Potash development company Kore Potash has signed nonbinding term sheets with Swiss-headquartered investment platform OWI-RAMS to arrange and provide a funding package of about $2.2-billion for Kore's Kola project, in Congo-Brazzaville.

The Aim-, ASX-, JSE- and A2X-listed company, which owns the Kola and the Dougou Extension projects in Congo-Brazzaville, noted in a June 10 statement to shareholders that the funding would be a blend of senior secured project finance and royalty financing. The senior secured project financing facility will account for about 70% of the overall funding, amounting to about $1.53-billion, while the royalty financing will account for the remaining 30% of the financing, or about $655-million.

The company's JSE share price rose by nearly 15% on the news, while its shares on the LSE rose by nearly 5%.

“The signing of these term sheets represents a pivotal step forward in realising the full potential of the Kola project. As the world seeks to strengthen agricultural resilience and secure essential nutrient supply chains, Kola is poised to become a globally significant source of potash.

"By securing a less dilutive funding structure aligned with long-term sustainability and value creation, we are safeguarding shareholder interests while advancing food security in Africa and beyond. We remain focused on working collaboratively with our strategic partners to address the remaining requirements and move confidently towards the delivery of this transformational project,” comments Kore chairperson David Hathorn.

OWI-RAMS deploys a bespoke investment strategy focused on advancing global food security and accelerating the energy transition through strategic investments in food system enablers and next-generation critical energy infrastructure. Its strategy includes providing capital solutions across the risk spectrum, from equity and structured loan offerings to bespoke senior and whole-loan facilities for sponsors and operating companies.

In relation to the Kola project, this includes contributing to global food security and stimulating economic growth for Congo-Brazzaville.

Kore and OWI-RAMS have agreed to leverage their respective strengths to deliver a long-term, sustainable investment servicing the global fertiliser industry.

As part of the progression toward binding legal agreements and financial close, Kore is required to further derisk the Kola project by addressing a number of key requirements, which are included as an initial list of conditions precedent.

These include appointing a third-party industry company to perform a watch-and-brief function across each of the key Kola project construction areas, which include mine development, processing plant, marine jetty and general infrastructure and finalising the operating strategy for the project.

Kore has initiated a formal process to appoint a qualified contract operator to take responsibility for the mine, processing plant and associated infrastructure following commissioning.

The company points out that while PowerChina, the company’s engineering, procurement and construction contractor, has expressed interest in assuming this role, Kore is engaging with several interested parties to conclude an operator framework that best meets the expectations of both Kore and its financiers.

Other conditions precedent include addressing political risk as a condition to financial close; and enhancing Kore’s internal capabilities and finalising the Kola project execution framework.

Kore says it plans to expand its management and operational team to ensure it possesses the depth and expertise required to oversee all external service providers, manage in-country operations, ensure health and safety compliance and uphold environmental and social performance standards, as well as prepare for long-term operational readiness. 

Further, OWI-RAMS and Kore have also agreed to explore downstream opportunities, including fertiliser blending plants, logistics infrastructure and precision agriculture platforms in regions such as Africa and Brazil.

These investments aim to enhance fertiliser self-sufficiency, bolster regional food system resilience and enable long-term food security impact, with the potash acquired from Kola supplying and enabling these downstream opportunities. 

Under the terms of the term sheets, OWI-RAMS will be granted the right to buy up to 100% of the muriate of potash (MoP) to be produced at the Kola project over the life of the mine at market-aligned prices.

The estimated capital cost to develop the Kola project is $2.07-billion. It is expected to produce about 2.2-million tonnes a year of MoP, delivering about 50-million tonnes of MoP over a 23-year life-of-mine.