TIDMKRPZ
RNS Number : 4028W
Kropz PLC
22 December 2021
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
22 December 2021
Kropz Plc
("Kropz" or the "Company")
Hinda Update
Kropz Plc (AIM: KRPZ), an emerging African phosphate developer,
is pleased to provide the results of the updated feasibility study
("Updated FS") for its wholly-owned Hinda phosphate project
("Hinda"), located in the Republic of the Congo ("RoC").
Hatch Africa (Pty) Ltd ("Hatch"), a global engineering and
construction firm, was appointed in February 2021 to complete the
Updated FS on Hinda, targeting a phased approach in line with the
terms of the mining investment agreement.
Highlights
-- The phased approach studied will initially deliver 1 million
tonnes per annum ("Mtpa") phosphate rock concentrate ("Product")
through the existing Port of Pointe-Noire (Phase 1), expanding to
2Mtpa Product through a new port facility at Pointe Indienne (Phase
2);
-- The feasibility study demonstrates low technical and mining
risk and attractive project economics;
-- Mineral resource is unchanged from the 2018 Competent Persons
Report, with 201 million tonnes of measured mineral resource at
11.6% P(2) O(5) and 381 million tonnes of indicated mineral
resource at 9.8% P(2) O(5) ;
Classification Quantity Grade Contained
(Mt) (%P(2) P(2) O(5)
O(5) ) (Mt)
---------------- --------- -------- -----------
Measured 200.5 11.6 23.3
Indicated 380.9 9.8 37.3
Inferred 94.4 7.5 7.1
---------------- --------- -------- -----------
Total 675.8 10.0 67.7
-- Study delivers a 28 year life of mine ("LOM"), extracting 31
million tonnes of ore in Phase 1 and 214 million tonnes of ore in
Phase 2;
-- Estimated Phase 1 capital cost of US$ 355 million, Phase 2
capital cost of US$ 310 million (real, 2021), with a nominal, peak
funding requirement of US$ 392 million, as the first phase supports
the subsequent Phase 2 expansion capital expenditure;
-- Phase 1 operating cost on a free-on-board ("FOB") basis of
US$ 62.87/t Product, and Phase 2 operating cost of US$ 69.51/t
Product, inclusive of mining royalties. Using the latest price
forecast received from CRU on a FOB Pointe-Noire basis, the real
LOM EBITDA margin is US$65.48/t of Product;
-- Estimated three year execution schedule, allows first revenue
in 2025, assuming that the required funding is in place by June
2022; and
-- Base case, nominal internal rate of return ("IRR") of 19.2%
and base case, ungeared, nominal net present value ("NPV") (at
11.1% discount rate) of US$ 397 million.
Updated Feasibility Study
The phased approach was intended to reduce up-front execution
capital requirements by making use of existing port facilities;
this limits the first phase to 1 Mtpa Product.
This Updated FS includes detailed engineering of the open pit
mine, associated mine dewatering and surface water management, the
beneficiation plant and all associated infrastructure, tailings
storage facilities and water storage dam, a gas fired power plant
and gas supply pipeline, a 30kV overhead line to support
construction and early works, mine access roads, an accommodation
camp and port infrastructure. Costs and schedules associated with
procurement, construction management and commissioning are also
included.
Hatch has delivered a robust execution strategy, which provides
high confidence in achieving execution success. The beneficiation
plant employs standard and proven technologies, and the design is
based on extensive laboratory and pilot-scale test work completed
between 2013 and 2016.
Further Opportunities
A mine plan was run, scheduling the immediate commencement of
Phase 2 production, i.e. 2Mtpa Product. This opportunity led to a
conservative increase in ungeared NPV (at 11.1% discount rate) to
US$543 million with an IRR of 20.96%. The estimated capital cost
for the immediate commencement of Phase 2 is US$618 million, based
on the study work completed. If this option is studied further, it
should be possible to optimise both capital and operating costs
further.
Opportunities also exist to enter into a long term power
purchase agreement with one of several companies already
established in-country. The capital cost of the gas fired power
plant would therefore be removed though this would be offset by a
potential increase in power costs.
A number of other capital cost optimisation initiatives have
been identified for investigation ahead of detailed design.
Updated Environmental and Social Impact Assessment (" ESIA")
The project has a valid environmental compliance certificate
issued in April 2020, valid for 25 years. As a result of the
modifications to the project in the Updated FS, the ESIA has been
updated to comply with local regulations. Th e updated ESIA has
been conducted in parallel with the execution of the Updated FS and
will be submitted to the Ministry of Environment in Q4 2021.
For further information visit www.kropz.com or contact:
Kropz Plc
Mark Summers (CEO) +27 (0)79 744 8708
Grant Thornton UK LLP Nominated Adviser
Samantha Harrison
Harrison Clarke +44 (0) 20 7383
George Grainger 5100
Hannam & Partners Broker
Andrew Chubb +44 (0)20 7907
Ernest Bell 8500
Tavistock Financial PR &
IR (UK)
Nick Elwes +44 (0) 207 920
Jos Simson 3150
Oliver Lamb kropz@tavistock.co.uk
R&A Strategic Communications PR (South Africa)
James Duncan +27 (0) 11 880
3924
james@rasc.co.za
About
Kropz is an emerging African explorer and developer of plant
nutrient feed minerals with phosphate projects in South Africa and
the Republic of Congo. The vision of the Group is to become a
leading independent phosphate rock producer and to develop into an
integrated, mine-to-market plant nutrient company focusing on
sub-Saharan Africa.
Kropz plc owns an exploitation permit ("Hinda Permit") of an
area of 263.68 km(2) , attributed by Decree No. 2015-975 on
December 7, 2015. The Hinda Permit has been granted for a duration
of 25 years, renewable on request for a maximum duration of 15
years, in accordance with the Mining Code, until the exhaustion of
ore reserves.
Hinda is part of a national context marked by the Congolese
government's desire to diversify the economy while contributing to
the local economy through the creation of short- and long-term
employment and economic opportunities for the country's commercial
service companies.
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