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Kore’s JSE share price rises on confirmation of receipt of EPC proposal, draft contract

9th February 2024

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Triple-listed Kore Potash’s share price on the JSE surged by more than 30% on February 9 after it confirmed that PowerChina International Group had, on February 6, delivered its engineering, procurement and construction (EPC) proposal and draft EPC contract for Kore’s 97%-owned Kola project, in Congo-Brazzaville.

In April 2021, ASX-, JSE- and Aim-listed Kore established a memorandum of understanding with the Summit Consortium for optimisation and EPC services, alongside a debt and royalty financing proposal for the Kola project.

The optimisation study results, released on June 27, 2022, supported advancing to Kola's next developmental phase.

The initial EPC contract price aligns with expectations and reconfirms the capital cost detailed in the study.

On June 28, 2022, Kore Potash entered into a heads of agreement (HoA) with Sepco Electric Power Construction. The HoA acknowledged the study’s verification of Kola’s capital costs and construction timeframe and initiated further EPC contract negotiations.

Owing to Kola’s significant scale, lengthy construction period and extensive financing needs, Kore sought, from Sepco’s holdings company PowerChina, the customary EPC contract assurances, including performance and retention bonds to ensure construction and operational efficacy.

On August 8, 2023, Kore and Sepco reached a revised agreement to furnish an EPC contract for the Kola project, contingent on completing further engineering designs resulting from PowerChina’s review, leading to a joint EPC proposal and contract presentation by PowerChina and Sepco to the company.

During the past five months, PowerChina led five external technical groups that completed additional design and engineering work.

Specific design areas included the underground mine, mineral processing jetty and transshipment operations, energy transportation and storage, conveyor systems and materials handling.

Sepco had personnel living in the country for the past 24 months who continued dialogue with potential in-country service providers and conducted several Kola site visits collecting information for both the study and the works.

Additionally, Sepco mobilised a larger team to Kola for four months in the second half of the past year to source additional information to enable finalisation of the works, including the planned service corridors, conveyor route and geomechanical information on foundation materials.

These findings were presented to PowerChina in early December 2023.

Kore Potash and Sepco/PowerChina will now further negotiate the EPC proposal and draft the EPC contract, targeting signing full EPC documentation by the end of April.

The Summit Consortium has advised that the financing proposal for the total construction cost of Kola will be provided to the company within six weeks of EPC documentation terms being finalised.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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