Kore would not contribute to the capital needed to build Kola, but would separately contribute around $900,000 to optimisation study costs.
The $11 million, Kore said, will allow the company to fund work related to the optimisation study, as well as meeting “ongoing working capital requirements”.
With just this fundraise, the firm will have enough working capital to implement its strategy for the next 12 months at least.
The MOU will see Kore keep a 90% equity interest in Kola while the RoC government’s keeps its own10% shareholding.
Kola, as a high-grade and high-quality shallow sylvanite potash deposit, is most promising. Not only is it just 35 kilometres away from the coast, it is also a mere 65 kilometres north of harbour city Pointe Noire.
On top of that, Kola also has permitting and agreements in place for its construction, including environmental and trans-shipment permits as well as a mining convention with the government.
Overall, Kore believes Kola could be one of the world’s lowest cost potash producers and is excellently situated to supply the African and South American markets.
Potash is the name of a group of minerals that provide potassium for plant growth. It is among the three key plant nutrients, alongside nitrogen and phosphorus. It helps maintain the fertility of soil, as well as boosting the health of plants.
Potassium is sometimes called the “quality nutrient” due to its important effects on things like the size, taste, and colour of foods.
“Kola remains one of the most attractive potash projects in the world, with market low-operating costs,” said Kore.
Author: Anna Farley
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