It is worth reminding ourselves where we are with KP2Strengths...

It is worth reminding ourselves where we are with KP2

Strengths and Positive Factors:

• KP2 benefits from a strong, supportive relationship with the Republic of Congo government, which has shown commitment to the Kola project through formal engagements and a 10% stake in the project, providing political stability and regulatory backing.

• The company has secured a fixed-price Engineering, Procurement, and Construction (EPC) contract with PowerChina, signed in late 2024, which helps mitigate cost overruns and schedule risks typical of large mining projects.

• KP2’s long-standing partnership with the Summit Consortium, a consortium of investors and engineering firms. The term sheet is with KP2 for approval – hopefully by the end of May. We are lead to believe the term sheet will provide full debt and royalty financing for the Kola project, potentially eliminating the need for further equity dilution and allowing Kore to retain a 90% stake.

• The company’s board is experienced and professional, actively managing risks and governance, as reflected in regular risk reviews and strategic oversight.

Challenges and Risks:

• Despite the recent fund raise, KP2 continues to report losses and has a tight cash position, with a good possibility they will need to raise additional capital in late 2025 to cover working capital and bridge to financial close, indicating ongoing funding risks.

• Despite the fixed-price EPC contract, large projects like Kola often face cost and time overruns, and any technical or geotechnical issues could trigger contract termination clauses, posing execution risks.

Outlook:

Kore Potash is advancing toward production with strong institutional partnerships and government support, positioning it well to capitalise on growing potash demand at an ever increasing sale price. However, it must successfully secure full project financing, manage construction risks, and maintain liquidity to realise its potential. The imminent confirmation of funding will be a massive milestone and this should clear the path to begin mine production in Jan 26. (and potentially rerate the shares). I am still very bullish on KP2 and think the reward outweigh the risk - by a long margin.