Republic of Congo Archives - International Mining

Kore Potash says it has signed a Heads of Agreement (HoA) with SEPCO Electric Power Construction Corporation for the construction of the Kola potash project in the Republic of Congo.

The HoA recognises the recent Kola optimisation study outcomes, which recently confirmed its potential to produce 2.2 Mt/y of granular muriate of potash over an initial 31-year life.

Brad Sampson, Chief Executive Officer of Kore Potash, said the HoA with SEPCO reconfirms the Chinese company’s 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 (engineering, procurement and construction) contract proposal,” he said.

The Kola optimisation study outlined a project with a capital cost of $1.83 billion on an EPC basis. It also envisaged a 40-month construction period.

Kola is designed as a conventional mechanised underground potash mine with shallow shaft access. Ore will be extracted within ‘panels’, using continuous miners of the drum-cutting type. The mine design adopts a relatively typical layout including panels, comprised of rooms and pillars.

The mine design is based on a minimum mining height of 2.5 m with mining being undertaken by a continuous miner capable of mining seam heights of between 2.5-6 m. Each panel is accessed by four entries. Each entry is 8-m wide and 3-6-m high depending on the seam height. The rooms are mined in a chevron pattern at an angle of 65° from the middle entry, each with a length of approximately 150 m.

Mine access is provided by two vertical shafts, each 8 m in diameter. The shafts will be sunk near the centre of the orebody. To provide access to the underground, the intake shaft will be equipped with a hoist and cage system for transportation of persons and material. The exhaust shaft will be equipped with a pocket lift conveyor system to continuously convey the mined-out ore to the surface. Both shafts are approximately 270-m deep in the plan.

Mining equipment selected for Kola includes a fleet of seven electrically-powered continuous miners. Ore haulage from the continuous miners to the feeder breaker apron feeder will be done using electrically-powered shuttle cars, with a rated payload of 30 t and a 250 m power supply cable. Underground conveyor belts will be used for ore transportation to the shaft.

The belt conveyors are distributed in the haulages and into the working panels near the continuous miner working face. The ore will be placed on the belts from feeder breakers that are fed by the shuttle cars. Belt conveyors will carry the ore loaded by the feeder breakers to the ore bins. The ore is then conveyed from the ore bins to the vertical conveyor (pocket lift) system located in the exhaust shaft.

Ore from underground is transported to the process plant via an overland conveyor approximately 25 km long. After processing, the muriate of potash product is conveyor-transported 11 km to the marine export facility. The potash is conveyed from the storage area onto barges via the dedicated barge loading jetty and then trans-shipped into ocean going vessels for export.

Kore Potash and Summit Africa Ltd, on behalf of a consortium of investors and engineering firms, have signed a non-binding memorandum of understanding (MoU) to arrange the total financing required for the construction of the Kola potash project in the Republic of Congo.

The MoU with Summit outlines a roadmap to optimise, fully finance and construct Kola via a mix of debt and royalty financing, it said.

Summit and its technical partners, SEPCO Electric Power Construction Corp and China ENFI Engineering Corp, who has been subcontracted by SEPCO, will work with Kore to undertake an optimisation study to reduce Kola’s capital cost with a target of less than $1.65 billion.

Kore, which owns 97% of Kola, will contribute around $900,000 to the optimisation study costs, with SEPCO covering the remaining 50% of the estimated study costs, it said.

Summit is an Africa-focused strategic advisory, corporate finance and alternative investment group headquartered in Mauritius who, 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 called the State General Reserve Fund) and Sociedad Quimica y Minera de Chile (SQM) each invested $20 million.

Summit’s role in the MoU is to, again, be the lead arranger and to advise the company concerning the most optimal financing solution that would see the delivery of the Kola project, Kore said.

SEPCO will be the engineering procurement and construction contractor for Kola within the Summit consortium. ENFI’s potash-specific experience includes design and construction of an underground potash mine in Southeast Asia.

Summit, SEPCO and ENFI commenced discussions with the company towards financing the construction of Kola in the second half of 2019.

The MoU provides the Summit consortium with a nine-month period to present a financing proposal to fully finance the construction of Kola via a combination of debt and royalty financing. This means the company would not be required to raise equity to fund the capital cost of construction as the equity portion will be covered by the royalty funding with the company retaining its 90% interest in the project (the Republic of Congo Government receiving the remaining 10%).

The results of the definitive feasibility study for Kola were announced in January 2019. During its review of the DFS, the company and its independent consultants identified several opportunities to achieve a material reduction in the capital cost of Kola, but the realisation of these opportunities requires further capital optimisation studies, it said.

“Having already completed a preliminary review of the DFS and the potential optimisation opportunities identified, the technical partners in the Summit consortium (SEPCO and ENFI) have confirmed a target capital cost for the optimisation study of $1.65 billion,” Kore said. “Reducing the capital cost of Kola will reduce the size of the financing required for construction and improve returns for the company’s shareholders. The Summit consortium has set out in the MoU that achieving the target capital expenditure in the optimisation study is a condition for Kore to receive the financing proposal.”

Kola is a high grade, high quality, shallow sylvinite potash deposit situated on an existing mining licence, approximately 35 km from the coast, and 65 km north of the harbour city of Pointe Noire, Kore says. It comes with a 2.2 Mt/y muriate of potash production profile over a 33-year mine life.

The permitting and agreements required for construction are in place including the environmental permit, trans-shipment permit and the Mining Convention with the government.

Once in production, Kola is anticipated to be one of the lowest cost potash producers globally, ideally located to supply nearby African and South American markets, the company added.

Kore Potash progresses Kola mine development plans, signs SEPCO agreement

Kore Potash and China’s SEPCO, ENFI to work on Kola potash optimisation study