Exploration and development company Kore Potash has completed a prefeasibility study (PFS) on the Dougou Extension (DX) project, which has confirmed the district-scale development potential of this potash basin and the standalone commercial viability of the DX project, CEO Brad Sampson says.
Kore’s flagship asset is the 97%-owned Sintoukola potash project, in Congo-Brazzaville.
“The estimated $286-million capital cost to construct the DX project in just 21 months makes it attractive from a capital and near-term cash flow perspective and low operating costs will allow Kore to profitably deliver muriate of potash (MoP) to our target markets.
“Building on the PFS and previously published positive scoping study for the DX project, we can rapidly progress to conducting a definitive feasibility study, which will continue to improve Kore’s understanding of the asset and de-risk the project even further," he notes.
Sampson says accelerating the company into production and early cash flow generation through the DX project will provide a strong platform to continue to optimise the Tier-1 Kola project and the wider potash basin, and significantly improve its commercial position to undertake its development.
Further, construction of the DX project is expected to deliver advantages in terms of overlapping infrastructure, thereby reducing the future capital cost at Kola.
“Developing the DX project first is the best way forward for all of the company’s stakeholders: our local communities; the government of the Republic of Congo; and our shareholders. We look forward to working with all these parties as we progress the DX project into production and look to unlock the significant value within Kore’s portfolio,” Sampson enthuses.
The PFS has estimated a nameplate production target of 400 000 t/y MoP over an initial 18-year life based on probable ore reserves.
It indicates average yearly earnings before interest, taxes, depreciation and amortisation of $118-million.
Average yearly post-construction, post-tax, free cash flow is about $95-million; and there is an about 4.3 years post-tax payback period from first production.
The PFS has confirmed low technical risk using selective solution mining, an efficient potash extraction method in use at multiple potash operations globally.
The PFS outcome reinforces Kore’s broader development strategy for its deposits in the Sintoukola potash basin.
There is also competitive costs to supply MoP to target markets. The close proximity to a deep water port at Pointe Noire creates a competitive advantage of reduced shipping distance compared to northern hemisphere producers, which tend to be well inland.
The higher grade and shallower deposits than the majority of existing potash producers contributes to the project's competitive cost structure.