Kore Potash secures $2.2 billion funding for Kola Project in Congo

In a significant move for the Republic of Congo, Kore Potash, a UK-based potash developer, has signed a non-binding term sheet with the Swiss investment platform OWI-RAMS. This agreement aims to secure $2.2 billion in funds for the flagship Kola Project, responsible for producing muriate of potash (MoP), a key agricultural nutrient. The funding structure is a dual approach, comprising approximately $1.53 billion in senior secured project finance and around $655 million in royalty financing. The decision demonstrates Kore Potash's commitment to long-term sustainability and its goal to enhance food security in Africa. The senior secured facility is designed to comply with Shariah principles, offering a fixed profit payment that ranges from 6.8% to 9.3% annually. The repayment structure is deferred during the 49 to 50 month construction phase and will be amortized over a span of 7 to 8 years. Although the terms secured are non-binding, they represent a crucial milestone for Kore Potash's ambitions to put the Kola Project into production. However, fulfilling specific requirements is necessary to implement the plan effectively. This includes appointing an independent project overseer and finalizing an operator agreement, among other stipulations. Complementing the senior secured finance, the royalty financing introduces a quasi-equity model ensuring that Kore Potash can prevent equity dilution, thereby protecting shareholder interests. Under this arrangement, OWI-RAMS will receive 14% of gross revenue while loans are repaid, which can increase to 16% following full repayment. Moreover, OWI-RAMS can acquire up to 100% of the project's MoP output at market prices for the project’s 23-year duration. This innovative financing model is set against a backdrop of robust global demand for potash, which is expected to rise to 40.9 million tons by 2025, attributed to growing food security needs and concerns regarding soil health. Kore Potash’s Kola Project, located in the Sintoukola Basin, is 97% owned by the company and is projected to produce approximately 2.2 million tons of MoP annually, equating to around 50 million tons over the life of the project. The significance of this development is underscored by the nearby Dougou Extension project also held by Kore Potash. The potash market's value is greatly emphasized by the material’s essential role in fertilizers; its potassium content plays a crucial part in the nutrition of plants, animals, and humans alike. With the recent developments, Kore Potash positions itself for potential growth in an industry facing increasing pressure to meet the needs of a burgeoning population while contributing to food security initiatives across the continent and beyond.