Potash development company Kore Potash and African strategic advisory, corporate finance and alternative investment group Summit Africa have signed a nonbinding memorandum of understanding (MoU) to arrange the total financing required for the construction of the Kola potash project in Congo-Brazzaville.
The MoU with Summit outlines a roadmap to optimise, fully finance and build Kola using a mix of debt and royalty financing.
Summit, representing a consortium of investors and engineering firms, and its technical partners Sepco Electric Power Construction Corporation and China ENFI Engineering Corporation, which has been subcontracted by Sepco, will work with Kore to undertake an optimisation study to reduce Kola’s capital cost to less than $1.65-billion.
Summit will work with potential financing partner BRP Global to, subject to completion of their due diligence and achieving the target capital expenditure 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, Kore will not be required to contribute to the capital needed to build the project and will retain a 90% equity interest in Kola.
Under the proposed financing arrangements, the Congo-Brazzaville government will retain its 10% shareholding in the Kola project.
Kore will contribute about $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, Kore acclaims.