Johannesburg- and London-listed Kore Potash’s share price on the JSE and the LSE fell by more than 20% on June 24, after the company reported ongoing discussions with regard to the engineering, procurement and construction (EPC) proposal and draft EPC contract with PowerChina International Group.
The potash development company revealed that further important issues had been raised about completion and performance guarantee tests, which now needed to be further discussed and agreed on with PowerChina.
Kore Potash lodged its Quarterly Activities Report on April 29, reaffirming that PowerChina delivered its EPC proposal and draft EPC contract on February 6.
The company also previously advised that it and PowerChina had begun further detailed negotiation on the EPC proposal and draft EPC contract, and that the parties remained on track for the signing of full EPC documentation in the second quarter of this year, with the company meeting PowerChina senior officials in Beijing in early May.
The company on June 24 reported that the meeting took place as planned and progressed on many points.
However, owing to the high complexity of the Kola project, in Congo-Brazzaville, which involves underground mining, processing and offshore transshipment, the discussions involved many specialist engineers, financiers and lawyers with the objective of devising a fixed price contract which allows only minimal possibilities for variation.
This led to the raising of the subsequent issues, with a further session with PowerChina in either Beijing or Dubai now planned for early July.
Further, Kore said PowerChina had expressed an interest in operating the mine after construction.
Kore now also expects to receive a draft operating proposal from the Chinese company in July.
The company reiterated that it would need to raise further funds for the working capital requirements for the period up to signing full EPC documentation and the financing proposal for the complete construction of Kola from the Summit Consortium.
The company’s share price on the JSE fell by nearly 25% on the news and was still trading 17% lower at 15:00 on June 24.
Kore’s share price on the LSE also fell by 25% on the news.