Kore Potash plc, the potash development company whose flagship asset is the 97%-owned Sintoukola Potash Project (“Project”), is pleased to announce that the Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licences has been gazetted into law following ratification by the Parliament of the Republic of the Congo (“RoC”).
· The gazetting of the Mining Convention is a critical milestone for the Company, providing security of title and the right to develop and operate the Kola mining project as well as the adjacent Dougou and Dougou Extension deposits.
· The Mining Convention concludes the framework envisaged in the 25-year renewable Kola and Dougou Mining Licences granted in August 2013 and May 2017, respectively.
· The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the development and operation of Kola and Dougou Mining Licenses, which amongst other items include import duty and VAT exemptions and agreed tax rates during mine operations.
· The Mining Convention provides strengthened legal protection of the Company’s investments in the RoC through the settlement of disputes by international arbitration.
Brad Sampson, CEO of Kore, commented:
“The finalisation of the Mining Convention creates certainty on the legal and fiscal regime within which Kore Potash will operate its potash projects in the Republic of the Congo. Furthermore, it demonstrates the Government of the Republic of Congo’s alignment to realise the potential of the Congo potash basin and the commitment to the development of the Kola Project.
This is an exciting milestone which has been reached at an important time, as Kore Potash works to complete its review of the Kola Definitive Feasibility Study.”
“The recent growth in the sylvinite mineral resources and the definition of exploration targets highlights the potential scale and strategic importance of the Sintoukola area. With the Mining Convention in place the Company is one step closer to having all necessary permits and studies in place to commence development.”
The Mining Convention, signed between the RoC Government (‘Government’) and Kore Potash on 8 June 2017, was approved by the RoC Parliament during third quarter 2018, gazetted into Law on 29 November 2018 and printed on 6th December 2018.
The Mining Convention encompasses the areas of the Kola Mining License and the Dougou Mining License as shown in Figure 1.
Figure 1: Map showing the location of the Project and Mining Convention area (available at www.korepotash.com)
Summary of key terms of the Mining Convention
· Concessions to corporate tax rate during the initial 10 years:
o first 5 years – 0%;
o years 6-10 – 7.5%; and
o rest of mine life – 15%
· Concessional corporate tax rate may be renewed in conjunction with investment in expanded production capacity.
· Exemption from withholding taxes including interest, dividends and capital gains during the term of the mining convention.
· Exemption from VAT, import duty and export duty (for surplus construction material) during construction, applicable to Kore Potash and all contractors.
· Guarantees that the Government will facilitate and support implementation of the Project and to permit export of the final product through the use of a dedicated jetty.
· Guarantees that Kore Potash and all its subcontractors may employ foreign workers.
· Guarantees to permit creation of securities over all or part of the share capital of Kore Potash’s RoC subsidiaries and the Kola and Dougou Mining Licenses.
· Settlement of any disputes through international arbitration.
· Stability of legal, fiscal, tax and customs regimes during the entire term of the Mining Convention and any extensions.
· The Government will be granted a 10% equity interest in Kola Mining SA and Dougou Mining SA on a free-carry basis for the initial phase of projects at Kola or Dougou. Post the initial phases, the Government is required to contribute to any capital expansion programme or dilute.
· The Government may appoint one director to the board of each of Kola Mining SA and Dougou Mining SA.
· A mining royalty, of 3% of the Ex-Mine Market Value.
· The Mining Convention has a term which covers the life of the mining permits including any extensions.