Kore signs heads of agreement for construction of Kola

Highlights

• Construction HoA signed with SEPCO Electric Power Construction Corporation (SEPCO) to construct Kola.
• Agreement signed in the presence of the Minister of State and Minister of Mining, Industry and Geology of the Republic of Congo, Pierre Oba.
• The HoA recognises the recent Kola optimisation study outcomes and confirms:
  • Kola is designed with capability to produce 2.2 million tpy of granular muriate of potash (MoP) over an initial 31-year life.
  • The Kola construction period will be 40 months.
  • The capital cost to construct Kola will be US$1.83 billion.
  • The capital cost of the underground works component of Kola may be reviewed following completion of additional investigations by SEPCO during the preconstruction engineering design phase.
  • The EPC contract will be based on the Fédération Internationale Des Ingénieurs-Conseils (FIDIC) silver book 2017.
  • SEPCO will continue negotiations with Kore with a view to finalising all EPC terms and presenting the completed EPC construction proposal to Kore in August 2022.
• The Summit Consortium have reaffirmed their commitment to provide Kore with a financing proposal for the full construction cost of Kola, and that the financing proposal will be provided after Kore has received the EPC proposal and has agreed with SEPCO on the key EPC terms.

Brad Sampson, CEO of Kore Potash, commented: “The HoA with SEPCO reconfirms their commitment to advance from the completed Kola optimisation phase, to construction contract formation and then into construction of Kola. We look forward now to receiving the EPC contract proposal.”

HoA

Kore Potash signed a HoA for the construction of Kola in the presence of the Minister of State and Minister of Mining, Industry and Geology of Congo, Pierre Oba. Following the signing of the HoA, the Minister of State commented that, the Kola project is of vital international interest and congratulated Kore Potash on the successful outcome of negotiations with SEPCO.

The HoA confirms the timeline for SEPCO to complete their discussions with Kore ahead of presenting the company an EPC construction contract proposal for Kola. It also provides additional clarity on matters that SEPCO are required to finalise in advance of presenting Kore with the construction contract proposal.

The HoA provides for

• Kola to be designed and constructed as a conventional underground potash mine and processing plant producing up to 2.2 million tpy of granular MoP over an initial 31 year life.
• The granular MoP produced by Kola will be at a minimum quality of 95.3 % KCl in line with international standards.
• The capital cost to construct Kola will be US$1.83 billion as detailed in the announcement ‘Kola Optimisation Study’ on 27 June 2022 and the construction period will be 40 months.
• During the preconstruction engineering design phase, the HoA provides SEPCO with an opportunity to adjust the costs related to the underground mine portion of the works. SEPCO’s current capital cost is based in part upon information collected during the definitive feasibility study phase, some of which SEPCO continue to review. Should the final agreed quantities of materials and labour or the underground construction period differ materially from the baseline, SEPCO will be able to adjust proportionately. The underground portion of the works (excluding equipment and infrastructure) is currently estimated as US$164 million, which represents 9% of the total Kola capital cost.
• SEPCO will also be able to adjust the capital cost if Chinese RMB or Congolese FCFA currency exchange rates to the US dollar vary materially prior to commencement of the works. In such circumstance only the cost of affected works or components may be adjusted.
• SEPCO will provide Kore with a binding construction contract proposal based on FIDIC Silver book 2017 terms in August 2022.

Read the article online at: https://www.globalminingreview.com/mining/30062022/kore-signs-heads-of-agreement-for-construction-of-kola/