Kore Potash
Annual Report 2022

Plain-text annual report

KORE POTASH PLC ANNUAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022 CONTENTS CORPORATE DIRECTORY GLOSSARY REVIEW OF OPERATIONS AND STRATEGIC REPORT DIRECTORS’ REPORT CORPORATE GOVERNANCE REPORT INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME STATEMENTS OF FINANCIAL POSITION STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS ASX ADDITIONAL INFORMATION (UNAUDITED) 3 4 7 24 34 66 75 76 77 79 80 114 2 CORPORATE DIRECTORY NON-EXECUTIVE DIRECTORS Jonathan Trollip David Netherway Pablo Hernandez Mac-Donald COMPANY REGISTRATION NUMBER United Kingdom 10933682 NON-EXECUTIVE CHAIRMAN David Hathorn CHIEF EXECUTIVE OFFICER Brad Sampson JOINT COMPANY SECRETARY Henko Vos St James’s Corporate Services Limited PRINCIPAL & REGISTERED OFFICE (UK) 45 Gresham Street, London EC2V 7BG United Kingdom Telephone: +44 (0) 203 963 1776 AUSTRALIAN OFFICE Level 3, 88 William Street, Perth WA 6000 Telephone: +61 (8) 9463 2463 SHARE REGISTRY (UK) Computershare Investor Services Plc The Pavilions, Bridgwater Road Bristol BS99 6ZZ United Kingdom Telephone: +44 (0) 370 702 0000 SHARE REGISTRY (AUSTRALIA) Computershare Investor Services Pty Ltd Level 11, 172 St George’s Terrace Perth WA 6000 Telephone: +61 (0) 3 9415 4000 SINTOUKOLA POTASH S.A Level 3, Apartment C 91 Germain Bikoumat centre-ville route de la radio Immeuble Abdallah BP 662 Pointe Noire République du Congo Telephone: +242 22 294 1924 NOMINATED ADVISER AND JOINT BROKER SP Angel Corporate Finance LLP Prince Frederick House, 35 - 39 Maddox Street, London W1S 2PP United Kingdom Telephone: +44 (0) 20 3470 0470 SHARE REGISTRY (JOHANNESBURG) Computershare Investor Services (Pty) Ltd Rosebank Towers, 15 Biermann Avenue Rosebank 2196, South Africa Telephone: +27 (11) 370 5000 JOINT BROKER Shore Capital Cassini House, 57 St James’s Street, London SWIA 1LD United Kingdom Telephone: +44 (0) 20 7408 4050 JSE SPONSOR Questco Corporate Advisory Proprietary Limited Ground Floor, Block C, Investment Place 10th Road Hyde Park 2196, South Africa Telephone: +27 (11) 011 9205 AUDITOR BDO LLP 55 Baker St, London W1U 7EU United Kingdom Telephone: +44 (0) 20 7486 5888 SECURITIES EXCHANGE LISTINGS London Stock Exchange (AIM) Australian Securities Exchange (ASX) Johannesburg Stock Exchange (JSE) AIM, ASX and JSE Codes: KP2 ISIN: GB00BYP2QJ94 FINANCIAL PUBLIC RELATIONS Tavistock Communications Limited 18 St. Swithin's Lane, London EC4N 8AD United Kingdom Telephone: +44 (0) 20 7920 3150 WEBSITE https://www.korepotash.com/ 3 GLOSSARY Stands For / Meaning Definition and/or Additional Information Acronym / Term $ or USD Denotes USD or United States dollars 2018 UK Code 2018 UK Corporate Governance Code AGM Annual General Meeting AIM AIM ASX AUD Board Carnallitite/ Carnallite CDIs Australian Securities Exchange Australian dollars The board of directors of Kore Potash plc A rock type comprised predominantly of the potash mineral carnallite (KMgCl3·6H2O) and halite (NaCl) CHESS Depositary Interests CEO CFO Company Chief Executive Officer Chief Financial Officer Kore Potash plc (Parent Company) COO COVID-19 Chief Operating Officer Coronavirus 2019 DFS Definitive Feasibility Study Dougou Denotes the Dougou Project DPM DUP Dougou Potash Mining S.A. Déclaration d'Utilité Publique DX Dougou Extension EBITDA ENFI EPC Earnings Before Interest, Taxes, Depreciation and Amortization China ENFI Engineering Corporation Engineering, Procurement and Construction 4 The official currency of the United States of America and its territories, as well as being the functional and presentation currency of the Company and the Group. The UK corporate governance code that came into effect on 1 January 2018 and applies to accounting reference periods commencing on and after 1 January 2019. The mandatory yearly gathering of the Company’s interested shareholders. The latest AGM was held on 9 June 2022. AIM (formerly the Alternative Investment Market) is a market operated by the London Stock Exchange. The ASX is Australia's primary securities exchange. The official Australian currency. Carnallitite may be replaced by the word carnallite for simplicity. CDIs are instruments traded on the ASX that allow non- Australian companies to list their shares on the exchange and use the exchange’s settlement systems. In the Company’s case, one CDI is equivalent to one share traded on the AIM market or on the JSE. Kore Potash plc is public company incorporated and registered in England and Wales (registered number 10933682). An acute disease in humans caused by a coronavirus. It was originally identified in 2019 and became a pandemic in 2020. A DFS is an evaluation of a proposed mining project to determine whether the mineral resource can be mined economically. The Dougou Project (including the Dougou Extension (DX) Project) is part of the Sintoukola Potash Project. DPM is located in the RoC and is one of the subsidiaries of SPSA. A DUP, or translated as a “declaration of public utility”, is a formal recognition in RoC law that a proposed project has public benefits. The Dougou Extension sylvinite solution mining project. A particular form of contracting arrangement used in some industries where the EPC contractor is made responsible from design, procurement, construction, commissioning and handover of the project to the end-user or owner. the activities for all GLOSSARY (CONT) Stands For / Meaning Definition and/or Additional Information Acronym / Term ESIA GBP Granular MoP Group HoA Insoluble material JORC JORC Code JSE KCI KMP Environmental and social impact assessment British pound sterling The selling description for compacted MoP Kore Potash plc (Parent Company) and its controlled entities Head of Agreement Here refers to clays, organic material and other insoluble components of the sylvinite Australasian Joint Ore Reserves Committee for Reporting of The Australasian Code Exploration Results, Mineral Resources and Ore Reserves Johannesburg Stock Exchange Potassium Chloride Key Management Personnel Kola Kore Potash KPI KPM Denotes the Kola Project. Kore Potash plc Key Performance Indicator Kola Potash Mining S.A LSE London Stock Exchange LTIP Mining Convention Long Term Incentive Plan Denotes the mining convention signed by the Group and the government of RoC MoP MoU Mt/Mtpa NED OIA Period Muriate of Potash Memorandum of Understanding Million tonnes/Million tonnes per annum Non-Executive Director Oman Investment Authority (former SGRF) The current reporting period for the Annual report commencing 1 January and ending 31 December. 5 A process for predicting and assessing the potential environmental and social impacts of a proposed project, evaluating alternatives and designing appropriate mitigation, management and monitoring measures. The official currency of the United Kingdom. A list of the controlled entities within the Group is included in Note 8. Low insoluble content is considered advantageous. JORC is sponsored by the Australian mining industry and its professional organisations. The JORC Code is one of the most accepted standards for the reporting of a company's Mineral Resources and Ore Reserves. The securities exchange, licensed under the Financial Market Act (No 19 of 2012), as amended from time to time, operated by JSE Limited. to Refers those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group. The Kola Project is part of the Sintoukola Potash Project. See definition for “Company” above. KPM is located in the RoC and is one of the subsidiaries of SPSA. The LSE is the primary stock exchange in the United Kingdom. The mining convention governs the conditions of construction, operation and mine closure of the Kola and Dougou (including Dougou Extension) mining projects. The saleable comprising of a minimum 95% KCl. The MoU was signed on 6 April 2021 by the Company and Summit. form of potassium chloride (KCl), Non-Executive Director of Kore Potash plc. OIA, is a sovereign wealth fund in Oman, and is one of the Company’s substantial shareholders. Its investment in the Company is held in the name of Princess Aurora Company Pte. GLOSSARY (CONT) Stands For / Meaning Definition and/or Additional Information Acronym / Term Potash PFS Refers to potassium compounds, especially those of potassium chloride (MoP) or sulfate (SoP) Pre – Feasibility Study Refer to MoP and SoP for the definitions on the two main types of potash. A PFS is a comprehensive study of a range of options for the technical and economic viability of a mining project that has advanced to a stage where a preferred mining method is established, and an effective method of mineral processing is determined. A PFS is at a lower confidence level than a Feasibility Study. The RoC is where the Group’s exploration activities are located. SEPCO is an international engineering and construction group headquartered in Jinan, China. The Sintoukola Potash Project includes the Kola Project, the Dougou Project and the DX Project (previously known as the Yangala Project). SJCS, together with Henko Vos, are the Company’s joint company secretary. Also called potassium sulphate, arcanite, or archaically known as potash of sulphur. SoP is the inorganic compound with formula K2SO4. It is a white water- soluble solid. It is commonly used in fertilizers, providing both potassium and a source of sulphur. SPSA is the Company’s 97%-owned subsidiary located in the RoC, owned through the Company. SQM is a New York listed Chilean lithium & potash company and is one of the Company’s substantial shareholders. RoC Republic of Congo Rock-salt SBP SEPCO Sintoukola Potash Project SJCS SoP SPSA SQM Electric In this case, a rock comprised predominantly of the mineral halite (NaCl) Share-Based Payment(s) SEPCO Corporation Denotes the large potash project operated by the Group through SPSA located in the Kouilou Province of the Republic of Congo St James’s Corporate Services Limited Construction Power Sulfate of Potash Sintoukola Potash S.A. Sociedad Quimica y Minera de Chile S.A. Standard MoP The selling description for uncompacted MoP. Short Term Incentive Plan STIP Summit Africa Limited Summit The Summit Consortium refers to Summit, Summit BRP Global Limited, SEPCO and their Consortium subcontractor ENFI. A rock type comprised predominantly of the potash mineral sylvite (KCl) and halite (NaCl) TPA Tonnes per annum 2018 UK Code 2018 UK Corporate Governance Code Sylvinite 6 REVIEW OF OPERATIONS AND STRATEGIC REPORT FOR KORE POTASH AND THE GROUP The Board of Directors of Kore Potash is pleased to present its review of its potash development Group, with 97%-ownership of Sintoukola Potash SA, the Congolese subsidiary company that that holds the Kola and Dougou Potash Projects. The ROC Government is to hold 10% of the Kola and Dougou Potash projects based on the Mining Convention however at the end of the period the transfer of ownership to the State was not complete. The Group is developing its globally significant potash deposits in the RoC, ideally located to supply the important Brazilian agricultural market and high growth African markets. The Group’s potash deposits are high grade, shallow, and close to the coast with access to infrastructure. The Sintoukola Potash Project also has district-scale development potential with over 6 billion tonnes of potash mineral resources located approximately 35 kilometres from the coast. Feeding the world’s growing population as arable land per capita declines requires increasing fertiliser application. Potassium (from potash) is a key nutrient essential for high quality and high yield food production to meet this need. As a result, the increasing demand for potash and the potential for the Group to be one of the lowest-cost suppliers of potash to Brazil and African markets puts the Group in an excellent position to increase its business value over the long term. PROJECT OVERVIEW The Sintoukola Potash Project area contains the Kola sylvinite and carnallite deposits, DX sylvinite deposits and Dougou carnallite deposits. These deposits are all situated within the Kola and Dougou Mining Licenses. The Sintoukola Basin is located approximately 80 km to the north of the city of Pointe Noire, which has a major port facility, and within 35 km of the Atlantic coast. The Sintoukola Potash Projects has the potential to be among the world’s lowest-cost potash producers, and its location near the coast offers a transport cost advantage to global fertiliser markets. The Kola sylvinite deposit has a Mineral Resource of 848 Mt with an average grade of 34.8% KCl at an average depth of approximately 250 metres below the surface. The Kola DFS was announced on 29 January 2019, which determined Proved and Probable Ore Reserves totalling 152.4 Mt with an average grade of 32.5% KCl. The deposit is open laterally and an exploration target for the southward extension of sylvinite was announced on 21 November 2018. A non-binding MoU for the completion of a capital optimisation study on Kola, presentation of an EPC proposal and financing for the construction of Kola was signed with the Summit Consortium and announced on 6 April 2021. On the 27 June 2022, the Company announced the Optimisation Study was completed with a optimised construction costs of USD 1.83 billion and a shortened construction schedule of 40 months. The results of the updated DX PFS were announced on 24 January 2023, which determined the DX Deposit contains a total sylvinite Mineral Resources of 129 Mt with an average grade of 24.9% KCl, Proven and Probable Ore Reserves of 9.3 Mt with an average grade of 35.7% KCl. DX is located 15 km southwest of Kola. The DX deposit is open laterally, and an Exploration Target for the northward extension of sylvinite at DX was announced on 21 November 2018. The Kola and DX sylvinite deposits are high grade relative to most potash deposits globally. They contain less than 0.3% insoluble material, which provides a further processing advantage over other potash deposits. The Dougou carnallite deposit has a Mineral Resource of 3.056 billion tonnes with an average grade of 20.7% KCl (at a depth of between 400 and 600 metres) hosted by 35-40 metres of carnallite within four flat-lying seams. The Dougou deposit remains open laterally and at depth. A scoping study was completed and announced in February 2015. 7 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) SUMMARY OF KEY DEVELOPMENTS • On 1 April 2022, the Company announced it had received the Optimisation Study on the Kola Project. • The detailed review of the Study was completed, and the outcomes of the Study announced to shareholders on 27 June 2022. • On 28 June 2022, the Company announced it had signed a HoA for the construction of Kola. • On 19 October 2022, the Company announced receipt of correspondence from the Minister of Mines of the RoC on 12 October 2022 expressing discontent with the progress towards construction of the Kola Project and providing the Company 30 days within which to respond. The letter was received following the arrest and subsequent release, without charge, of two senior employees of the Company by the RoC police. Neither the employees nor the Company have been informed of the reason for the arrests. The Company provided a response to the Minister on 11 November 2022. On 17 December 2022, the Company met in person with the Minister, and the discussion included a further update on the progress towards financing Kola. At the end of the meeting the Minister expressed his thanks for how the Company responded to his most recent letter and assured the Company of his and the RoC Government’s ongoing support for Kore Potash and to develop the Kola Project. • • Since this time the Company has held multiple meetings with the Minister of Mines and is assured that the Company has and will continue to have his full support and that the Company’s tenements in the RoC remain in good standing. • Subsequent to the end of the period on the 24 January 2023, the Company announced the updated Dougou Extension PFS and Production Target. SUMMARY OF FINANCIALS • During the Period, the Group’s Total Comprehensive Loss was USD 10,174,361 (2021: Loss USD 13,470,876), and the Group experienced net cash outflows from operating and investing activities of USD 5,744,285 (2021: USD 7,499,811 million). Cash and cash equivalents totalled USD 5,046,629 as at 31 December 2022 (2021: USD 11,092,509). • • Group net assets decreased in the year to USD 167,650,279 (2021: USD 177,419,886). This was primarily driven by a USD 5,064,934 increase in exploration expenditure capitalised offset by a USD 8,949,642 reduction in the capitalised exploration costs due to the strengthening of the USD against the currency of the RoC. The Directors prepared a cash flow forecast for the period ending 31 December 2024, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period (March 2024). Please refer to Note 1 to the financial statements for more detail on the going concern statement. The Company will be required to raise funds before Q4 2023 in order to meet its current planned activities over the next 12 months. The Directors have considered various mitigating actions, which include raising additional capital to enable the Group to continue to fund its working capital requirements. The Directors have identified a number of potential funding options available to the Group. • CORPORATE ACTIVITIES • On 5 May 2022, a total of 550,000 ordinary shares were issued to certain employees and ex-employees following the vesting of Performance Rights awarded under the Company’s Employee Performance Incentive Plans of which 283,333 ordinary shares were issued to Gavin Chamberlain, COO. • On 13 June 2022, the Company issued 44,132,674 ordinary shares to SQM in lieu of fees payable of USD 375,470 for the DX DFS Phase 1 work completed under the Technical Services Agreement. • On 14 June 2022, the Company announced that the registered office of the Company has changed to 45 Gresham Street, London, EC2V 7BG. • On 21 December 2022, Mr Sameer Oundhakar resigned as a Non-Executive Director on the Board as a nominee of OIA. The Company has been advised of OIA’s preferred Non-Executive Director candidate. This nomination is currently being considered by the Board and the Company intends to announce the appointment after completing the normal due diligence processes. • On 23 December 2022, the Company announced that Mr Gavin Chamberlain COO would be leaving the Company. Mr Chamberlain departed the company in January 2023. 8 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY Kola Potash Project • The Company signed a non-binding MoU with Summit, on behalf of a consortium of investors and engineering firms on 6 April 2021, to arrange the total financing required for the construction of Kola, in the presence of the Minister of Mines of the RoC and his key staff in Brazzaville. • The Summit Consortium includes: o BRP Global, headquartered in Abu Dhabi, who will provide royalty financing in conjunction with product offtake. o SEPCO, an international engineering and construction group headquartered in Jinan, China and with offices in Dubai which is a wholly owned subsidiary of Power Construction Corporation of China (POWER CHINA). SEPCO will be the EPC contractor for Kola within the Summit Consortium. SEPCO has significant construction experience globally across a range of industries, including power, oil and gas chemical, energy-reduction and environmental protection and infrastructure projects. SEPCO has completed major construction projects in 25 countries, including 44 EPC contracts in 11 countries with seven of these in Africa, in addition to its construction capability, SEPCO will also assist in arranging the debt financing: and o China ENFI Engineering Corporation, subcontracted by SEPCO and headquartered in Beijing, is a significant engineering group with specific mining, processing, and potash experience. ENFI is a mining technology leader in China and has provided technical services for the design and construction of more than 400 mining operations around the world. ENFI’s potash specific experience includes design and construction of an underground potash mine in southeast Asia. • During the period, the Summit Consortium completed the Optimisation Study with the successful outcomes: o Capital cost reduced by USD 520 million to USD 1.83 billion on an EPC basis compared to the DFS capital cost of USD 2.35 billion on an equivalent EPC basis. o Construction period reduced to 40 months from the DFS construction period of 46 months. o Key financial metrics improved on DFS outcomes (at potash pricing averaging USD 360/tonne unchanged from the DFS):  Kola net present value NPV10 post tax improved to USD 1.623 billion  IRR improved to 20% on ungeared post tax basis o At a potash price of USD 1000/t MoP CFR Brazil (less than potash price of approximately USD 1100/t MoP CFR Brazil when announced in June 2022) the Kola financial metrics improve to:  NPV10 post tax USD 9.354 billion  IRR of 49% on ungeared post tax basis o Designed with a nameplate production capacity of 2.2 Mtpa of MoP. o MoP production scheduled over an initial 31 year project life. o Designed as a conventional mechanised underground potash mine with shallow shaft access. Ore from underground is transported to the process plant via an overland conveyor approximately 25 km long. After processing, the MoP product is conveyor transported 11 km to the marine export facility. MoP is conveyed from the storage area onto barges via the dedicated barge loading jetty and then trans-shipped into ocean going vessels for export. • On 28 June 2022, Kore Potash signed a HoA for the construction in the presence of the Minister of State and Minister of Mining Industry and Geology of the RoC, Mr Pierre Oba. The HoA confirms the timeline for SEPCO to complete their discussions with Kore Potash ahead of presenting the Company an EPC contract proposal for Kola. It also provides additional clarity on matters that SEPCO are required to finalise in advance of presenting Kore with the construction contract proposal. The HoA provides for: o Kola to be designed and constructed as a conventional underground potash mine and processing plant producing up to 2.2 Mtpa of granular MoP over an initial 31 year life. o The granular MoP produced will be at a minimum quality of 95.3% KCI in line with international standards. o The capital cost to construct will be USD 1.83 billion and the construction period will be 40 months. o During the preconstruction engineering design phase, the HoA provides SEPCO with an opportunity to adjust the costs related to the underground mine portion of the works. SEPCO’s current capital cost is based in part 9 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY (CONT) Kola Potash Project (Cont) o upon information collected during the DFS Study phase, some of which SEPCO continues to review. Should the final agreed quantities of materials and labour or the underground construction period differ materially from the baseline, SEPCO will be able to adjust proportionately. The underground portion of the works (excluding equipment and infrastructure) is currently estimated as USD 164 million, which represents 9% of the total capital cost. o SEPCO will also be able to adjust the capital cost if the Chinese RMB or Congolese FCFA currency exchange rates to the US dollar vary materially prior to commencement of the works. In such circumstance only the cost of affected works or components may be adjusted. • On 10 October 2022, Kore Potash announced that SEPCO had delivered the EPC proposal for Kola. The EPC proposal was approved for presentation to Kore Potash by the Boards of SEPCO, and its parent company, Power Construction Corporation of China. The EPC proposal reflects the capital cost and construction timeline reported in the Optimisation Study and the terms agreed to in the HoA. The EPC proposal includes an EPC Agreement which details the contractual terms in a format congruent with the FIDIC Silver book (2nd Edition, 2017) conditions of contract. The contractual terms are being finalised prior to acceptance of the EPC. Kore Potash and SEPCO are in dialogue to complete this process. The Company notes that it may transpire that SEPCO will require further SEPCO and Power Construction Corporation of China Board approvals prior to the finalisation of the contractual terms. Next Steps • Kore Potash and SEPCO to finalise all EPC terms based on FIDIC Silver book (2nd Edition, 2017). • The Summit Consortium has advised that the strongly positive outcomes of the Study continue to support their financing of Kola and it intends to provide the financing proposal for the complete construction cost of Kola after the agreement of the key EPC terms. Dougou Extension (DX) Sylvinite Defined Feasibility Study Phase 1 • Subsequent to the Period, the Company released its update on the DX PFS and Production Target on 24 January 2023.The Company reported the following highlights: o Production Target of 15.5Mt sylvinite at a grade of 30.63 % KCl demonstrates initial project life of 12 years at a production rate of 400,000 tpa MoP. o Production Target based on Proven and Probable Ore Reserves and 13% of the Inferred Mineral Resources that represents 30% of the life of project MoP production. o NPV10 (real) of USD 275 million and 27% IRR on a real post tax basis at life of project average granular MoP price of USD 450/t. o Approximately 2.9 years post-tax payback period from first production. o Proven and Probable Ore Reserve of 9.31 Mt sylvinite at an average grade of 35.7% KCl. o Mineral Resource of 129 Mt at an average grade of 24.9% KCl. o Higher confidence in the distribution of Sylvinite within the Top Seams and improved understanding of the Sylvinite/Carnallite boundary within the Hanging Wall Seam. 10 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY (CONT) Mining Convention • The Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licences was gazetted into law on 29 November 2018 following ratification by the Parliament of the RoC. The gazetting of the Mining Convention provides security of title and the right to develop and operate the Kola Project and the adjacent Dougou and DX deposits1. • The Mining Convention concludes the framework envisaged in the 25-year renewable Kola and Dougou Mining Licences granted in August 2013 and May 2017. The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the development and operation of Kola and Dougou Mining Licences, which including import duty and VAT exemptions and agreed tax rates during mining operations. See Note 7 to the financial statements for further details on the terms and conditions of the Mining Convention. • The Mining Convention provides strengthened legal protection of the Company’s investments in the RoC through the settlement of disputes by international arbitration. • The Company continues to engage with the RoC Government to implement the Mining Convention’s commitments. This includes the intra-group transfer of the Dougou Mining License from SPSA to the operating entity DPM1. • On 14 December 2020 and 12 October 2022, the Company reported receipt of correspondence received from the Minister of Mines expressing dissatisfaction with the pace of development of the Kola Potash project. • Since this time the Company has held multiple meetings with the Minister of Mines and is assured that the Company has and will continue to have his full support and that the Company’s tenements in the RoC remain in good standing and that the Company remains compliant with its obligations under the Mining Convention. 1 Under the Mining Convention, the RoC government will be granted a 10% carried equity interest (subject to signing shareholders agreement) in the project companies (DPM and KPM, which SPSA wholly owns). Authorisation obtained from RoC authorities • The Minister of Tourism and Environment of the RoC issued certificates on 31 March 2020 granting 25-year approvals to the ESIAs for both the Dougou and the Kola Mining Licences. Workstreams with RoC authorities Declaration of Public Utility (DUP) this is the formal process to authorise the use of public land use by the Group for the Kola project. The existing DUP for the Kola project issued under Order No. 6595/MAFDPRP-CAB on 13 August 2018 requires a revision based on the proposed optimisation changes to the process plant layout. The Group started a process of reapplying for the DUP. An initial land survey of the affected land by the Department of Cadastral Survey was completed on 23 September 2021 and the surveyed co-ordinates issued to the Company for review. Once Kola financing is in place, the Company will submit a formal request to have the DUP renewed. Impact on Climate Change • The groups existing operations in the RoC have a minimal carbon emission impact which is driven by the use of diesel fuel for electricity generation in the exploration camp. To assist in offsetting this impact, Kore Potash has implemented a nursery onsite and in conjunction with the local communities’ plants seedlings in the surrounding areas throughout the year. • Kore Potash’s final product MoP is a vital agri-nutrient required for quality plant growth and crop yield and its application is necessary to meet the growing global demand for food. Plant growth and higher yields from crops is critical to reduce the carbon footprint and to meet the increased demand for foods that create a lower carbon footprint. 11 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY (CONT) Impact on Climate Change (Cont) • Kore Potash’s planned operations will be adjacent to the Conkouati-Douli National Park. The Company has previously partnered with Non-Government Organisations to provide financial assistance for rainforest guards to preserve the forest and rainforest environments within this National Park. A conservation focused Non-Government Organisation, become actively involved with preserving this National Park in 2021 and the Company commenced partnering with them in 2022 to preserve the forests in this National Park. Key Performance Indicators The Board has set the KPIs for the Company and Group that reflect the development stage of the business: Health and Safety • The Group has set a goal of zero lost time injuries. There were no lost time injuries during the year. The Company maintained its COVID-19 measures to ensure the spread of the disease was minimised. Only one positive COVID case was reported during the year in our Congolese employees. Available Cash and cash equivalents • The Group is required to have sufficient cash to meet its obligations. At 31 December 2022 the Group held cash of USD 5,046,629 (2021: USD 11,092,509) which is not sufficient to meet its obligations for at least 12 months from the date of approval of these financial statements. The Board plan to complete a fundraise prior to Q4 2023 to ensure it has sufficient cash to meet its ongoing obligations. Kola Project Optimisation • The 2022 KPI was to complete the Optimisation for the Kola Project reducing the project capital costs and construction schedule. On the 27 June 2022 the Company announced the outcomes of the Optimisation study including Kola production target and forecast financial information which incorporated the results of the optimisation study. Kola Project EPC and Financing • • The Board set the KPI for 2022 to formalise an EPC Contract for the construction of Kola and Financing agreement for the complete construction of Kola based on the optimised scope. On 10 October 2022, the Company announced the receipt of the EPC Proposal and is continuing work to finalise the terms of the proposal. Once the EPC terms are agreed, the Financing proposal will be provided by the Summit Consortium. The 2023 KPI is for the financing proposal for the full construction cost of Kola to be provided by the Summit Consortium following agreement on the EPC contract terms. Viability Assessment The Directors prepared a cash flow forecast for the period ending 31 December 2024, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period (March 2024). Current estimations are the Group will have exhausted current cash reserves in Q4 2023. The Board is confident that funding can be obtained based on past performance. The Directors have considered the risks associated with the continuity of business and believe the assumptions of the forecast are adequate given the controllable market conditions. 12 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY (CONT) Viability Assessment (Cont) The Group’s financial projections and cash flow forecast does not include funding for the construction of the Kola project which is subject to agreement to the EPC and Financing proposal from the Summit Consortium. Under the MoU the Consortium’s Financing proposal is for the completed construction of the Kola Project. In the event the Financing proposal is not presented or accepted by Kore Potash, the Company intends to seek alternative EPC and Financing proposals for the construction of the Kola project. Current market conditions for potash remain strong with the area of arable land available for crops globally reducing with very few new potash projects entering the market to meet the increase in demand. Some producers exports have been stopped due to international sanctions, further reducing supply. Given the increase in potash prices, the outcomes of the optimisation study and the increase in some supply cost driven by the current market conditions Kola remains an attractive project. Tenement Details and Ownership The Company is incorporated and registered in England and Wales and has a 97% holding in SPSA in the RoC. SPSA is the 100% owner of DPM, which holds the Dougou Mining Lease and KPM, which holds the Kola Mining Lease. The Dougou Mining lease hosts the Dougou Deposit and the DX Deposit. The Kola Deposit is located within the Kola Mining Lease. Table 1: Schedule of mining tenements (Republic of Congo) Project & Type Tenement Issued Company Interest Title Registered to Kola Mining Dougou Mining Decree 2013-412 100% Kola Potash Mining S.A. of 9 August 2013 potassium rights only Decree 2017-139 100% Sintoukola Potash S.A. of 9 May 2017 potassium rights only Revised Decree No 2021-389 of 2 August 2021 Changes to Potash Mineral Resources and Ore Reserves between 2021, 2022 and 24 January 2023 Tables 1 and 2 provide a comparison of the Company’s Mineral Resources and Ore Reserves, year-on-year between 2021, 2022 and 24 January 2023, as per ASX Listing rule 5.21.4. There are no changes to the Mineral Resources and Ore Reserves for Kola and Dougou in 2022. However, after the period the DX sylvinite resource and reserves were updated in the Updated Dougou Extension (DX) PFS and Production Target announced on 24 January 2023. The main drivers for the change in the Mineral Resources and Ore Reserves were: • For the HWSS, only five drillholes in the ‘mining area’ contained sylvinite that was not immediately underlain by carnallite. Therefore, the overall grade and volume of HWSS Mineral Resources were reduced as a result of these drilling results, • Reduced KCl grade for the TSS due to the ID2 estimation method, whereby if there are no nearby drillholes, the grade in a block will be reduced in accordance with the weighted mean of the square of the distances from drillholes within the search radius. 13 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY (CONT) Changes to Potash Mineral Resources and Ore Reserves between 2021, 2022 and 24 January 2023 (Cont) Table 1. Comparison of Potash Mineral Resources year-on-year between 2021, 2022 and 24 January 2023. MINERAL RESOURCES Kola Sylvinite deposit Dougou Extension Sylvinite deposit Category Measured Indicated Measured + Indicated Inferred TOTAL Measured Indicated Measured + Indicated Inferred TOTAL TOTAL SYLVINITE MINERAL RESOURCES Measured Indicated Measured + Indicated Inferred TOTAL Measured Indicated Measured + Indicated Inferred TOTAL Measured Indicated Measured + Indicated Inferred TOTAL Measured Indicated Measured + Indicated Inferred TOTAL Kola Carnallite deposit Dougou Carnallite deposit TOTAL CARNALLITE MINERAL RESOURCES 31 December 2021 and 2022 Grade KCl % 34.9 35.7 35.4 Contained KCl (Mt) 75 104 180 Million Tonnes 216 292 508 116 295 0 31 31 27 58 75 135 211 143 353 59 83 142 236 378 30 190 220 414 634 89 273 362 650 1,012 340 848 0 79 79 66 145 216 371 587 406 993 341 441 783 1,266 2,049 148 920 1,068 1,988 3,056 489 1,361 1,851 3,254 5,105 34.0 34.8 0.0 39.1 39.1 40.4 39.7 34.7 36.4 35.9 35.2 35.5 17.4 18.7 18.1 18.7 18.5 20.1 20.7 20.6 20.8 20.7 18.2 20.1 19.6 20.0 19.8 14 24 January 2023 Grade KCl % 34.9 35.7 35.4 Contained KCl (Mt) 75 104 180 Million Tonnes 216 292 508 340 848 20 8 28 101 129 236 300 536 441 977 341 441 783 1,266 2,049 148 920 1,068 1,988 3,056 489 1,361 1,851 3,254 5,105 34.0 34.8 32.4 23.1 29.9 23.5 24.8 34.7 35.4 35.1 31.6 33.5 17.4 18.7 18.1 18.7 18.5 20.1 20.7 20.6 20.8 20.7 18.2 20.1 19.6 20.0 19.8 116 295 6 2 8 24 32 82 106 188 139 327 59 83 142 236 378 30 190 220 414 634 89 273 362 650 1,012 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) OPERATIONAL AND EXPLORATION ACTIVITY (CONT) Changes to Potash Mineral Resources and Ore Reserves between 2021 and 2022 (Cont) Table 2. Comparison of Ore Reserves year-on-year between 2021, 2022 and January 2024. ORE RESERVES Kola Sylvinite deposit ORE RESERVES Dougou Extension Sylvinite deposit Category Proved Probable TOTAL Category Proved Probable TOTAL Notes: 31 December 2021 and 2022 Grade KCl % 32.1 32.8 Contained KCl (Mt) 19.8 29.7 Million Tonnes 61.8 90.6 152.4 32.5 49.5 31 December 2021 and 2022 Grade KCl % 0 41.7 Contained KCl (Mt) 0 7.4 Million Tonnes 0 17.7 24 January 2023 Grade KCl % 32.1 32.8 Contained KCl (Mt) 19.8 29.7 32.5 49.5 Million Tonnes 61.8 90.6 152.4 24 January 2023 Grade KCl % 32.5 41.8 Contained KCl (Mt) 2.0 1.3 Million Tonnes 6.1 3.2 17.7 41.7 7.4 9.3 35.7 3.3 The Mineral Resource and Ore Reserves are prepared in accordance with the JORC Code (2012 edition) by independent competent persons and the geological models and modifying factors are reviewed by Company staff and other individuals with appropriate capability to peer review the work of the competent persons. All Mineral Resource and Ore Reserves are reported in accordance with the JORC Code (2012 edition). Numbers are rounded to the appropriate decimal place. Rounding ‘errors’ may be reflected in the “totals”. The Kola Mineral Resource Estimate was reported 6 July 2017 in an announcement titled ‘Updated Mineral Resource for the High -Grade Kola Deposit’. It was prepared by Competent Person Mr. Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia. The Ore Reserve Estimate for sylvinite at Kola was first reported 29 January 2019 in an announcement titled “Kola Definitive Feasibility Study” and was prepared by Met-Chem; the Competent Person for the estimate was Mr Mo Molavi, member of good standing of Engineers and Geoscientists of British Columbia. The Dougou carnallite Mineral Resource estimate was reported on 9 February 2015 in an announcement titled ‘Elemental Minerals Announces Large Mineral Resource Expansion and Upgrade for the Dougou Potash Deposit’. It was prepared by Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the European Federation of Geologists. The Dougou Extension sylvinite Mineral Resource Estimate and Ore Reserve Estimate were reported in an announcement titled “Updated Dougou Extension (DX) PFS and Production Target” on 24 January 2023. Dr. Douglas F. Hambley, Ph.D., P.E., P.Eng., P.G of Agapito Associates Inc., for the Exploration Results and Mineral Resources. Mr. Hambley is a licensed professional geologist in states of Illinois (Member 196-000007) and Indiana (Member 2175), USA, and is an Honorary Registered Member (HRM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 1299100RM), a Recognized Professional Organization’ (RPO) included in a list that is posted on the ASX website from time to time and Dr. Michael Hardy was the Competent Person for the Ore Reserves, and he is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an RPO included in a list that is posted on the ASX website from time to time. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. 15 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) Figure1. Location of the Sintoukola Project showing the Kola, Dougou and DX Projects 16 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) BUSINESS MODEL The Group’s business strategy for the financial year ahead and in the foreseeable future is to continue exploration and development activities on the Group’s existing potash mineral projects in the RoC. The Group’s current activities do not generate any revenues or positive operating cash flow and future development, necessary to commence production, will require significant capital expenditures. POSITION AND PRINCIPAL RISKS The Group’s business strategy is subject to numerous risks, some outside the Board and management’s control. These risks can be specific to the Group, generic to the mining industry and generic to the stock market. The key risks, expressed in summary form, affecting the Group and its future performance include but are not limited to: • Capital requirement and ability to attract future funding The Group will have sizeable capital requirements as it proceeds to develop its projects. The future development of these projects will depend on the Group’s ability to obtain additional required financing. The Group may not be able to obtain financing on favourable terms or at all. If financing is not available, it could result in a delay or indefinite postponement of development or production at the Group’s projects, or in a loss of project ownership or earning opportunities by the Group. The Group currently has no source of funding for the financing of the capital needs of its business and future activities, other than by the issuance of additional securities of the Group. The Group continues to actively engage and develop relationships with potential lenders, export credit agencies and equity investors. The Group also has two large long-term strategic investors, SQM and OIA, with extensive capital resources. The Company is expecting to receive a financing proposal for the complete construction of Kola after agreement on the EPC terms. Factors beyond the Company’s control, including pandemic diseases such as COVID-19 (coronavirus) and the Russian/Ukraine conflict impact on macro-economics can affect the stock markets and in doing so impair the Company’s ability to attract investors and lenders. This in turn could have an impact on any fund raising or financing arrangements that the Company may require to pursue. • Country risk in the RoC The operations of the Group are conducted in the RoC and as such are exposed to various levels of political, economic and other natural and man-made risks and uncertainties over which the Group has no or limited control. Changes, if any, in mining, environmental or investment policies or shifts in political attitude in the RoC may have a material adverse effect on the Group’s business, financial condition and results of operations. The Group’s local management has regular consultations with the local community and actively seeks to employ locally, where possible. Additionally, the CEO and other relevant senior management have established good relationships with the official local and country establishments including. the Ministry of Mines and Geology and the Ministry of Environment with whom regular contact and consultation is maintained. In addition, the Group benefits from the UK-RoC bilateral investment treaty, which provides strengthened legal protection to the Group’s investments in the RoC. On 14 December 2020 and 12 October 2022, the Company reported receipt of correspondence received from the Minister of Mines expressing dissatisfaction with the pace of development of the Kola Potash project. Since then, the Company continued to communicate constructively and openly with the Minister of Mines to ensure the parties remain fully engaged as Kore Potash progresses the development of its projects. The Minister of Mines was present at the signing of the HoA for the construction of Kola. 17 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) POSITION AND PRINCIPAL RISKS (CONT) • Change in potash commodity prices and market conditions The Group is subject to changes in the commodity price for potash due to changes in marketing conditions (political, economic and other uncertainties) over which the Group has limited control. The Group plans to be a low cost producer being in the first quartile of sustainable costs to enable the Group to be profitable when commodity prices reduce. Demand for potash continues to grow as the volume of arable land reduces with limited new projects entering the market to meet the increase in demand, and some suppliers’ exports have been stopped due to international sanctions imposed, reducing supply availability. The Group continues to engage with reputable buyers with the intention to enter contractual arrangements to sell production prior to commercial production. The Company’s financial models take into consideration the impact of commodity pricing when evaluating projects. • Geological and technical risk posed to exploration and commercial exploitation success Mining complexities arising from geotechnical, hydro-geological conditions and undetected geological phenomena may adversely impact the efficiency of the operation to the extent that the operation becomes financially unviable. Additionally, human error by the miners, equipment failure, mistakes in planning the operations, and encountering unforeseen obstacles could each affect the profitability of the Group. The Group has appointed reputable third-party technical consultants with specific skills to undertake the feasibility and engineering studies. The Group intends to appoint well regarded, EPC contractors to develop the Group’s project and highly regarded technical consultants to verify the work undertaken by the EPC contractors. • Environmental and occupational health and safety risks Environmental, safety and health incidents including pandemic diseases like COVID-19 could result in harm to the Group’s employees, contractors or local communities and adversely affect the Group’s relationship with local stakeholders. Ensuring safety and wellbeing is critical to the Group and part of the Group’s core values. An environmental incident, poor safety record or serious accidents could have a long-term impact on the Group’s morale, reputation, project development and production. The Group seeks to continuously improve its health, safety and environmental risk management procedures, with particular focus on the early identification of risks and the prevention of incidents, injuries and fatalities. In order to reduce the impact of COVID-19 testing, and control procedures were introduced for all people in 2020 and the Company reviews these on a periodic basis. All employees and consultants have been vaccinated with the only exemptions being for medical reasons. Those employees that cannot be vaccinated continue to work from home until they are medically fit to undertake the vaccination. The Group’s operations are subject to ESIA which have been granted for 25 years by the RoC government. • Government policy change The mineral exploration and development activities and future operations of the Group are subject to various laws and regulations governing mineral concession acquisition, prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. New rules and regulations could be enacted, or existing rules and regulations could be applied or amended in a manner that could have a material and adverse effect on the business, financial condition, and results of operations of the Group. The Group monitors changes in legislation for relevant jurisdictions to enable rapid and effective response. The Group also consults with tax, legal, accounting and regulatory experts as required to ensure that any upcoming changes in legislations are proactively accounted for. 18 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) POSITION AND PRINCIPAL RISKS (CONT) • Retention of key staff The attraction and retention of persons skilled in the development, operation, exploration and acquisition of mining properties are important factors in enabling the Group to fulfil its strategic ambitions and to build further expertise, knowledge and capabilities within the Group. Being unable to do so would compromise the Group’s ability to deliver on its strategic objectives. The Group’s performance management system and incentive schemes are designed to attract and retain key employees by creating suitable reward and remuneration structures linked to key performance milestones and provide personal development opportunities. • Climate change The Group has considered the impact that climate change can have on the Group and the business as a result of climate change and the impact the Group’s operations have on climate change. Areas of risks are reviewed periodically with actions put in place to address these risks where management can exert some influence over the climate outcomes. The Group has assessed the potential impact of climate change including severe weather changes on the Group’s existing operations as negligible. Assessment of the potential impacts of climate change on the Kola Project have led to modifications to the proposed processing plant location as part of the Optimisation Study in part due to the potential impact sea level and weather changes. The risk of impact on the goods supply chain and commodity pricing for the construction of the Kola Project linked to climate change is assessed as minimal for the construction period of Kola. As the Kola project moves towards construction management will re-assess the potential risk presented to planned operations by climate change. The key risk identified at present is planned carbon emissions from the Kola operation based on the current energy supply methodology available to the project. The Group will continue to review options to reduce these carbon emissions. Global climate change is potentially going to drive an increase in demand for Potash to produce fertiliser to maintain soil fertility and improve plant health as the global arable land area per person reduces. Therefore, the risk associated with the final product is assessed as immaterial. For more details of the financial risk management objectives and policies of the Group, please refer to Note 14 to the financial statements. This is not an exhaustive list of risks faced by the Company or an investment in it. There are other risks generic to the stock market and the world economy as a whole and other risks generic to the mining industry, all of which can impact on the Company. The management of risks is integrated into the development of the Company’s strategic and business plans and is reviewed and monitored regularly by the Board. Further details on how the Company monitors, manages and mitigates these risks are included as part of the Audit and Risk Committee Report contained within the Corporate Governance Report. DIRECTORS’ SECTION 172 STATEMENT The following disclosure describes how the Directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the Directors’ statement required under section 414CZA of The Companies Act 2006. The matters set out in section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to: 19 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) DIRECTORS’ SECTION 172 STATEMENT (CONT) (a) the likely consequences of any decision in the long term; (b) the interests of the Company’s employees; (c) the need to foster the Company’s business relationships with suppliers, customers and others; (d) the impact of the Company’s operations on the community and the environment; (e) the desirability of the Company maintaining a reputation for high standards of business conduct; and (f) the need to act fairly between members of the Company. Stakeholder Engagement Kore Potash adheres to sound corporate governance policies and attaches considerable importance to and strives to engage transparently and effectively on a continuous basis with a variety of stakeholders, including shareholders, employees, contractors, suppliers, government bodies and local communities and environment in which it operates. Shareholders: The Company’s two largest shareholders, SQM and OIA, by virtue of their respective Investment Agreements, have each appointed a NED to the Board. As such, they are involved in all principal decisions taken by the Board, other than in cases where conflicts of interests may arise. All other existing substantial shareholders have regular meetings throughout the year with the Chairman, CEO and CFO, although due to the COVID-19 pandemic these have mainly been conducted by teleconference calls. Prior consultation with significant shareholders is undertaken in respect of all issues requiring the approval of shareholders in general meeting. In addition, all significant matters raised, or areas of concern specified by such shareholders during such meetings in respect of the Company’s operations, strategy and other significant business matters are taken into account by the Board when taking principal decisions. At the Company’s AGM, held on 9 June 2022, all resolutions were passed with at least 95% of the votes cast in favour. The CEO, CFO and NEDs, including the chair of each Committee, are usually available at and following general meetings of the Company when shareholders have the opportunity to ask questions on the business of the meeting and more generally on Company matters. However, as limited shareholders were able to attend this year’s AGM in person due to COVID-19 restrictions, they were afforded the opportunity to dial-in to listen to the business of the meeting and to raise questions with the Board in advance of the meeting by e-mail. All substantial shareholders that own more than 3% of the Company’s shares are listed on page 115 of this Report. Further details of engagement with shareholders can be found within the Corporate Governance Report. Employees: Kore Potash provides fair remuneration with incentives for its senior personnel through share option schemes that are performance related. Further details of these are included in the Remuneration Report on pages 53 to 62. Further, the Group gives full and fair consideration to applications for employment irrespective of age, gender, colour, ethnicity, disability, nationality, religious beliefs or sexual orientation. The Group maintains an open line of communication between its employees, senior management and the Board of Directors. A whistle blower procedure is in place for employees to raise concerns anonymously. Specifically, during the year the COO and CFO held weekly virtual meetings with key employees where open questioning and sharing of concerns was encouraged. No significant issues were raised during such meetings. The Board has had oversight on issues raised by the employees and management actions throughout the year via monthly management reports to the Board which detail any personnel complaints or grievances and action management have committed to in order to resolve issues. 20 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) DIRECTORS’ SECTION 172 STATEMENT (CONT) Stakeholder Engagement (Cont) In normal circumstances, selected members of the Board periodically visit all parts of the business and interact with employees. However, due to COVID-19 restrictions this was not possible during the course of this year. It is intended that such practice will resume once the restrictions are lifted, and it is safe to do so. Nonetheless, the COO, CFO and CEO visited to the operation in the RoC during the year and actively engaged with all RoC employees. In addition, David Hathorn visited the RoC operations in April 2022. David Netherway, a NED, is the appointed designated director responsible for workplace engagement in accordance with the 2018 Corporate Governance Code. Due to the restrictions imposed as a result of the COVID-19 Pandemic where possible meetings were held virtually with the workplace. To fulfil his duties during 2023, David Netherway plans to visit to the RoC where the majority of the employees are based. Contractors and Suppliers: The Group has a prompt payment policy and seeks to ensure that all liabilities are settled within each supplier’s terms. Through fair dealings the Group aims to cultivate the goodwill of its contractors, consultants and suppliers. Corporate and local management work closely with contractors and suppliers in the UK and the RoC to ensure they work within the parameters of their respective terms of engagement and any grievance are resolved to ensure they do not have a detrimental effect on the Group’s business and project timeline. Governmental Bodies, local communities and environment: The Group takes significant cognisance of the importance to the communities in which it operates and is grateful for their support and involvement in the Group’s exploration and development activities. The Group has had ongoing engagements with the local community in order to ensure there are open lines of communication for any concerns to be raised and to ensure there is two-way communication between the Group and the local communities. The Company has a full-time community liaison officer that has direct contact with all 11 local chiefs via company supplied cell phones in order to facilitate quick and harmonious communications between the Company and the communities. In the second half of the year, the COO and CFO meet face to face with the villagers to update them on the Company’s progress. The CEO and the COO and other relevant senior management have established good relationships with the official local and country establishments including the Ministry of Mines and Geology and the Ministry of Environment with whom regular contact and consultation is maintained. The Chairman and CEO meet with the Minister of Mines and some of his cabinet on several occasions during the year. Ongoing discussions between the Company and the various other Ministries has been maintained through written communications. The Kola DFS design had incorporated a number of value-adding design changes since the approval of the ESIA and the Company has undertaken to amend the ESIA accordingly ahead of commencement of construction. The Minister of Tourism and Environment of the RoC issued certificates on 31 March 2020 granting 25-year approvals to the ESIAs for both the Dougou and the Kola Mining Licences. Principal decisions taken by the Board during the period Principal decisions are defined as those that have long-term strategic impact and are material to the Group and those that are significant to the Group’s key stakeholder groups. In making the principal decisions, the Board considered the alignment with its stated strategy, the outcome from its stakeholder engagement, the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company. 21 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) DIRECTORS’ SECTION 172 STATEMENT (CONT) Principal decisions taken by the board during the period (cont) Details of the principal decisions taken by the Board during the year in respect of the Kola Optimisation Study is contained under the Summary of Key Developments within the Review of Operations and Strategic Report. The information relating to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves in this report is based on, or extracted from previous reports referred to herein, and is available to view on the Company’s website www.korepotash.com The Kola Mineral Resource Estimate was reported on 6 July 2017 in an announcement titled ‘Updated Mineral Resource for the High-Grade Kola deposit’. It was prepared by Competent Person Mr Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia COMPETENT PERSON STATEMENT The Ore Reserve Estimate for Sylvinite at Kola was first reported on 29 January 2019, in an announcement titled ‘Kola Definitive Feasibility Study’ and was prepared by Met-Chem; the Competent Person for the estimate is Mr Molavi, member of good standing of Engineers and Geoscientists of British Columbia. The Dougou Carnallite Mineral Resource Estimate was reported on 9 February 2015 in an announcement titled ‘Elemental Minerals Announces Large Mineral Resource Expansion and Upgrade for the Dougou Potash deposit’. It was prepared by Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the European Federation of Geologists. The Dougou Extension Sylvinite Mineral Resource Estimate was reported on 13 May 2020 in an announcement titled ‘Dougou Extension (DX) Project Pre-Feasibility Study’. It was prepared by Competent Person Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318), a Recognized Professional Organization (RPO) included in a list that is posted on the ASX website from time to time. The Ore Reserve Estimate for Sylvinite at DX was reported on 13 May 2020 in an announcement titled ‘Dougou Extension (DX) Project Pre-Feasibility Study and was prepared Dr. Michael Hardy, a Competent Person who is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an RPO included in a list that is posted on the ASX website from time to time. The Dougou Extension sylvinite Mineral Resource Estimate and Ore Reserve Estimate were reported in an announcement titled “Updated Dougou Extension (DX) PFS and Production Target” on 24 January 2023. Dr. Douglas F. Hambley, Ph.D., P.E., P.Eng., P.G of Agapito Associates Inc., for the Exploration Results and Mineral Resources. Mr. Hambley is a licensed professional geologist in states of Illinois (Member 196-000007) and Indiana (Member 2175), USA, and is an Honorary Registered Member (HRM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 1299100RM), a Recognized RPO included in a list that is posted on the ASX website from time to time and Dr. Michael Hardy was the Competent Person for the Ore Reserves, and he is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an RPO included in a list that is posted on the ASX website from time to time. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. 22 REVIEW OF OPERATIONS AND STRATEGIC REPORT (CONT) DIRECTORS’ SECTION 172 STATEMENT (CONT) FORWARD-LOOKING STATEMENTS This report contains statements that are “forward-looking”. Generally, the words “expect,” “potential”, “intend,” “estimate,” “will” and similar expressions identify forward-looking statements. By their very nature and whilst there is a reasonable basis for making such statements regarding the proposed placement described herein; forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance. Statements in this report regarding the Company’s business or proposed business, which are not historical facts, are “forward looking” statements that involve risks and uncertainties, such as resource estimates and statements that describe the Company’s future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made. This Review of Operations and Strategic Report was approved by the Board of Directors on 30 March 2023 and is signed on its behalf by: ____________________________ Non-Executive Chairman David Hathorn 30 March 2023 _________________________________ Chief Executive Officer Brad Sampson 30 March 2023 23 The Directors present their annual report on Kore Potash and the Group for the financial year ended 31 December 2022. DIRECTORS’ REPORT The Corporate Governance statement set out in pages 34 to 64 forms part of this Directors’ Report. Directors The names of directors of the Company in office at any time during or since the end of the year are: David Hathorn Brad Sampson Jonathan Trollip David Netherway Sameer Oundhakar Pablo Hernandez Mac-Donald Non-Executive Director Non-Executive Chairman Chief Executive Officer Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director (Resigned with effect from 21 December 2022) Directors have been in office of the Company since the start of the financial year to the date of this report unless otherwise stated. Joint Company Secretary Mr Henko Vos St James’s Corporate Services Limited Principal Activities and Significant Changes in Nature of Activities The principal activity of the Group during the financial year was exploration for potash minerals prospects and project development at the Group’s Kola Mining and Dougou Mining Permit in the RoC. There were no significant changes in the nature of activities of the Group during the year. Operating Results The net loss after tax of the Group for the year ended 31 December 2022 amounted to USD 1,513,953 (31 December 2021: 1,941,196). Dividends Paid or Recommended No dividends were paid during the year and the directors do not intend to recommend the payment of a final dividend for the financial year under review (2021: nil). Review of Operations and Strategic Report Please refer to pages 7 to 23 of the Annual Report. Significant Changes in State of Affairs Board Changes On 21 December 2022, Sameer Oundhakar resigned as a NED of the Company nominated by OIA. A replacement has been nominated to replace Mr Oundhakar and the Company intends to provide a further update to shareholders following completion of the normal due diligence processes. Other capital movements: On 5 May 2022, a total of 550,000 ordinary shares were issued to certain employees and ex-employees following the vesting of Performance Rights awarded under the Company's Employee Performance Incentive Plans of which 283,333 ordinary shares were issued to Gavin Chamberlain, COO. On 13 June 2022, the Company issued 44,132,674 ordinary shares to SQM in lieu of fees payable for the DX DFS Phase 1 work completed under the Technical Services Agreement. 24 DIRECTORS’ REPORT (CONT) Significant Changes in State of Affairs (Cont) Other capital movements (Cont): On 13 June 2022, David Hathorn was granted 9,000,000 options, as approved at the Annual General Meeting held on 9 June 2022 and pursuant to the Directors and Executives Share Option Plan. The options will only vest, and be exercisable into shares, subject to the Company obtaining a financing package to fully fund the development of the Company’s Kola Project approved by the Board. CDI Movement During the year the number of CDIs quoted on the ASX decreased by 48,536,088 as a result of transfers between CDIs quoted on the ASX and ordinary shares quoted on AIM and the JSE. Significant Events Subsequent to Reporting Date Details of the Group’s significant events subsequent to the reporting date are included in Note 16 to the financial statements. Political Contributions and Charitable Donations During the current and previous years, the Group did not make any political contributions and charitable donations. Employee Engagement Details of how the directors have engaged with the employees and how the directors have had regard to employee interests and the effect of that regard, including on the principal decisions taken by the company during the financial year, are included in the Section 172 Statement contained within the Review of Operations and Strategic Report. Business Relationships Details of the how the directors have had regard to the need to foster the Company’s business relationships with suppliers, customers and others and the effect of that regard, including on the principal decisions taken by the Company during the financial year are included in the Section 172 Statement contained within the Review of Operations and Strategic Report. AGM This report and financial statements will be presented to shareholders at the next AGM. The Notice of the AGM will be distributed to shareholders together with the Annual Report. Auditor Following the appointment of BDO LLP as the Company auditor on 28 June 2019, a resolution to reappoint BDO LLP as the Company auditor was proposed at the AGM and passed by the requisite majority. A resolution for BDO LLP’s reappointment will be proposed at the forthcoming AGM. The Use of Financial Instruments by the Group The Group has exposure to the following risks from their use of financial instruments: • market risk, • • credit risk, and liquidity risks. For more details of the financial risk management objectives and policies of the Group, please refer to Note 14 to the financial statements. Employment Policies The Group is committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure the ongoing success for the business. Employees and those who seek to work within the Group are treated equally regardless of gender, age, marital status, creed, colour, race or ethnic origin. 25 DIRECTORS’ REPORT (CONT) Health and Safety The Group’s aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective, a Health, Safety and Environmental Committee has been established to review the health and safety policy and risks of the Group and make recommendations to the Board. However, due to the limited operational activity during the feasibility study phases, creating a low-risk environment no separate Health, Safety and Environment Committee meetings were held during the Period, but health, safety and environment matters are reported on each month in management reporting to the Board and are part of each Board meeting agenda. The Group provides training and support to employees and sets demanding standards for workplace safety. The Group recorded no lost time injuries in 2022 and completed the year with a LTIFR of nil. Payment to Suppliers The Group’s policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided the supplier has met the terms and conditions. Under normal operating conditions, suppliers are paid within 30 days of receipt of invoice. Future Developments The Group will continue its potash development activities of the Kola and the Dougou deposits. Environmental Issues The Group operates within the resources sector and conducts its business activities with respect for the environment while continuing to meet the expectations of shareholders, employees and suppliers. In respect of the current year under review, the Directors are not aware of any particular or significant environmental issues which have been raised in relation to the Group’s operations. The Group holds mining licences in the RoC. The Group’s operations are subject to environmental legislation in this jurisdiction in relation to its exploration activities. Unissued Shares under Options and Equity Warrants Share options outstanding at the date of this report: Exercise Period Options expiring on or before 19 July 2024 Options expiring on or before 1 January 2024 Options expiring on or before 12 June 2027 Exercise Price GBP 0.022 GBP 0.022 GBP 0.022 Number of Options 26,900,000 20,000,000 9,000,000 55,900,000 The holders of these options do not have the right, by the virtue of the option, to participate in any share issue or interest issue of the Company. There was no exercise of unlisted options during the year. Performance Rights Performance rights outstanding at the date of this report: Class Employee Performance Shares (Long Term) Expiry Not Applicable Number of Rights 1,760,000 1,760,000 The performance rights holders do not hold any voting rights or rights to participate in dividends unless the rights have vested and were converted to fully paid ordinary shares. On 5 May 2022, 550,000 performance rights were exercised. See Note 11(a) to the financial statements for further details on the performance rights issued during the year. 26 Information on Directors David Hathorn Non-Executive Chairman BCom, CA DIRECTORS’ REPORT (CONT) Mr Hathorn joined the Group in November 2015. Mr Hathorn retired in 2017 from the Mondi group where he had been CEO for 17 years. The Mondi group is an international packaging and paper group, employing around 25,000 people across more than 30 countries, listed on the LSE and the JSE. Prior to the demerger of the Mondi group from Anglo American plc, Mr Hathorn was a member of the Anglo American group executive committee from 2003 and an executive director of Anglo American plc from 2005, serving on several boards of the group's major mining operations. Interest in Shares and Options as at 31 December 2022 144,237,061 Fully Paid Ordinary Shares 9,000,000 Unlisted Options exercisable at GBP 0.022 each expiring 12 June 2027 Directorships held in other listed entities Former directorships of listed companies in last three years None None Brad Sampson Chief Executive Officer B Eng (Mining) Hons, MBA, AMP, GAICD, MAusIMM Mr Sampson is a mining engineer and joined the Group in June 2018. He has more than 30 years’ resources industry experience across numerous locations including West and Southern Africa. In addition to significant mine development and operating experience, Brad has held leadership positions at several publicly listed companies. Interest in Shares and Options as at 31 December 2022 2,464,705 Fully Paid Ordinary Shares 26,900,000 Unlisted Options exercisable at GBP 0.022 each expiring 19 July 2024 Directorships held in other listed entities Agrimin Limited (from 22 April 2016) Metallica Minerals Limited (from 13 May 2021) Former directorships of listed companies in last three years None 27 DIRECTORS’ REPORT (CONT) Information on Directors (Cont) Jonathan Trollip Independent Non-Executive Director B.A (Hons) LLM, FAICD Interest in Shares & Options as at 31 December 2022 Directorships held in other listed entities Mr Trollip joined the Group in April 2016 and is a globally experienced director (both executive and non-executive) with over 30 years of commercial, corporate, governance and legal and transactional expertise. He is currently Non-Executive Chairman of ASX listed Global Value Fund Ltd, Plato Income Maximiser Ltd and Spheria Emerging Companies Ltd and a non-executive director of BCAL Diagnostics Limited. He also holds various private company directorships in the commercial and not-for-profit sectors. 7,276,296 Fully Paid Ordinary Shares Global Value Fund Limited (from 20 March 2014) Plato Income Maximiser Limited (from 20 February 2017) Spheria Emerging Companies Limited (from 12 September 2017) BCAL Diagnostics Limited (from 23 December 2020) Former directorships of listed companies in last three years Antipodes Global Investment Company Limited Future Generation Investment Company Limited Propel Funeral Partners Limited Spicers Limited Sameer Oundhakar Non-Executive Director B Eng (Mechanical), BDipBbus, MBA Resigned with effect from 21 December 2022 Mr Oundhakar joined OIA in 2018 and holds the position of Senior Manager – Diversified Private Equity Investments. He has extensive private equity experience across diverse industry sectors / geographies and represents OIA on investee company boards in Europe, Latin America and the Middle East. He has lived and worked in the Middle East (OIA, Seera), UK (Boston Consulting Group, Columbia Threadneedle, American Express), France and India (HSBC, Larsen & Toubro). Sameer has a Bachelor’s degree with distinction in Mechanical Engineering from VJTI Mumbai, a Post Graduate Diploma in Management from IIM Lucknow and an MBA from INSEAD. Interest in Shares & Options as at 31 December 2022 Directorships held in other listed entities Former directorships of listed companies in last three years None None None Pablo Hernandez Mac-Donald Non-Executive Director Mr Hernandez joined SQM in 2013 and is the Vice President Finance Commercial Offices within SQM reporting to the Chief Financial Officer of SQM. Pablo completed Industrial Engineering and Master of Science in Engineering degrees having graduated from Pontificia Universidad Catolica de Chile in 2013, and a Master’s in Business Administration from Emory University in 2019. Interest in Shares & Options as at 31 December 2022 Directorships held in other listed entities Former directorships of listed companies in last three years None None None 28 Information on Directors (Cont) David Netherway Independent Non-Executive Director B.Eng (Mining), CDipAF, F.Aus.IMM, F.IoM3, C.E. DIRECTORS’ REPORT (CONT) Mr Netherway joined the Group in December 2017 and is a mining engineer with over 40 years of experience in the mining industry. He was involved in the construction and development of the New Liberty, Iduapriem, Siguiri, Samira Hill and Kiniero gold mines in West Africa and has mining experience in Africa, Australia, China, Canada, India and the Former Soviet Union. Mr Netherway served as the CEO of Shield Mining until its takeover by Gryphon Minerals. Prior to that, he was the CEO of Toronto listed African Mining Corporation, a China focused gold mining company that was sold to Eldorado Gold in 2005. He was also the Chairman of Afferro Mining which was acquired by IMIC in 2013. Mr Netherway has held senior management positions in a number of mining companies including Golden Shamrock Mines, Ashanti Goldfields and Semafo Inc and is currently the Chairman of TSX-V listed Elemental Altus Royalties Corp., and a non-executive Director of ASX-listed Canyon Resources Ltd. He also holds various private company directorships. Interest in Shares & Options as at 31 December 2022 8,536,434 Fully Paid Ordinary Shares Directorships held in other listed entities Canyon Resources Ltd (from 17 March 2014) Elemental Altus Royalties Corp. (from 17 August 2022) Former directorships of listed companies in last three years Altus Strategies plc Avesoro Resources Inc. Kilo Goldmines Ltd Joint Company Secretaries Henko Vos B.Compt, CA, ACIS, RCA Mr Vos is a member of the Governance Institute of Australia, the Australian Institute of Company Directors and Chartered Accountants Australia and New Zealand with more than 20 years’ experience working within public practice, specifically within the area of corporate and accounting services both in Australia and South Africa. He holds similar secretarial roles in various other listed public companies in both industrial and resource sectors. Mr Vos is an employee of Nexia Perth, a mid-tier corporate advisory and accounting practice. St James’s Corporate Services Limited SJCS is operated by Jane Kirton (ACG), following the retirement of Phil Dexter in December 2022. Ms Kirton has worked for SJCS since its inception in June 1998 and its former parent company in excess of 20 years Ms Kirton has over 20 years’ experience in the company secretarial environment and qualified as a Chartered Secretary in 2007. Ms Kirton has worked with most of the leading South African mining companies and assisted on numerous corporate transactions involving acquisitions, reorganisations and restructurings, rights offers and fund raisings. Ms Kirton is an Associate of the Chartered Governance Institute UK & Ireland. 29 DIRECTORS’ REPORT (CONT) Board and Committee Meetings Attendance Attendance of directors and committee members at board and committee meetings held during the year is set out in the table below. David Hathorn Brad Sampson Jonathan Trollip David Netherway Sameer Oundhakar (i) Pablo Hernandez Mac- Donald Board Meetings 3/3 3/3 2/3 2/3 2/3 1/3 Audit and Risk Committee Meetings 1/2 - 2/2 1/2 - - Remuneration and Nomination Committee Meetings (ii) - - - - - - Health, Safety and Environment Meetings (iii) - - - - - - (i) Meetings attended prior to ceasing to be a director on 21 December 2022. (ii) No formal remuneration and nomination committee meeting as was held during the year as committee members agreed in discussion to defer remuneration until after the Kola Project financing proposal has been received. (iii) Health, safety and environmental matters are reported on each month in management reporting to the Board and are part of each Board meeting agenda. With limited operational activity during the feasibility study phases, creating a low-risk environment no separate Health, Safety and Environment Committee meetings were held during the Period. Directors’ Conflicts of Interest The Board has formal procedures to deal with directors’ conflicts of interest. In the instance where there is a transactional conflict of interest identified, the director would not take part in the discussion or determination of any matter in respect of which he had disclosed a transactional conflict of interest. There were no transactional conflicts of interest concerning any director that arose during the year. Directors’ Service Contracts The CEO is employed on an ongoing basis, which may be terminated by either party giving six months’ notice. Each NED has a letter of appointment for an initial term of six years after which the re-election will be subject to a review to ensure the Board remains progressive. The appointment of the NED may be terminated by the Company giving one month notice, by the NED by immediate notice and also in accordance with the Company’s articles of association. Indemnifying Officers and Directors and Officers Liability Insurance The Company indemnifies all directors of the Company named in this report and current and former executive officers of the Company and its controlled entities against all liabilities to persons (other than the Company or the related body corporate) which arise out of the performance of their normal duties as director or executive officer unless the liability relates to conduct involving bad faith. The company also has a policy to indemnify the directors and executive officers against all costs and expenses incurred in defending an action that falls within the scope of the indemnity and any resulting payments. During the year, the Company has paid a premium in respect of directors’ and executive officers’ insurance. The contract contains a prohibition of disclosure of the amount of the premium and the nature of the liabilities under the policy. 30 Share Dealing Code DIRECTORS’ REPORT (CONT) The Company has adopted a share dealing code for directors and applicable employees (within the meaning given in the AIM Rules for Companies) in order to ensure compliance with Rule 21 of the AIM Rules for Companies and the provisions of the Market Abuse Regulations relating to dealings in the Company’s securities. The Board considers that the Share Dealing Code is appropriate for a company whose shares are admitted to trading on AIM, the ASX and the JSE. Proceedings on Behalf of Group No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. Statement of disclosure of information to auditor As at the date of this report the serving Directors confirm that: (a) so far as each Director is aware, there is no relevant audit information of which the Company’s auditor are unaware, and (b) they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. Going Concern The 31 December 2022 full-year report has been prepared on a going concern basis that contemplates the continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. In determining the appropriateness of the basis of preparation, the directors have considered the impact of COVID-19 and other global macro- economic conditions on the position of the Group at 31 December 2022 and its operations in future periods. Cash and cash equivalents, at 31 December 2022 were USD 5,046,629 (31 December 2021: USD 11,092,509) the decrease was driven by parent expenditure USD 1,236,245 and exploration expenditure USD 4,574,363. For the Period ended 31 December 2022 the Group recorded a net loss of USD 1,513,953 (31 December 2021: USD 1,941,196) and at 31 December 2022 had a net working capital of USD 4,497,385 (31 December 2021: USD 10,215,877). The Group also recorded a net cash (used in) operating activities for the Period ended 31 December 2022 of USD 1,236,245 (31 December 2021: USD 1,701,079). The Group’s financial projections and cash flow forecasts covering a period of more than twelve months from the date of approval of these financial statements show that the Group will have insufficient available funds in order to meet its current planned activities over the next 12 months. This does not include funding for the construction of the Kola project which is subject to agreement to the EPC and Financing proposal from the Summit Consortium. The Group's financial projections and cash flow forecasts indicate that it has sufficient funding until Q4 2023 and therefore will need to complete a capital raise prior to this in order to meet its current planned activities for the full12 months. The directors have considered various mitigating actions, which includes raising additional capital to enable the Group to continue to fund its working capital requirements. The Directors note the Group has a history of successfully raising capital on the AIM and JSE, and in the past on the ASX with the support from its two major shareholders. If this was not successful further mitigating action would include raising funds through the sale of assets. However, factors beyond the Group’s control, including pandemic diseases such as COVID-19, the Russian/Ukraine conflict impact on macro-economics, inflation, interest rates and the banking crisis and uncertainty in the overall public markets, which affect the stock markets, may in turn have a negative impact on any fund raising. The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that there are reasonable grounds to believe that funding will be secured and therefore that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due. The Directors will continue to pursue further capital raising initiatives in order to have sufficient funds to continue the work to finalise the Kola Project EPC and Financing Proposal for the complete construction of Kola. 31 DIRECTORS’ REPORT (CONT) Going Concern (Cont) The ability of the Group to continue as a going concern is dependent on the matters set out above. As at of the date of approving the financial statement none of these matters are complete. These conditions indicate that a material uncertainty exists which may cast significant doubt as to the Group’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. The directors reviewed a cash flow forecast for the period ending 31 December 2024, which indicates that the Group will have insufficient liquidity to meet its working capital requirements to the end of the going concern period (March 2024). This period covered by the financial projection to 31 December 2024 is considered to be the same for the viability assessment of the Group. Statement of Directors’ Responsibilities The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the group and Company financial statements in accordance with UK adopted international accounting standards. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the Group and Company for that period. The directors are also required to prepare financial statements in accordance with the rules of the LSE for companies trading securities on AIM. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; • • make judgements and accounting estimates that are reasonable and prudent; • state whether they prepared in accordance with UK adopted international accounting standards subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business. • The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 32 DIRECTORS’ REPORT (CONT) Responsibility statement We confirm that to the best of our knowledge: • • • the financial statements, prepared in accordance with UK adopted international accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group and the undertakings included in the consolidation taken as a whole; the review and operations and strategic report includes a fair review of the development and performance of the business and the position of the Company, and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. This responsibility statement and the Directors’ Report was approved by the Board of Directors on 30 March 2023 and is signed on its behalf by: ____________________________ Non-Executive Chairman David Hathorn 30 March 2023 _________________________________ Chief Executive Officer Brad Sampson 30 March 2023 33 INTRODUCTION CORPORATE GOVERNANCE REPORT The Board is committed to the principles of good corporate governance and to maintaining the highest standards and best practice of corporate governance. In this regard the Board has given consideration to the provisions set out in the 2018 UK Code and has taken due regard of the principles of good governance set out therein in relation to the size and stage of development of the Company. The Board is conscious that the corporate governance environment is constantly evolving and the charters and policies under which it operates its business are monitored and amended as required. The Board currently comprises one executive director and five NEDs, including the Chairman. Since inception, the Company has the following appropriately constituted committees, each with formally delegated duties and responsibilities set out in respective written Terms of Reference: • Audit and Risk Committee • Remuneration and Nomination Committee • Health, Safety and Environmental Committee The Company also has in place appropriate guidance, training, policies and procedures to ensure compliance with the Bribery Act 2010 and Australian and South African laws governing anti-bribery and anti-corruption. COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE The Board recognizes the value and importance of maintaining the highest standards of corporate governance and aims to comply with the provisions set out in the 2018 UK Code. Although compliance with the 2018 UK Code is not compulsory for AIM companies, the Directors intend to apply the provisions, where practicable, so as to adhere to the highest standards of governance. Accordingly, the sections below detail how the Group has complied with the 2018 UK Code and explains the reasons for any non-compliance. BOARD LEADERSHIP AND COMPANY PURPOSE Principles A. A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society. B. The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture. C. The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed. D. In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties. E. The board should ensure that workforce policies and practices are consistent with the company’s values and support its long-term sustainable success. The workforce should be able to raise any matters of concern. 34 CORPORATE GOVERNANCE REPORT (CONT) BOARD LEADERSHIP AND COMPANY PURPOSE (CONT) Provisions 1. The board should assess the basis on which the company generates and preserves value over the long-term. It should describe in the annual report how opportunities and risks to the future success of the business have been considered and addressed, the company’s business model and how its governance contributes to the delivery of its strategy. the sustainability of 2. The board should assess and monitor culture. Where it is not satisfied that policy, practices or behaviour throughout the business are aligned with the company’s purpose, values and strategy, it should seek assurance that management has taken corrective action. The annual report should explain the board’s activities and any action taken. In addition, it should include an explanation of the company’s approach to investing in and rewarding its workforce. The Company’s strategy remains to develop a cash generative potash project in the RoC. Financing project development relies on the ongoing support of existing shareholders and ability to attract new equity finance. Kore Potash had 22 employees at the end of the reporting period. In normal circumstances members of the Board periodically visit all parts of the business and interact with employees. However, due to COVID-19 restrictions this has not been possible during the year. The CEO meets with all employees on a regular basis. During 2022 he met with each employee at least once face to face. During the year the COO and CFO held weekly virtual meetings and the CEO has held monthly video meetings with key employees where open questioning and sharing of concerns was encouraged. The Board has oversight on issues raised and management actions via monthly management reports to the Board which detail any community or personnel complaints, or grievances and action management have committed to in order to resolve issues. Each employee’s performance is reviewed annually and employee development planning within the Congolese workforce are being developed. requires The Group’s communication with shareholders and stakeholders in an open, regular and timely manner. communication strategy The Company’s two largest shareholders, OIA and SQM, are represented on the Board. In addition, face-to face meetings are usually undertaken throughout the year with some of the major shareholders, as well as with analysts and brokers but due to COVID-19 restrictions consultations with major shareholders and discussions with analysts and brokers have generally been conducted via teleconference calls. As shareholders were able to attend the AGM in person, a dial-in facility was made available to shareholders to listen to business of the meeting via a webcast and shareholders were also afforded the opportunity to submit questions to the Board in advance of the AGM by e-mail. 3. In addition to formal general meetings, the chair should seek regular engagement with major shareholders in order to understand their views on governance and performance against the strategy. Committee chairs should seek engagement with shareholders on significant matters related to their areas of responsibility. The chair should ensure that the board as a whole has a clear understanding of the views of shareholders. 35 CORPORATE GOVERNANCE REPORT (CONT) BOARD LEADERSHIP AND COMPANY PURPOSE (CONT) Provisions 4. When 20 per cent or more of votes have been cast against the board recommendation for a resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders in order to understand the reasons behind the result. An update on the views received from shareholders and actions taken should be published no later than six months after the shareholder meeting. The board should then provide a final summary in the annual report and, if applicable, in the explanatory notes to resolutions at the next shareholder meeting, on what impact the feedback has had on the decisions the board has taken and any actions or resolutions now proposed. 5. The board should understand the views of the company’s other key stakeholders and describe in the annual report how their interests and the matters set out in section 172 of the Companies Act 2006 have been considered in board discussions and decision-making. The board should keep engagement mechanisms under review so that they remain effective. For engagement with the workforce, one or a combination of the following methods should be used: • a director appointed from the workforce; • a formal workforce advisory panel; • a designated non-executive director. If the board has not chosen one or more of these methods, it should explain what alternative arrangements are in place and why it considers that they are effective. 6. There should be a means for the workforce to raise concerns in confidence and – if they wish – anonymously. The board should routinely review this and the reports arising that arrangements are in place for the proportionate and independent investigation of such matters and for follow-up action. It should ensure its operation. from At the Company’s AGM held on 09 June 2022, all resolutions were passed on a poll by more than 95% of the votes cast. Refer to the section 172 Statement. In addition, David Netherway is the appointed designated NED responsible for workplace engagement. However, due to COVID-19 restrictions, engagements with the workforce were limited to virtual meetings where possible. During 2023, David Netherway plans to visit the RoC where the majority of the employees are based. The CEO holds monthly virtual meetings with all employees where open questioning and sharing of concerns is encouraged. The CEO met in person with all employees during the year, where open questioning and sharing of concerns was encouraged. In addition, a confidential Whistleblowing Policy is in force which allows employees to raise suspected breaches of the Code of Conduct with designated management. No employee will be disadvantaged or prejudiced in the event that a suspected breach is reported in good faith. The Board, through the Audit and Risk Committee, is informed of material incidents reported. 36 CORPORATE GOVERNANCE REPORT (CONT) BOARD LEADERSHIP AND COMPANY PURPOSE (CONT) Provisions 7. The board should take action to identify and manage conflicts of from including significant shareholdings, and ensure that the influence of third parties does not compromise or override independent judgement. those resulting interest, Investment agreements are in place with the two major shareholders, who have representatives on the Board and which address influence and conflicts of interest. In addition, a register of directors’ interests is maintained and updated as required. The Board has formal procedures to deal with Directors’ conflicts of interests. In any instance where a transactional conflict of interest is identified, the Director concerned would not take part in in the discussion or determination of any matter in respect of which they had a disclosed transactional conflict of interest. During the year no transactional conflicts of interest arose. 8. Where directors have concerns about the operation of the board or the management of the company that cannot be resolved, their concerns should be recorded in the board minutes. On resignation, a non-executive director should provide a written statement to the chair, for circulation to the board, if they have any such concerns. All directors have the opportunity at Board meetings to raise concerns on any issues including the operation of the board or the management of the company and give their independent views on all matters being discussed. All such concerns and views are recorded in the minutes. NEDs are also able to raise any such concerns during the annual Board and Chairman’s internal evaluation, the results of which are disclosed in the minutes of the Board meeting at which the evaluations are discussed. DIVISION OF RESPONSIBILITIES Principles F. The chair leads the board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information. G. The board should include an appropriate combination of executive and non-executive (and, in particular, independent non- executive) directors, such that no one individual or small group of individuals dominates the board’s decision-making. There should be a clear division of responsibilities between the leadership of the board and the executive leadership of the company’s business. H. Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account. I. The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently. 37 CORPORATE GOVERNANCE REPORT (CONT) considered David Hathorn was independent on appointment and, in the Board’s view, continues to remain independent as he is not involved in any executive capacity, has no material business relationships with the Company nor is associated with any such material investor and has no close family or other business relationships with the Company or any of its directors or senior executives. The division of responsibilities between the Non-Executive Chairman and the CEO is clearly defined in writing. However, they work closely together to ensure effective decision making and the successful delivery of the Group’s strategy. The Company sets out the matters that are reserved for the Board on its website. The Board considers David Netherway and Jonathan Trollip to be independent as they are not involved in any executive capacity, have no business relationships with the Company nor are associated with any such investor and have no close family or other business relationships with the Company or any of its directors or senior executives. the small quantum of shares held by each Given independent NED the Board is of the view that these do not affect their independent judgement. DIVISION OF RESPONSIBILITIES (CONT) Provisions 9. The chair should be independent on appointment when assessed against the circumstances set out in Provision 10. The roles of chair and chief executive should not be exercised by the same individual. A chief executive should not become chair of the same company. If, exceptionally, this is proposed by the board, major shareholders should be consulted ahead of appointment. The board should set out its reasons to all shareholders at the time of the appointment and also publish these on the company website. 10. The board should identify in the annual report each non- executive director independent. it considers Circumstances which are likely to impair, or could appear to independence include, but are not limited to, whether a director: • impair, a non-executive director’s to be is or has been an employee of the company or group within the last five years; has, or has had within the last three years, a material business relationship with the company, either directly or as a partner, shareholder, director or senior employee of a body that has such a relationship with the company; has received or receives additional remuneration from the company apart from a director’s fee, participates in the company’s share option or a performance- related pay scheme, or is a member of the company’s pension scheme; has close family ties with any of the company’s advisers, directors or senior employees; holds cross-directorships or has significant links with other directors in other companies or bodies; represents a significant shareholder; or has served on the board for more than nine years from the date of their first appointment involvement through • • • • • • Where any of these or other relevant circumstances apply, and the board nonetheless considers that the non- executive director is independent, a clear explanation should be provided. 38 CORPORATE GOVERNANCE REPORT (CONT) DIVISION OF RESPONSIBILITIES (CONT) Provisions 11. At least half the board, excluding the chair, should be non- executive directors whom the board considers to be independent. During the year the Board consisted of the Non-Executive Chairman, the CEO, two NEDs and two independent NEDs. During the course of the year, one NED resigned, and no additional NEDs were appointed. During the year less than half the Board, excluding the Non-Executive Chairman, were NEDs considered to be independent. Due to the current stage of development of the Company’s projects this is not considered to impair the judgement of the Board as a whole but the matter is kept under review and the appointment of further independent NEDs will be considered when deemed appropriate. 12. The board should appoint one of the independent non- executive directors to be the senior independent director to provide a sounding board for the chair and serve as an intermediary for the other directors and shareholders. Led by the senior independent director, the non-executive directors should meet without the chair present at least annually to appraise the chair’s performance, and on other occasions as necessary. Non-executive directors have a prime role in appointing and removing executive directors. Non-executive directors should scrutinise and hold to account the performance of management and individual executive directors against agreed performance objectives. The chair should hold meetings with the non-executive directors without the executive directors present. 13. David Netherway is the Senior Independent NED. During the annual Directors survey discussion at a Board meeting, each Director was given an opportunity to provide open and honest feedback on the Chairman’s performance and no concerns were raised. Mr Netherway was also available to the directors and shareholders to discuss any matters and in particular the performance of the Chairman. In terms of the Company’s Articles of Association, the Directors may appoint a person to be a director to fill a casual vacancy and may appoint from time to time any one or more of their bodies to be the holder of an executive office and may also remove such person from any such office. In addition, the Remuneration and Nomination Committee, which comprises entirely of independent NEDs, identify and recommend to the Board candidates to become new Directors to fill casual vacancies as and when they arise. Further, the Committee gives appropriate consideration to succession planning for directors, including executive directors. remuneration policy The Committee also reviews and recommends an appropriate for executives and considers the performance of any executive director against his performance objectives when considering the executive director’s annual remuneration review. 39 CORPORATE GOVERNANCE REPORT (CONT) DIVISION OF RESPONSIBILITIES (CONT) Provisions 14. The responsibilities of the chair, chief executive, senior independent director, board and committees should be clear, set out in writing, agreed by the board and made publicly available. The annual report should set out the number of meetings of the board and its committees, and the individual attendance by directors. As mentioned in Provision 9. above, the responsibilities of the Non-Executive Chairman and the CEO are clearly defined in writing. In addition, the CEO has entered into a contract of employment so that he can clearly understand the requirements of the role. Each NED, including the Senior Independent NED, has a Letter of Appointment in place to ensure they clearly understand the requirements of their role. Details of executive directors’ service contracts and the Chairman’s and NEDs’ appointment letters are provided within the Directors Report, copies of all of which are also available for inspection by request at the Company’s registered office during normal business hours and at the AGM. 15. When making new appointments, the board should take into account other demands on directors’ time. Prior to appointment, significant commitments should be disclosed with an indication of the time involved. Additional external appointments should not be undertaken without prior approval of the board, with the reasons for permitting significant appointments explained in the annual report. Full-time executive directors should not take on more than one non-executive directorship in a FTSE 100 company or other significant appointment. The number of meetings of the Board and its committees and the individual attendance by directors is set out within the Directors Report. Directors are required to disclose prior appointments and other significant commitments and are required to inform the Board of any changes or additional commitments in a timely manner. Details of the external appointments can be found on pages 27 to 29. Before accepting new appointments, directors are required to obtain approval from the Chairman and the Chairman requires approval from the whole Board. It is essential that no appointment causes a conflict of interest or impacts on the Director’s commitment and time spent with the Group in their existing appointment. 16 All directors should have access to the advice of the company secretary, who is responsible for advising the board on all governance matters. Both the appointment and removal of the company secretary should be a matter for the whole board. All directors have access to the advice and services of the joint company secretaries and each director, and each Board committee member may obtain independent professional advice at the Company’s expense, subject to prior notification to the other NEDs and the joint company secretaries. The joint company secretaries are accountable directly to the Board through the Chairman. The Company currently has two joint company secretaries, one based in London, and one based in Australia. Both the appointment and removal of the company secretary is a matter for the whole Board. 40 CORPORATE GOVERNANCE REPORT (CONT) COMPOSITION, SUCCESSION AND EVALUATION Principles J. Appointments to the board should be subject to a formal, rigorous and transparent procedure, and an effective succession plan should be maintained for board and senior management. Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths. K. The board and its committees should have a combination of skills, experience and knowledge. Consideration should be given to the length of service of the board as a whole and membership regularly refreshed. L. Annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute effectively. Provisions 17. The board should establish a nomination committee to lead the process for appointments, ensure plans are in place for orderly succession to both the board and senior management positions, and oversee the development of a diverse pipeline for succession. A majority of members of the committee should be independent non-executive directors. The chair of the board should not chair the committee when it is dealing with the appointment of their successor. The Remuneration and Nomination Committee is comprised of Jonathan Trollip, as Chairman together with David Hathorn and David Netherway. The Remuneration and Nomination Committee Report is on pages 51 and 52 and details how the Company has complied with the relevant sections of the Code or explains the reasons for any areas of non-compliance. All newly appointed directors are provided with a legal update on directors’ duties and subject to practical considerations responsibilities and one-on-one meetings with members of the senior management team are undertaken. 18. All directors should be subject to annual re-election. The board should set out in the papers accompanying the resolutions to elect each director the specific reasons why their contribution is, and continues to be, important to the company’s long-term sustainable success. 19. The chair should not remain in post beyond nine years from the date of their first appointment to the board. To facilitate effective succession planning and the development of a diverse board, this period can be extended for a limited time, particularly in those cases where the chair was an existing non-executive director on appointment. A clear explanation should be provided. 20. Open advertising and/or an external search consultancy should generally be used for the appointment of the chair and non-executive directors. If an external search consultancy is engaged, it should be identified in the annual report alongside a statement about any other connection it has with the company or individual directors. 21. There should be a formal and rigorous annual evaluation of the performance of the board, its committees, the chair and individual directors. The chair should consider having a regular externally facilitated board evaluation. In FTSE 350 companies this should happen at least every three years. The external evaluator should be identified in the annual report and a statement made about any other connection it has with the company or individual directors. All directors are subject to annual re-election. Shareholders are provided with all material information in the notice of meetings to assist in informing the decision on whether or not to elect or re-elect a director as well as reasons why their contribution is, and continues to be, important to the Company’s long-term sustainable success. David Hathorn has been the Non-Executive Chairman for approximately five and a half years, having been appointed a Director and Non-Executive Chairman on 25 August 2017. No such appointments were made during the year. During the year the Company undertook an annual evaluation of the Board and its committees. In addition, an appraisal of the Non-Executive Chairman’s performance was led by David Netherway as the Senior Independent Non-Executive Director. The annual evaluation was conducted by SJCS who provide company secretarial services. 41 CORPORATE GOVERNANCE REPORT (CONT) COMPOSITION, SUCCESSION AND EVALUATION (CONT) Provisions 22. The chair should act on the results of the evaluation by recognising the strengths and addressing any weaknesses of the board. Each director should engage with the process and take appropriate action when development needs have been identified. Each director of the Company at the time participated in the Board and Committee evaluations, as applicable, the results of which were discussed at a Board meeting attended by all directors. No significant areas of development were identified that required appropriate action to be taken. 23. The annual report should describe the work of the The Remuneration and Nomination Committee Report on pages 51 to 52 sets out, inter alia, the objectives of the Committee, the processes that are used in relation to appointments, its approach to succession planning, how the Board evaluation has been conducted, the policy on diversity and inclusion and the gender balance of senior management and their direct reports. nomination committee, including: • the process used in relation to appointments, its approach to succession planning and how both support developing a diverse pipeline; • how the board evaluation has been conducted, the nature and extent of an external evaluator’s contact with the board and individual directors, the outcomes and actions taken, and how it has or will influence board composition; • the policy on diversity and inclusion, its objectives and linkage it has been implemented and progress on achieving the objectives; and • the gender balance of those in the senior management and their direct reports. to company strategy, how AUDIT, RISK AND INTERNAL CONTROL Principles M. The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements. N. The board should present a fair, balanced and understandable assessment of the company’s position and prospects. O. The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives. Provisions 24. The board should establish an audit committee of independent non-executive directors, with a minimum membership of three, or in the case of smaller companies, two. The chair of the board should not be a member. The board should satisfy itself that at least one member has recent and relevant financial experience. The committee as a whole shall have competence relevant to the sector in which the company operates. The Audit and Risk Committee comprised of three members during the period, David Netherway and Jonathan Trollip both of whom are independent NEDs and David Hathorn who resigned from this committee on 24 January 2023, of which David Netherway is considered by the Board to have recent and relevant financial experience. Due to the current size and stage of development of the Company’s projects it is considered appropriate to have two Independent NEDs members. This matter is kept under review and the appointment of a further independent NED will be considered when deemed appropriate. 42 CORPORATE GOVERNANCE REPORT (CONT) The main roles and responsibilities of the Committee are set out in its Terms of Reference, a copy of which can be found on the Company’s website. The Terms of Reference specifically cover the requirements of the UK 2018 Code. AUDIT, RISK AND INTERNAL CONTROL (CONT) Provisions 25. The main roles and responsibilities of the audit committee • the company’s should include: • monitoring the integrity of the financial statements of the company and any formal announcements relating to financial performance, and reviewing significant financial reporting judgements contained in them; providing advice (where requested by the board) on whether the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company’s position and performance, business model and strategy; reviewing the company’s internal financial controls and internal control and risk management systems, unless expressly addressed by a separate board risk committee composed of independent non-executive directors, or by the board itself; • • • to • monitoring and reviewing the effectiveness of the company’s internal audit function or, where there is not one, considering annually whether there is a need for one and making a recommendation to the board; tender process and making conducting the the the board, about recommendations appointment, reappointment and removal of the external auditor, and approving the remuneration and terms of engagement of the external auditor; reviewing and monitoring the external auditor’s independence and objectivity; reviewing the effectiveness of the external audit process, into consideration relevant UK professional and regulatory requirements; developing and the engagement of the external auditor to supply non- audit services, ensuring there is prior approval of non- audit services, considering the impact this may have on independence, taking into account the relevant regulations and ethical guidance in this regard, and reporting to the board on any improvement or action required; and implementing policy on taking • • reporting to the board on how it has discharged its responsibilities. 43 CORPORATE GOVERNANCE REPORT (CONT) AUDIT, RISK AND INTERNAL CONTROL (CONT) Details of the work of the Committee during the year are set out in the Audit and Risk Committee Report on pages 49 to 50. Provisions 26. The annual report should describe the work of the audit committee, including: o the significant issues that the audit committee considered relating to the financial statements, and how these issues were addressed; o an explanation of how it has assessed the independence and effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, information on the length of tenure of the current audit firm, when a tender was last conducted and advance notice of any retendering plans; in the case of a board not accepting the audit committee’s recommendation on the external auditor appointment, reappointment or removal, a statement from the audit committee explaining its recommendation and the reasons why the board has taken a different position (this should also be supplied in any papers recommending appointment or reappointment); o o where there is no internal audit function, an explanation internal assurance is achieved, and how this affects the work of external audit; and the absence, how for o an explanation of how auditor independence and the external objectivity are safeguarded, auditor provides non-audit services. if 27. 28. The directors should explain in the annual report their responsibility for preparing the annual report and accounts, and state that they consider the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company’s position, performance, business model and strategy. The board should carry out a robust assessment of the company’s emerging and principal risks. The board should confirm in the annual report that it has completed this assessment, including a description of its principal risks, what procedures are in place to identify emerging risks, and an explanation of how these are being managed or mitigated. The Directors’ Responsibility Statement is set out on page 32. The Board has carried out a robust assessment of the Company’s emerging and principal risks, details of which are set out within the Review of Operations and Strategic Report set out on pages 17 to 19. The risk in respect of COVID-19 remains and this is referred to in the Review of Operations and Strategic Report under the section headed environmental and occupational health and safety risks. The risk in relation to Climate Change has been addressed in the Review of Operations and Strategic Report under the section headed climate change. 44 CORPORATE GOVERNANCE REPORT (CONT) AUDIT, RISK AND INTERNAL CONTROL (CONT) Kore Potash has a Risk Matrix which is reviewed by the Audit and Risk Committee twice a year to ensure the controls are appropriate and in place with an open question and answer session with management to ensure the controls are appropriate and new risks identified are updated and appropriate controls put in place. The Board monitor risk management and internal control through managements reporting on a monthly basis which identifies new risks and appropriate controls and any breach of the internal controls. Breaches of the company internal controls are investigated with appropriate actions put in place to ensure the matter doesn’t reoccur. The statement also confirms the integrity of the Group’s financial statements and that they are founded on a sound system of risk management, internal compliance and controls which are implemented in accordance with the policies approved by the Board, and that the Group’s risk management and internal compliance and control systems, to the extent they relate to financial reporting, are operating efficiently and effectively in all material respects. The Board considers the Company’s risk management and internal control systems to be sound and effective. The CEO and CFO provide, at the end of each reporting period, a formal statement to the Board confirming that the Group’s financial reports present a true and fair view, in all material respects, and that the Group’s financial condition and operational results have been prepared in accordance with the relevant accounting standards. The Board has considered that preparing the financial statements on a going concern basis is appropriate and that material uncertainty exists as set out within the Directors Report on pages 31-32. The Board has carried out a robust assessment of the Company’s viability, emerging and principal risks and going concern details of which are set out within the Review of Operations and Strategic Report set out on pages 7-23. 29. The board should monitor the company’s risk management and internal control systems and, at least annually, carry out a review of their effectiveness and report on that review in the annual report. The monitoring and review should cover all material controls, including financial, operational and compliance controls. 30. In annual and half-yearly financial statements, the board should state whether it considers it appropriate to adopt the going concern basis of accounting in preparing them, and identify any material uncertainties to the company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements. 31. Taking account of the company’s current position and principal risks, the board should explain in the annual report how it has assessed the prospects of the company, over what period it has done so and why it considers that period to be appropriate. The board should state whether it has a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, drawing attention to any qualifications or assumptions as necessary. 45 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION Principles P. Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values and be clearly linked to the successful delivery of the company’s long-term strategy. Q. A formal and transparent procedure for developing policy on executive remuneration and determining director and senior management remuneration should be established. No director should be involved in deciding their own remuneration outcome. R. Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances. Provisions 32. The board should establish a remuneration committee of independent non-executive directors, with a minimum membership of three, or in the case of smaller companies, two. In addition, the chair of the board can only be a member if they were independent on appointment and cannot chair the committee. Before appointment as chair of the remuneration committee, the appointee should have served on a remuneration committee for at least 12 months. 33. The remuneration committee should have delegated responsibility for determining the policy for executive director remuneration and setting remuneration for the chair, executive directors and senior management. It should review workforce remuneration and related policies and the alignment of incentives and rewards with culture, taking these into account when setting the policy for executive director remuneration. 34. The remuneration of non-executive directors should be determined in accordance with the Articles of Association or, alternatively, by the board. Levels of remuneration for the chair and all non-executive directors should reflect the time commitment and responsibilities of the role. Remuneration for all non-executive directors should not include share options or other performance-related elements. the the 35. Where a remuneration consultant is appointed, this remuneration responsibility of should be committee. The consultant should be identified in the annual report alongside a statement about any other connection it has with the company or individual directors. judgement should be exercised when Independent evaluating the advice of external third parties and when receiving views from executive directors and senior management. is The Remuneration and Nomination Committee comprised of Jonathan Trollip, as Chairman, together with David Netherway and David Hathorn, who was considered independent on his appointment as a Director and Chairman of the Board. Jonathan Trollip has had relevant experience of listed company directorships and senior executive remuneration in his former capacity as chairman of ASX listed Spicers Limited and as NED of ASX listed of BCAL Diagnostics Limited and Global Value Fund Limited. The main roles and responsibilities of the Committee are set out in its Terms of Reference, a copy of which can be found on the Company’s website. The Terms of Reference specifically cover the requirements of the UK 2018 Code. The remuneration of NEDs is determined by the Board, taking cognisance of the Company’s Articles of Association and their time commitment and responsibilities. Additional remuneration is paid to the Chairman of the Board and the chair of each Board Committee in order to reflect the time commitment and responsibilities required for those roles. No increase in NEDs’ remuneration was made during the year. An external remuneration consultant is appointed as and when required to advise the Committee. However, no such appointment was required during the year. 46 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION (CONT) in 2022 the Board. Following a discussion During 2021 the Remuneration and Nomination Committee reviewed the remuneration package of the CEO. It was agreed and subsequently approved by the Board that the CEO’s salary remains unchanged at USD 550,000 per annum and that he be eligible for a short-term bonus of USD 270,000, payable only in the event that the Kola project was optimised and fully funded with a finance package approved by the Remunerations and Nomination Committee didn’t recommend to the Board any change to the CEO’s salary, and it was noted that the Kola Project optimisation and full funding remains a work in progress. However, should the Kola project not be optimised and fully funded the Board may consider the payment of a discretionary short-term bonus, taking into account factors such as the outcome of the optimisation and funding process. Any such payment will be at the absolute discretion of the Board. Further, it was recommended that the timing of the consideration of the short term bonus be dependent on when the outcome of the optimisation and funding process is known. Details of the Company’s remuneration scheme and policies are set out within the Remuneration Report. Details of the pension arrangements, including contribution rates, for the CEO are set within the Remuneration Report. long-term 36. Remuneration schemes should promote shareholdings by executive directors that support alignment with long-term shareholder interests. Share awards granted for this purpose should be released for sale on a phased basis and be subject to a total vesting and holding period of five years or more. The remuneration committee should develop a formal policy for requirements encompassing both unvested and vested shares. post-employment shareholding 37. Remuneration schemes and policies should enable the use of discretion to override formulaic outcomes. They should also include provisions that would enable the company to recover and/or withhold sums or share awards and specify the circumstances in which it would be appropriate to do so. 38. Only basic salary should be pensionable. The pension contribution rates for executive directors, or payments in lieu, should be aligned with those available to the workforce. The pension consequences and associated costs of basic salary increases and any other changes in pensionable rates, particularly for directors close to retirement, should be carefully considered when compared with workforce arrangements. remuneration, or contribution 39. Notice or contract periods should be one year or less. If it is necessary to offer longer periods to new directors recruited from outside the company, such periods should reduce to one year or less after the initial period. The remuneration committee should ensure compensation commitments in directors’ terms of appointment do not reward poor performance. They should be robust in reducing compensation to reflect departing directors’ obligations to mitigate loss. the exception of The CEO is employed on an ongoing basis, which may be terminated by either party giving six months’ notice. Each NED has a letter of appointment for an initial term of six years (with the Chairman whose agreement continues until terminated by the Board or in accordance with its terms). The appointment of the NED may be terminated by the Company giving one month notice, by the NED by immediate notice and also in accordance with the Company’s Articles of Association. 47 CORPORATE GOVERNANCE REPORT (CONT) The CEO’s remuneration was subject to detailed consideration by the Remuneration and Nomination when the current CEO was employed in 2018. In 2021 it was agreed and subsequently approved by the Board that the CEO’s salary remains unchanged at USD 550,000 per annum and that he be eligible for a short-term bonus of USD 270,000. Following a discussion in 2022 the Remunerations and Nomination Committee didn’t recommend to the Board any change to the CEO’s salary. The Remuneration and Nomination Report on pages 53 to 62 sets out, inter alia the objectives of the Committee and a description of the work carried out during the year. REMUNERATION (CONT) Provisions 40. When determining executive director remuneration policy the remuneration committee should and practices, address the following: • • • • • • clarity – remuneration arrangements should be transparent and promote effective engagement with shareholders and the workforce; simplicity – remuneration structures should avoid complexity and their rationale and operation should be easy to understand; risk – remuneration arrangements should ensure reputational and other risks from excessive rewards, and behavioural risks that can arise from target- based incentive plans, are identified and mitigated; • predictability – the range of possible values of rewards to individual directors and any other limits or discretions should be identified and explained at the time of approving the policy; proportionality – the link between individual awards, the delivery of strategy and long-term performance of the company should be clear. Outcomes should not reward poor performance; and alignment to culture – incentive schemes should drive behaviours consistent with company purpose, values and strategy. the • 41. There should be a description of the work of the remuneration committee in the annual report, including: an explanation of the strategic rationale for executive • directors’ remuneration policies, structures and any performance metrics; the • internal and is appropriate using remuneration external measures, including pay ratios and pay gaps; the a description, with examples, of how remuneration committee has addressed the factors in Provision 40; the reasons why • whether remuneration policy operated as intended in terms of company performance and quantum, and, if not, what changes are necessary; • what engagement has taken place with shareholders and the impact this has had on remuneration policy and outcomes; what engagement with the workforce has taken place to explain how executive remuneration aligns with wider company pay policy; and • • what engagement with the workforce has taken place to explain how executive remuneration aligns with wider company pay policy; and to what extent discretion has been applied remuneration outcomes and the reasons why. to 48 CORPORATE GOVERNANCE REPORT (CONT) AUDIT AND RISK COMMITTEE The Audit and Risk Committee (“the Committee”) comprises comprised of three members during the period, David Netherway and Jonathan Trollip both of whom are independent NEDs and David Hathorn who has resigned from this committee subsequent to the period end, of which David Netherway, who is the chairman of the committee, is considered by the Board to have recent and relevant financial experience. The Committee meets formally at least twice a year and otherwise as required and also meets with the Company’s external auditors at least twice a year. The Committee assists the Board in discharging its responsibilities with regard to financial reporting, including reviewing the Group’s annual and half year financial statements, accounting policies, key judgments and estimates taken and external audit and controls, reviewing and monitoring the scope of the annual audit and the extent of the non-audit work undertaken by external auditors and advising on the appointment of external auditors. In addition, the Committee is responsible for ensuring the integrity of the financial information reported to shareholders and internal control systems and ensuring effective risk management and financial control frameworks have been implemented. The Committee also ensures that appropriate procedures, resources and controls are in place to comply with the AIM Rules for Companies and the Market Abuse Regulations, monitors compliance thereof and seeks to ensure that the Company and its nominated advisor are in contact on a regular basis. The Committee also helps to address risk management, and is committed to maintain a risk management framework that seeks to: • Avoid the likelihood of unacceptable outcomes and costly surprises; • Provide greater openness and transparency in decision making and ongoing management processes; • Provide for a better understanding of issues associated with the Group’s activities; • Comprise an effective reporting framework for meeting corporate governance requirements; and • Allow an appropriate assessment of innovative processes to identify risks before they occur and allow informed judgement. The Committee considered items of significant importance’s in relation to the statements for the year these included: • Carrying value of the Exploration and Evaluation which it reviewed the compliance with IFRS6 and whether impairment triggers have occurred. The Committee determined that no triggers or circumstances had occurred that would impair the asset, and the external audit verified this assessment and therefore, no adjustment was made to the carrying value. • Going Concern was reviewed by assessing the Cash forecast for the group and considering the impact of market conditions. The committee concluded the cash forecast was appropriate though the company has insufficient funding beyond Q3 2023. The committee considers the mitigating actions to be appropriate and the disclosure of material uncertainty in note 1(b) to the financial statements to be appropriately reflected and the external audit verified this assessment. In considering the appropriateness of the audit the Committee reviews the scope for each engagement and highlights any areas of concern to be specifically addressed. The Committee meet with the external auditors at the conclusion of the engagement to discuss the outcomes of the audit with an open question and answer session for the Committee to assess the effectiveness of the audit and any area identified for improvement. When appointing or reappointing the external audit firm the company takes into consideration the appropriateness of the firm in comparison to the companies’ size and operations, the number of partners available for rotation, the firms understanding of the exchanges and compliance regulations for these exchanges and other service the firm provides to the Group. The current external auditors BDO LLP have been in place for four years. They were appointed in 2019 through a tender process. The Committee is also responsible for approving, reviewing and monitoring the Company’s risk management policy. The objectives of this risk management policy are to: • Provide a structured risk management framework that will provide Senior Management and the Board with comfort that the risks confronting the organisation are identified and managed effectively; 49 CORPORATE GOVERNANCE REPORT (CONT) AUDIT AND RISK COMMITTEE (CONT) • Create an integrated risk management process owned and managed by the Group’s personnel that is both continuous and effective; • Ensure that the management of risk is integrated into the development of strategic and business plans, and the achievement of the Group’s vision and values; and • Ensure that the Board is regularly updated with reports by the committee. Management is responsible for efficient and effective risk management across the activities of the Group. This includes ensuring the implementation of policies and procedures that address risk identification and control, training and reporting. The CEO is responsible for ensuring the process for managing risks is integrated within business planning and management activities. The Board reviews the effectiveness of the implementation of the risk management system and internal control system annually. When reviewing risk management policies and the internal control system the Board takes into account the Company’s legal obligations and also considers the reasonable expectations of the Company’s stakeholders, including shareholders, employees, customers, suppliers, creditors, consumers and the wider community. The Group does not currently have an internal audit function. To evaluate and continually improve the effectiveness of the Company’s risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks with senior personnel and Directors. Once the Group is at a size and scale that warrants an Internal Auditor Committee, the Board will be responsible for the appointment and overseeing of the Internal Auditor. The Group currently is not subject to any material exposure to environmental and social sustainability risks. The principal areas of risk for the Company are detailed on pages 17 to 19 of the Annual Report. During the year, the Committee reviewed the planning of the 2022 Annual Report including consideration of the financial statements and going concern, impairment assessment of the exploration and evaluation assets, other key judgments and estimates, value proposition and business model. The Committee received and considered memoranda from management regarding these matters, and also took into account the views of the external auditor. The Committee concluded that no impairment charge was necessary for the exploration and evaluation assets and that the going concern basis is the appropriate method to prepare the annual report on. Following the appointment of BDO LLP, as the Company’s auditor with effect from 28 June 2019, a resolution to reappoint BDO LLP as auditor was proposed and passed by the requisite majority at the AGM held on 9 June 2022. A resolution will be proposed at this year’s AGM to reappoint BDO LLP for the forthcoming financial year. The Board via the Committee is satisfied that the provision of non-audit services during the year as disclosed in note 18 is compatible with the Financial Reporting Council’s Ethical Standard in the UK as well as other general standard of independence for auditors. The Directors are satisfied that non-audit services did not compromise the external auditor’s independence for the following reasons: • all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence under all relevant independence rules. • The Committee assesses the quality of the external audit annually and considers the performance of BDO LLP and its associates taking into account the Committee’s own assessment, feedback from senior finance personnel and views from BDO LLP and its associates on their performance as detailed in a report of their audit findings at the year end, which they presented to the Committee at its meeting in March 2023. Based on this review, the Committee was satisfied with the effectiveness of the audit for the year ended 31 December 2022. 50 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION AND NOMINATION COMMITTEE The Remuneration and Nomination Committee (“the Committee”) has three members, two of whom are independent NEDs, including the chair, Jonathan Trollip. The Committee also comprises David Netherway and David Hathorn. The Committee is required to meet annually and at such other times as required. Its objectives are to: • maintain a board of directors that has an appropriate mix of skills, experience and knowledge to be an effective decision- making body; ensure that the Board is comprised of directors who contribute to the successful management of the Company and discharge their duties having regard to the law and the highest standards of corporate governance; review and recommend an appropriate remuneration policy, the objective of which shall be to attract, retain and motivate executive directors of the quality required to successfully run the Company, without paying more than is necessary having regard to market comparables; and adhere to the principle that no director or senior executive shall be involved in any decisions as to their own remuneration. • • • Due to Covid-19 travel restrictions it was not possible to hold any physical meetings during the year and time zone differences between the countries where members of the committee reside made it difficult to arrange virtual meetings. Accordingly, all matters that were required to be dealt with by the committee were handled by way of bilateral and multilateral discussions among Committee members and other directors as co-ordinated by the Chairman, and decisions of the Committee were affected by written resolution. Other than for directors who are nominated by a major shareholder in accordance with the relevant investment agreement between the Company and the relevant shareholder, the Committee undertakes a detailed selection process as per the Company’s recruitment and diversity policy to appoint or re-appoint a director to the Board. Included in this process are appropriate reference checks which include but not limited to character reference, police clearance certificate and bankruptcy to ensure that the Board remains appropriate for that of an AIM, ASX or JSE quoted company. In addition, the Committee is responsible for considering and recommending board candidates for election or re-election, reviewing succession planning, determining the terms of employment and total remuneration of the executive director and Chairman and considering the Group’s incentive schemes. Directors’ Remuneration and Share Option Schemes The Non-Executive Chairman and CEO have been awarded Share Options, as approved by shareholders at the June 2022 and June 2019 AGM. The Share Options have been structured to recognise the Company’s current state of development and the key project milestones that are critical to the success of the Company, which may result in the Share Options being exercisable within five years from award. Following the achievement of these project milestones and the expiration and/or satisfaction of the conditions of the Share Options, the Board intends to adopt a new incentive scheme that will be more in line with the recommendations of the 2018 UK Code. Diversity Policy The Group is committed to an inclusive workplace that embraces and promotes diversity, while respecting International, sovereign, UK, South African, RoC and Australian laws. It is the responsibility of all directors, officers, employees and contractors to comply with the Group's Diversity Policy and report violations or suspected violations in accordance with this Diversity Policy. The Group recognises the value of a diverse work force and believes that diversity supports all employees reaching their full potential, improves business decisions, business results, increases stakeholder satisfaction and promotes realisation of the Group’s vision. Diversity may result from a range of factors including but not limited to gender, age, ethnicity and cultural backgrounds. The Company believes the individual differences between people add to the collective skills and experience of the Group and ensure it benefits by selecting from all available talent. 51 CORPORATE GOVERNANCE REPORT (CONT) Directors’ Remuneration and Share Option Schemes (Cont) Given the Group's size, early stage of development and relatively small number of employees, the Group is yet to define measurable objectives for achieving diversity targets and expects to set in place a range of objectives that are consistent with its growth strategy in future. Diversity Board Senior Executives All Employees Female % 0.0 33.3 45.8 2022 Male % 100.0 66.7 54.2 Total Number 6 3 24 Female % 0.0 33.3 31.0 2021 Male % 100.0 66.7 69.0 Total Number 6 3 29 Senior Executives include the CEO, COO and CFO. Group and Individual Expectations • Ensure diversity is incorporated into the behaviours and practises of the Group; • Facilitate equal employment opportunities based on job requirements only using recruitment and selection processes which ensures we select from a diverse pool; • Engage professional search and recruitment firms when needed to enhance our selection pool; • Help to build a safe work environment by acting with care and respect at all times, ensuring there is no discrimination, harassment, bullying, victimisation, vilification or exploitation of individuals or groups; • Develop flexible work practices to meet the differing needs of our employees and potential employees; • Attract and retain a skilled and diverse workforce as an employer of choice; • Enhance customer service and market reputation through a workforce that respects and reflects the diversity of our stakeholders and communities that we operate in; • Make a contribution to the economic, social and educational well • Meet the relevant requirements of domestic and international legislation appropriate to the Group’s operations; • Create an inclusive workplace culture; and • Establish measurable diversity objectives and monitor and report on the achievement of those objectives annually. being of all of the communities it serves; ‐ Evaluation of Senior Executives Arrangements put in place by the Board to monitor the ongoing performance of the Group’s Executives include: • A review by the Board of the Group’s financial performance; • Annual performance appraisal meetings incorporating analysis of key performance indicators with each individual to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Group; • An analysis of the Group’s prospects and projects; and • A review of feedback obtained from third parties, including advisors (where applicable). Informal evaluations of the CEO and other Senior Executives’ individual performance and overall business measures are undertaken progressively and periodically throughout the financial year. HEALTH, SAFETY AND ENVIRONMENTAL COMMITTEE The Health, Safety and Environmental Committee (“the Committee”) is chaired by David Netherway and comprised David Hathorn, Brad Sampson and Gavin Chamberlain (COO) and is required under its Terms of Reference to meet formally at least twice a year and at such other times as required. However, as health, safety and environmental matters are reported on each month in management reporting to the Board and are part of each Board meeting agenda and with limited operational activity during the feasibility study phases, creating a low-risk environment, no separate Committee meetings were held during the year. The Committee is responsible for assisting the Board in fulfilling its oversight responsibilities with respect to health, safety and environmental matters affecting the Group, including recommending various policies and policy changes in relation to these areas to be adopted by the Group, reviewing the compliance status and any material non-compliance and, in the event of an incident, reviewing the incident and considering the remedial actions being taken. 52 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT This Remuneration Report sets out information about the remuneration of Kore Potash’s KMP for the financial year ended 31 December 2022. The term ‘KMP’ refers to those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group. The prescribed details for each person covered by this report are detailed below under the following headings: • • • • • key management personnel (KMP) remuneration policy relationship between the remuneration policy and company performance key terms of employment contracts remuneration of KMP KMP of the Company and the Group This report details the nature and amount of remuneration for the KMP of the Group. KMP during the financial year 2022 were: Executive Directors Brad Sampson Non-Executive Directors David Hathorn Jonathan Trollip David Netherway Sameer Oundhakar Pablo Hernandez Mac-Donald Executives Henko Vos SJCS Amanda Farris Gavin Chamberlain Remuneration Policy Chief Executive Officer (appointed on 4 June 2018) Non-Executive Chairman (appointed on 25 August 2017) Independent Non-Executive Director (appointed on 17 November 2017) Independent Non-Executive Director (appointed on 12 December 2017) Non-Executive Director (appointed on 1 April 2021 and resigned on 21 December 2022) Non-Executive Director (appointed on 30 November 2021) Joint Company Secretary (appointed on 7 November 2017) Joint Company Secretary (appointed on 1 October 2018) Interim Chief Financial Officer (appointed on 16 July 2021) Chief Operating Officer (appointed on 1 October 2017) The remuneration policy of Kore Potash has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Group’s financial results. The Remuneration and Nomination makes recommendations to the Board in relation to the composition of the Board, the appointment of the CEO and succession planning, and remuneration for directors and senior executives. The Board endeavours with its remuneration policy to attract and retain high calibre executives and directors to run and manage the Group within the constraints of the financial position of the Group. The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board. All executives receive a base salary and superannuation, where applicable. The Board reviews executive packages annually by reference to the Group’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries. The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain high calibre executives and reward them for performance that results in long-term growth in shareholder wealth. Executives may also be entitled to participate in the employee share and option arrangements. 53 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Remuneration Policy (Cont) The Board policy is to remunerate NEDs at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the NEDs and reviews their remuneration annually, based on market practice, duties and accountability and the Company’s financial capacity constraints. Independent external advice is sought when required. During the 2020 financial year, independent external advice was sought on appropriate remuneration of directors to better reflect market practice for comparable companies listed on AIM, and this resulted in the implementation of revised remuneration arrangements for all NEDs. The maximum aggregate amount of fees that can be paid to NEDs is subject to approval by shareholders at the AGM. Fees for NEDs are not linked to the performance of the Group however, to align directors’ interests with shareholder interests, the Directors are encouraged to hold shares in the Company. The Board has adopted the Kore Potash Performance Rights Plan to establish an incentive plan aiming to create a stronger link between employee performance and reward and increasing shareholder value by enabling the participants of the plan to have a greater involvement with and share in the future growth and profitability of the Company. Key Terms of Employment Contracts with Executive KMPs Key Terms of Employment Contracts for the financial year ending 31 December 2022: Name Base Salary per Annum Term of Agreement Notice Period Brad Sampson (CEO, appointed 4 June 2018) USD 550,000 No fixed Term 6-month notice period Amanda Farris (Interim CFO, appointed 16 July 2021) AUD 288,000 Fixed Term 14 days notice period Gavin Chamberlain (COO, appointed 23 September 2019) USD 306,124 No fixed Term 3-month notice period Non-Executive Director Arrangements NEDs receive a board fee and fees for chairing or participating on board committees, as detailed in the table below. They do not receive performance-based pay (except via options and performance rights under the Group’s performance rights plan) or retirement allowances. The Chairman does not receive additional fees for participating in or chairing board committees. Fees are reviewed annually by the Board taking into account comparable roles and market data provided by the Board’s independent remuneration adviser. The current base annual fees were reviewed and remained unchanged with effect from 1 July 2022. Base fees Chairman Senior independent non-executive director Other independent non-executive directors Additional fees Audit and risk committee – Chair Audit and risk committee – member Remuneration and nomination – Chair Remuneration and nomination – member Health, safety and environmental – Chair Health, safety and environmental – member Base Salary Per Annum USD 100,000 USD 66,500 USD 56,000 USD 7,000 - USD 7,000 - USD 7,000 - All NEDs enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board’s policies and terms, including remuneration, relevant to the office of director. Directors with special responsibilities are disclosed within the various committee reports in the Corporate Governance Report on pages 49 to 52. 54 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) KMP Remuneration The remuneration for each Director and KMP of the Group during the year ended 31 December 2022 was as follows: 1 January 2022 to 31 December 2022 Short-Term Benefits Annual Bonus USD Fees/Basic Salary USD Termination benefits USD Executive Directors Brad Sampson Non-Executive Directors David Hathorn Jonathan Trollip David Netherway Sameer Oundhakar (ii) Pablo Hernandez Mac- Donald Executives Henko Vos (iii) SJCS Gavin Chamberlain Amanda Farris 550,000 100,000 63,000 80,500 - - 793,500 38,944 63,182 306,125 195,220 603,471 Total 1,396,971 - - - - - - - - - - - - - - - - - - - - - - - - - - Post- Employment Benefits Superannuation USD Options / Performance Rights (i) USD Total USD - - - - - - - - - - - - - 18,716 568,716 11,272 - - - - 111,272 63,000 80,500 - - 29,988 823,488 -) -) 234 -) 234 38,944 63,182 306,359 195,220 603,705 30,222 1,427,193 (i) Options as share-based payment arrangements and performance rights granted under the STIP, LTIP and other schemes are expensed over the vesting period, which includes the years to which they relate and their subsequent vesting periods. (ii) Sameer Oundhakar resigned as a NED on 21 December 2022.. (iii) Nexia Perth Pty Ltd has been engaged to provide accounting, administrative and company secretarial services on commercial terms. Mr Vos is currently employed by Nexia Perth. Brad Sampson was the highest paid Director during the 2022 year and details of his remuneration are disclosed above. 55 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) KMP Remuneration The remuneration for each Director and KMP of the Group during the year ended 31 December 2021 was as follows: 1 January 2021 to 31 December 2021 Short-Term Benefits Annual Bonus USD Fees/Basic Salary USD Termination benefits USD Executive Directors Brad Sampson Non-Executive Directors David Hathorn Jonathan Trollip Trinidad Maria Reyes Perez (ii) Timothy Keating (iii) David Netherway Sameer Oundhakar (iv) Ignacio Joaquin Majluf Caceres (v) Pablo Hernandez Mac- Donald (vi) Executives Henko Vos (vii) SJCS Gavin Chamberlain Andrey Maruta Jean-Michel Bour Amanda Farris 550,000 83,333 63,000 - - 80,500 - - - 776,833 42,377 67,718 302,356 107,372 48,616 134,946 703,385 Total 1,480,218 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Post- Employment Benefits Superannuation USD - - - - - - - - - - - - - - - - - - Options / Performance Rights (i) USD Total USD 62,193 612,193 - - - - - - - - 83,333 63,000 - - 80,500 - - - 62,193 839,026 -) -) )31,484 637 90,418 -) 122,539 42,377 67,718 333,840 108,009 139,034 134,946 825,924 184,732 1,664,950 (i) Options as share-based payment arrangements and performance rights granted under the STIP, LTIP and other schemes are expensed over the vesting period, which includes the years to which they relate and their subsequent vesting periods. (ii) Trinidad Maria Perez Peres resigned as a NED on 1 September 2021 and Ignacio Joaquin Majluf Caceres was appointed as her replacement. (iii) Timothy Keating resigned as a NED on 1 April 2021 and Sameer Oundhakar was appointed as his replacement. (iv) Sameer Oundhakar was appointed as a NED on 1 April 2021, following the resignation of Timothy Keating. (v) Ignacio Joaquin Majluf Caceres was appointed as a NED on 01 September 2021 and resigned as a NED on 30 November 2021 and Pablo Hernandez Mac-Donald was appointed as his replacement. (vi) Pablo Hernandez Mac-Donald was appointed as a NED on 30 November 2021, following the resignation of Ignacio Joaquin Majluf Caceres. (vii) Nexia Perth Pty Ltd has been engaged to provide accounting, administrative and company secretarial services on commercial terms. Mr Vos is currently employed by Nexia Perth. Brad Sampson was the highest paid Director during the 2021 year and details of his remuneration are disclosed above. 56 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Share-based payments granted as compensation to KMP Employee Share Option Plan and Employee Performance Rights Plan Kore Potash operates an ownership-based scheme for executives and senior employees of the Group. In accordance with the provisions of the plans, as approved by shareholders at a previous general meeting, executives and senior employees may be granted performance rights and/or options to purchase parcels of ordinary shares at an exercise price determined by the Board based on a recommendation by the Remuneration and Nomination Committee. Each employee share option converts into one ordinary share of Kore Potash on exercise. No amounts are paid or payable by the recipient on receipt of the option, aside from when the option is exercised. The options carry neither right to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Each employee performance rights will be converted into one ordinary share of Kore Potash upon vesting conditions being met. No amounts are paid or payable by the recipient on receipt of the performance rights. The performance rights carry neither right to dividends nor voting rights. The performance rights/options granted expire as determined by the Board based on a recommendation by Remuneration and Nomination Committee, or immediately following the resignation of the executive or senior employee, whichever is the earlier. Summary information for Options as SBP arrangements in existence during 2022 During the financial year, the following options as SBP arrangements for KMP and other personnel were in existence: Option Series 33 Options Series 34 Options Series 35 Options Series 38* Grant Date 19/07/2019 Vesting Date 19/07/2022 Number of Options 26,900,000 Expiry Date 19/07/2024 Fair Value at Grant Date GBP 0.007 Exercise Price GBP 0.022 15/09/2019 15/09/2022 12,000,000 01/01/2024 GBP 0.0092 GBP 0.022 15/09/2019 15/09/2022 8,000,000 01/01/2024 GBP 0.0092 GBP 0.022 13/06/2022 Conditional 9,000,000 12/06/2027 GBP 0.0089 GBP 0.022 * These options were granted to David Hathorn in the period. On 13 June 2022, David Hathorn was granted 9,000,000 options, as approved at the AGM held on 9 June 2022 and pursuant to the Directors and Executives Share Option Plan. The options will only vest, and be exercisable into shares, subject to the Company obtaining a financing package to fully fund the development of the Company’s Kola Project approved by the Board. Unless otherwise indicated above, there are no performance criteria that need to be met in relation to options granted above before the beneficial interest vests in the recipient. However, the executives and senior employees receiving the options meet the vesting conditions only if they continue to be employed with the Company at the vesting date. Please refer to Note 21 to the financial statements for further details of the options granted as detailed above. Further details of the performance conditions for Option Series 34-38 can also be found in Note 21 to the financial statements. There was no exercise of options during the year or any further issues. 57 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Share-based payments granted as compensation to KMP Summary information for Performance Rights as SBP arrangements in existence during 2022 During the financial year, the following performance rights as SBP arrangements for KMP and other personnel were in existence: Rights Series 15 Rights Series 25* Grant Date 29/05/2017 17/03/2020 Vesting Date None vested Refer below The above Performance Rights have nil exercise price. Number of Rights 1,760,000 550,000 Expiry Date 31/05/2022 17/03/2025 Fair Value at Grant Date AUD 0.17 / AUD 0.104 GBP 0.0615 * Vested, converted to fully paid ordinary shares during the year – Please refer to Note 21 to the financial statements for more details of conversions. There are various performance criteria that need to be met in relation to performance rights granted above before the beneficial interest vests in the recipient. However, if the executives and senior employees receiving the performance rights cease to be employed by the Company, the Board of Directors will determine if the performance rights vest immediately, are cancelled or vest upon the vesting condition being achieved. Further details of the performance rights, performance conditions and vesting for the above series can be found in Note 21 to the financial statements. Share-based payments granted as compensation to KMP Reconciliation of options as SBP arrangements and performance rights held by KMP The table below shows a reconciliation of options as SBP arrangements and performance rights held by each KMP from the beginning to the end of the 2022 year. The maximum value of the options yet to vest has been determined as the amount of the grant date fair value of the options that is yet to be expensed. The minimum value of options yet to vest is nil, as the options will be forfeited or cancelled if the vesting conditions are not met. The amount expensed during the year denotes the amount expensed over the vesting period of the options or performance rights, and the percentage indicated denotes the proportion of this expense over the KMP’s total compensation, and therefore the proportion of the KMP’s total compensation that is linked to the Group’s performance for the 2022 year. For further information on each option and performance rights series, please refer to Note 21 to the financial statements. 58 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Reconciliation of options as SBP arrangements and performance rights held by KMP (Cont) Grant date Amount granted Issue date Balance at the start of the year Name, option or rights series No Vested and exercisable Unvested Granted or allocate d as compen sation Vested Exercis ed Cancelled or expired Balance at the end of the year Expensed in 2022 Max value yet to vest Vested and exercisable Unvested No No USD USD % No No No No No % No No % Executive Directors Brad Sampson (i) Options 26,900,000 19/07/2019 17,933,334 8,966,666 - 8,966,666 33 9/06/2022 Series 33 02/07/2019 Non-executive directors David Hathorn Option Series 38 Executive Gavin Chamberlain Options Series 34 Performance rights Series 15 Series 25 29/05/2017 17/03/2020 19/07/2019 9,000,000 09/06/2022 - - 12,000,000 25/06/2020 8,000,000 4,000,000 2,200,000 850,000 29/05/2017 17/03/2020 - - 8,000,000 1,760,000 283,333 6,043,333 - - - - - - - 4,000,000 33 - 283,333 4,283,333 - 33 - - 283,333 283,333 - - - - - 26,900,000 - - 18,716 6 - - - 9,000,000 100,345 11,272 11 - - 33 - - - - - 12,000,000 - - 53 - - 12,000,000 1,760,000 - 1,760,000 188,640 - 188,640 - - - - - CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Share-based payments granted as compensation to KMP Options and Performance Rights granted during 2022 The following table summarises the options as share-based payments and performance rights granted and approved to KMP during the financial year ending 31 December 2022. Options / Rights Series Number of Options / Rights Granted at Grant Date Number Value of Options / Rights Granted at Grant Date USD Option Series 38 9,000,000 100,345 Executive Directors David Hathorn Shares issued on exercise of options or performance rights No shares were issued to KMP during the financial year ended 31 December 2022. 60 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Shareholdings (ordinary shares) The numbers of ordinary shares in the Company held during the financial year by KMP, including shares held by entities they control, are set out below. 31 December 2022 Executive Directors Brad Sampson Non-executive directors David Hathorn (i) Jonathan Trollip David Netherway Executives Henko Vos Gavin Chamberlain Balance at 1 Jan 2022 Received as Remuneration Options Exercised / Rights Converted Other Movements (i) Balance at 31 Dec 2022 2,464,705 144,237,061 7,276,296 8,536,434 162,514,496 1 516,667 516,668 - - - - - - - - - - - - - - 2,464,705 - -) -) - 144,237,061 7,276,296 8,536,434 162,514,496 - 283,333 283,333 - - - 1 800,000 800,001 Total 163,031,164 - 283,333 - 163,314,497 31 December 2021 Executive Directors Brad Sampson Non-executive directors David Hathorn (i) Jonathan Trollip Timothy Keating David Netherway Executives Henko Vos Gavin Chamberlain Balance at 1 Jan 2021 Received as Remuneration Options Exercised / Rights Converted Other Movements (i) Balance at 31 Dec 2021 2,464,705 - - - 2,464,705 116,177,565 5,116,190 500,000 5,845,744 130,104,204 1 - 2,615,968 1,910,106 - 2,440,690 6,966,764 - - 1 - 500,000 250,000 250,000 250,000 1,250,000 - 516,667 516,667 24,943,528 -) -) -) 24,943,528 144,237,061 7,276,296 750,000 8,536,434 163,264,496 - - 1 516,667 - 516,668 Total 130,104,205 6,966,764 1,766,667 24,943,528 163,781,164 (i) Shares purchased from off-market acquisitions 1,886,875 and shares purchases as part of Fundraise on 8th April 2021 23,056,653. Other than otherwise indicated above, no other KMP held any ordinary shares in the Company during the current or prior years. 61 CORPORATE GOVERNANCE REPORT (CONT) REMUNERATION REPORT (CONT) Options, rights and equity warrants over equity instruments granted as compensation Balance at 1 Jan 2022 Received as Remuneration Rights Exercised Other Movements Balance at 31 Dec 2022 Vested and exercisable at year end 31 December 2022 Executive Directors Brad Sampson Non-executive directors David Hathorn Jonathan Trollip Timothy Keating David Netherway Executives Amanda Farris Gavin Chamberlain 26,900,000 - - - - 26,900,000 - 14,043,333 14,043,333 - 9,000,000 - - - 9,000,000 - - - - - - - - - - (283,333) (283,333) - - - - - - - - - - 26,900,000 26,900,000 9,000,000 - - - 35,900,000 - - - - 26,900,000 - 13,760,000 13,760,000 - 12,000,000 12,000,000 49,660,000 38,900,000 Total 40,943,333 9,000,000 (283,333) Other than otherwise indicated above, no other KMP held any options, rights or equity warrants over ordinary shares in the Company during the year ended 31 December 2022. Other transactions with KMP during the financial year ended 31 December 2021 No KMP has entered into a material contract (apart from employment) with the Company and the Group. No amount of remuneration is outstanding at 31 December 2022. Nexia Perth Pty Ltd are engaged to provide accounting, administrative and company secretarial services for the Group on commercial terms. Mr Henko Vos, who is based in Perth, Australia has been appointed as joint company secretary and is also currently an employee with Nexia Perth. During the year, the total amount paid to Nexia Perth by the Group for providing accounting, administration and company secretarial services was USD 39,696 and USD 1,310 to Evelyn Partners LLP. St James’s Corporate Services Limited was appointed on 1 October 2018 and engaged to provide company secretarial services for Kore Potash on commercial terms. During the year, the total amounts paid to St James’s Corporate Services Limited by the Group for providing company secretarial services were USD 63,182. There were no other transactions with KMP and its related parties. Voting of shareholders at last year’s AGM held on 9 June 2022 The Company received 99.82% “yes” votes on its Remuneration Report for the 2021 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices. 62 CORPORATE GOVERNANCE REPORT (CONT) OTHER CORPORATE GOVERNANCE MATTERS Code of Conduct The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Group. The Board has adopted a Code of Conduct charter to promote ethical and responsible decision-making by the directors. The Board has approved a Code of Conduct for Directors, Officers, Employees and Contractors, which describes the standards of ethical behaviour that are required to be maintained. The Code of Conduct was approved prior to the Company’s listing on the AIM market and on the JSE. The Group promotes the open communication of any unethical behaviour within the organisation. Compliance with the Code of Conduct assists the Company in effectively managing its operating risks and meeting its legal and compliance obligations as well as enhancing the Group’s corporate reputation. The Code of Conduct describes the Group’s requirements on matters such as confidentiality, conflicts of interest, use of Group information, sound employment practices, compliance with laws and regulations and the protection and safeguarding of the Group’s assets. An employee who breaches the Code of Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Conduct has occurred or will occur, he or she must report that breach to the CEO or either of the joint company secretaries, via the Company’s confidential “Whistle Blowing” process. All material breaches of the Code of Conduct including Anti-Bribery and Anti-Corruption are reported to the Board. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be investigated, acted upon and kept confidential. Anti-Bribery and Anti-Corruption The Group’s Anti-Bribery and Anti-Corruption policy is set out in the Code of Conduct and has been aligned with relevant UK, Australian and South African laws governing Anti-Bribery and Anti-Corruption. The Group takes a zero-tolerance approach to acts of bribery and corruption by any Directors, officers, employees and contractors. The Group will not offer, give or receive bribes, or accept improper payments to obtain new business, retain existing business or secure any advantage and will not permit others to do so on its behalf. Dealings with Company Securities The Group’s Securities Dealing Policy is binding on all Directors, Senior Executives and Employees who are in possession of “inside information”. All such persons are prohibited from trading in the Company’s securities if they are in possession of ‘inside information’. Subject to this condition and trading prohibitions applying to certain periods, trading is permissible provided the relevant individual has received the appropriate prescribed clearance. The Board considers that the Share Dealing Code is in compliance with the MAR, AIM, ASX and JSE requirements, and continues to meet the requirements of the Board. Primary objective The Group’s primary objective is to leverage into resource projects to provide a solid base in the future from which the Group can build its resource business and create wealth for shareholders. The Group’s operations are subject to various environmental laws and regulations under the relevant government’s legislation. Full compliance with these laws and regulations is regarded as a minimum standard for the Group to achieve. In pursuing this objective, the Group manages its business operations consistent with its Code of Conduct. 63 CORPORATE GOVERNANCE REPORT (CONT) OTHER CORPORATE GOVERNANCE MATTERS (CONT) Market Disclosure The Company is subject to parallel obligations under the AIM Rules and the Market Abuse Regulation, in addition to the ASX Listing Rules and the JSE Regulations, in relation to the disclosure and control of price sensitive information. The Company has obligations under corporate and securities laws and stock exchange rules to keep the market fully informed of information which may have a material effect on the price or value of Group’s securities and to correct any material misrepresentation, mistake or misinformation in the market. The Group takes its continuous disclosure obligations seriously and requires that all of its Directors, Officers, Employees and Contractors observe and adhere to the Group’s procedures and policies governing compliance with all laws pertaining to continuous disclosure, tipping and insider trading. The Company has a formal Disclosure Policy ("Disclosure Policy") addressing its continuous disclosure obligations and arrangements. The objectives of the Disclosure Policy are to ensure that: • The communications of the Group with the public are timely, factual and accurate and broadly disseminated in accordance with all applicable legal and regulatory requirements; • Non-publicly disclosed information remains confidential; and • Trading of the Group's securities by directors, officers and employees of the Company and its subsidiaries remains in compliance with applicable securities laws. The Disclosure Policy also provides guidance to all Directors, Officers, Employees and Contractors of the Group of their responsibilities regarding their obligation to preserve the confidentiality of undisclosed material information while ensuring compliance with laws respecting timely, factual, complete and accurate continuous disclosure, price sensitive or material information, tipping and insider trading. The Disclosure Policy further covers disclosures in documents filed with the securities regulators and stock exchanges and written statements made in the Group’s annual and quarterly reports, news releases, letters to shareholders, presentations by Senior Management and information contained on Kore Potash’s website and other electronic communications. It extends to oral statements made in meetings and telephone conversations with analysts and investors, interviews with the media as well as speeches, press conferences and conference calls. All announcements are approved by the Board, or approved delegates, prior to release with each announcement indicating the relevant approving party and are not audited by an external auditor. The Board is circulated copies of announcements released to ensure they remain informed of market releases at all times. If there is misuse of price sensitive or material information not yet disclosed to the market by trading or breach in confidentiality, extremely serious penalties may apply to the individual or individuals involved. Shareholders The Group places considerable importance on effective communications with its shareholders. The Group’s communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Group. The strategy provides for the use of systems that ensure a regular and timely release of information about the Group is provided to shareholders. Information about the Company; The Company’s website contains a separate section titled “Investors” which contains key documents for its investors. The website also provides: • • An overview of the Group’s current projects; • Copies of its half year reports and annual reports; • Copies of quarterly cash flow reports and review of operations; • • Copies of its announcements to the stock exchanges Investors’ presentations; and 64 CORPORATE GOVERNANCE REPORT (CONT) OTHER CORPORATE GOVERNANCE MATTERS (CONT) Shareholders (Cont) The Company’s share register is maintained electronically by Computershare. Their contact details are disclosed in the Corporate Directory of the Annual Report on page 3. The Board encourages full participation of shareholders at the Company’s AGM to ensure a high level of accountability, transparency and understanding of the Group’s strategy and goals. The Company provides information in its notice of meeting that is presented in a clear, concise and effective manner. With the Company listed on three exchanges, it aims, where possible, to hold general meetings at a reasonable time for all shareholders. Shareholders are provided with the opportunity at these meetings to ask questions in relation to each resolution before they are put to a vote and discussion is encouraged by the Board. The Company intends to conduct all voting at general meetings via a poll, as was the case for the shareholder meetings held during 2022. One of the joint company secretaries, the Company’s external auditor and the Registrars are in attendance at general meetings of the Company to assist with any queries shareholders may have. The Corporate Governance Report was approved by the Board of Directors on 30 March 2023 and is signed on its behalf by ___________________________ David Hathorn Non-Executive Chairman _______________________________ Brad Sampson Chief Executive Officer 65 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC Opinion on the financial statements In our opinion the financial statements: • give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2022 and of the Group’s loss and of the Parent Company’s loss for the year then ended; • have been properly prepared in accordance with UK adopted international accounting standards; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Kore Potash Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2022 which comprise the Statements of Profit or Loss and Other Comprehensive Income, Statements of Financial Position, Statements of Changes in Equity, Statements of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Material uncertainty related to going concern We draw attention to the Going concern section in note 1 (b) to the financial statements, which explains that the Group and Parent company require additional funding in the next twelve months after the approval of the financial statements in order to continue as a going concern. As stated in Note 1 (b), these events or conditions, indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. For the reason set out above and based on our risk assessment, we determined going concern to be a key audit matter. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting and our response to the key audit matter included: • Obtained the Directors cash flow forecasts for the period to 31 December 2024 and assessed the key underlying assumptions, including forecast levels of expenditure and exploration costs used in preparing these forecasts. In doing so we considered actual costs incurred in the financial year 2022 against budgeted and contracted commitments. 66 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) • Performed sensitivity analysis in respect of key assumptions underpinning the forecasts, including operational costs and level of exploration expenditure and assessing the levels of funding required under each sensitivity. • Corroborating the opening cash position in the forecast to bank statements. • Assessed the underlying integrity of the cash flow forecasts. • Challenged the Directors ability to raise funds from further equity placements and assessed the historic performance of the Group in raising funds in the past. Assessed other funding options open to the Group, including the sale of assets, as disclosed in note 1. • Reviewed and considered the adequacy and consistency of the going concern disclosures within the financial statements alongside the Directors going concern assessment. In relation to the Parent Company’s voluntary reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview Coverage Key audit matters 99% (2021: 99%) of Group profit before tax 99% (2021: 100%) of Group total assets 2022  Carrying value of exploration and evaluation assets Going concern  2021   Materiality Group financial statements as a whole $2.5m (2021:$2.6m) based on 1.5% of Total Assets (2021: 1.5% of Total Assets) An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. The Group’s principal operations are located in the Republic of Congo. In approaching the audit, we considered how the Group is organised and managed. We assessed there to be three significant components, being the Parent Company and the two exploration entities in the Republic of Congo: Dougou Potash Mining S.A. and Kola Potash Mining S.A.. The remaining components were considered non-significant to the Group audit and we performed analytical review procedures over the financial information in respect of these. 67 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) As part of the full scope audit for Dougou Potash Mining S.A, and Kola Potash S.A, specified procedures were performed by a BDO Member firm based in West Africa. The group audit team performed the remaining procedures on the full scope audits of the significant components identified above, including additional specific procedures over key risk areas including the Key Audit Matters and the audit of the consolidation. Our involvement with component auditors For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole. Our involvement with component auditors included the following: • Detailed Group reporting instructions were sent to the component auditor, which included the specified procedures to be undertaken on significant risk areas (including the areas that were considered to be key audit matters), materiality levels to be used and set out the information to be reported to the Group audit team. • The Group audit team was actively involved in the direction of the specified procedures performed by the component auditor for the Group reporting purposes, along with the consideration of findings and determination of conclusions drawn. • The Group audit team reviewed the component auditor’s work papers remotely and attended a virtual clearance meeting. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. In addition to the matter disclosed in the Material uncertainty related to going concern section of our report, we determined the matter below to be the key audit matter to be communicated. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 68 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) Key audit matter of Carrying value exploration and evaluation (“E&E”) assets Refer notes and note 7 to 1(r) At 31 December 2022, the Group held E&E assets on its statement of financial position, as detailed in note 7, with a value of $162.7m (2021: $166.6m). As detailed in note 1(r), there are judgments and inherent uncertainties around the recoverability of exploration and evaluation assets. Management and the Board are required to assess there are any potential whether triggers, which would impairment indicate that the carrying value of the asset at 31 December 2022 may not be recoverable. Given financial significance of the E&E assets in the context of the Group’s statement of financial position and the significant judgement in making the assessment of whether any indicators of impairment exist we considered this to be a key audit matter. involved the reviewed and How the scope of our audit addressed the key audit matter challenged Management’s We impairment assessment, reviewed by the Board, against the requirements of the relevant accounting standards to determine whether there were any indicators of impairment. Our specific audit procedures performed in this regard included: • Inspecting that the licences remain valid and are in good title. to discuss the progress of • Held meetings with Management to understand the future plans for the assets and the Engineering, on negotiations (EPC) and Procurement agreement and funding arrangements. • Corroboration of future plans to develop the asset through to key documents including the draft EPC agreement, correspondence with Power China and Heads of Agreement for the construction. the Construction • Verification of the Net Present Value (NPV) to the underlying in particular the reduced NPV announced in the post balance sheet period in relation to the Dougou Extension (DX) asset. feasibility reports, Key observations: We found management’s assessment of the carrying value of E&E assets to be acceptable. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. 69 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Group financial statements 2021 2022 Parent company financial statements 2022 2021 US$ 2.5million 1.5% Total Assets US$ 2.6 million 1.5% Total Assets US$ 2.25 million Set at 90% of Group Materiality US$ 2.34 million Materiality was based total on 1.5% of We assets. total considered assets to be the most appropriate basis for materiality given the the is Group exploration and evaluation stage. US$1.875 million in Materiality was based on 1.5% of We total assets. total considered assets to be the most appropriate basis for materiality given the the is Group exploration and evaluation stage. US$1.95 million in 75% materiality Set at 90% of Group materiality given the assessment components of aggregation risk. the US$1.69 million US$1.75 million In reaching our conclusion on the level of performance materiality to be applied we considered a number of factors including the expected total value of known and likely misstatements (based on past experience), our knowledge of the group’s and parent company’s internal controls and management’s attitude towards proposed adjustments. for Materiality Basis determining materiality Rationale for the benchmark applied for Performance materiality Basis determining performance materiality Rationale for the percentage applied performance for materiality Specific materiality We also determined that for items included in the Statement of Profit or Loss, a misstatement of less than materiality for the financial statements as a whole, specific materiality, could influence the economic decisions of users. As a result, we determined materiality for these items to be $0.1 million based on 5% of Group expenditure (2021: $0.1 million based on 5% of expenditure). The same specific materiality was applied to items included in the Statement of Profit or Loss for the Parent Company. We further applied a performance materiality level of 75% (2021:75%) of specific materiality to ensure that the risk of errors exceeding specific materiality was appropriately mitigated. Component materiality We set materiality for each significant component of the Group based on a percentage of between 21% and 91% (19% and 90%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from $0.463 million to $2.25 million (2021: $0.487 million to $2.34 million). In the audit of each component, we further applied performance materiality levels of 75% (2021:75%) of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. 70 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) Reporting threshold We agreed with the Audit and Risk Committee that we would report to them all individual audit differences in excess of $0.05 million (2021:$0.052 million). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement As the Group has voluntarily adopted the UK Corporate Governance Code 2018 we are required to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit. Going concern and longer- term viability • The Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 31 and 32; and • The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 12 and 13. Other provisions Code • Directors’ statement on fair, balanced and understandable set out on page 32; • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 33; • The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 42 to 45; and • The section describing the work of the Audit and Risk Committee set out on page 49 to 50. 71 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report Directors’ report and Matters on which we are to required report by exception In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. • In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 72 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • Holding discussions with management and the audit and risk committee to understand the laws and regulations relevant to the Group and Parent company. These included elements of financial reporting framework, mining regulations and environmental regulations; • Holding discussions with management and the audit and risk committee to consider any known or suspected instances of non-compliance with laws and regulations or fraud identified by them; • Reviewing minutes from board meetings to identify any instances of non-compliance with laws and regulations or fraud; • We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur by meeting with management from various parts of the business and the Audit and Risk Committee to understand where it is considered there was a susceptibility of fraud. We identified that fraud might occur through the manual override of controls related to journal entries and in making key accounting estimates. We responded by performing the following: o Testing the appropriateness of journal entries made throughout the year by applying specific criteria to select journals which may be indicative of possible irregularities and fraud and agreeing to supporting documentation; o Performing a detailed review of the Group’s year-end adjusting entries and testing any that appear unusual as to nature or amount to supporting documentation; and o Assessing the judgements made by management when making key accounting estimates and judgements, and challenging management on the appropriateness of these judgements (as further described in the Key Audit Matter section of our report). We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. The engagement partner has assessed that the engagement team collectively had the appropriate competence and capabilities to identify or recognize non-compliance with laws and regulations. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 73 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF KORE POTASH PLC (CONT) Use of our report This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Matt Crane (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, UK 30 March 2023 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 74 STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Continuing operations Parent Note Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD Other Revenue 2(a) 1,092,147 Directors’ remuneration Equity compensation benefits Salaries, employee benefits and consultancy expense Credit loss provision Administration expenses Interest income Interest and finance expenses Net realised foreign exchange losses Loss before income tax expense and unrealised 2(b) 2(d) 5 2(c) (814,597) (9,412) (890,518) - (542,146) 66,956 (3,935) 834,158 ) (743,353) (34,596) (1,113,966) - (850,424) 14,698 (4,365) - - (418,962) (9,412) (293,292) - (546,507) 66,956 (3,935) (440,853) (34,596) (687,623) - (675,174) 14,709 (4,708) (308,801) (1,410,306) (112,951) (2,010,799) (308,801) (1,513,953) (112,951) (1,941,196) Income tax Loss for the year 3 - (1,410,306) - (2,010,799) - (1,513,953) - (1,941,196) Other comprehensive income/(loss) Items that may be classified subsequent to profit or loss Exchange differences on translating foreign operations Other comprehensive income/(loss) for the year TOTAL COMPREHENSIVE LOSS FOR THE YEAR Loss attributable to: Owners of the Company Non-controlling interest Total comprehensive loss attributable to: Owners of the Company Non-controlling interest - - - - (8,660,408) (11,529,680) (8,660,408) (11,529,680) (1,410,306) (2,010,799) (10,174,361) (13,470,876) (1,410,306) - (1,410,306) (2,010,799) - (2,010,799) (1,513,822) (131) (1,513,953) (1,941,196) - (1,941,196) (1,410,306) - (1,410,306) (2,010,799) - (2,010,799) (10,174,230) (131) (10,174,361) (13,470,876) - (13,470,876) Basic and diluted loss per share (cents per share) 22 (0.04) (0.06) (0.04) (0.06) The accompanying notes from pages 80 to 113 form part of these financial statements. 75 STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON CURRENT ASSETS Trade and other receivables Property, plant and equipment Exploration and evaluation expenditure Investment in subsidiary TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Derivative financial liability TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS Parent Consolidated Entity Note Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD 4 5 5 6 7 8 9 4,999,889 112,272 5,112,161 10,916,397 88,836 11,005,233 5,046,629 200,251 5,246,880 11,092,509 197,996 11,290,505 158,444,734 153,515,625 - - 69 158,444,802 153,515,694 - - 68 38,597 385,103 162,729,194 - 163,152,894 107,577 482,530 166,613,902 - 167,204,009 163,556,963 164,520,927 168,399,774 178,494,514 396,982 26 397,008 356,882 26 356,908 749,469 26 749,495 1,074,602 26 1,074,628 397,008 356,908 749,495 1,074,628 163,159,955 164,164,019 167,650,279 177,419,886 EQUITY Contributed equity – Ordinary Shares Reserves Accumulated losses EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Non-controlling interests TOTAL EQUITY 10 11 11(f) 3,420,177 3,375,494 172,999,244 172,642,133 (11,853,608) (13,259,466) 3,420,177 221,586,467 (56,793,651) 3,375,494 230,029,754 (55,422,779) 163,159,955 164,164,019 - 163,159,955 164,164,019 - 168,212,993 (562,714) 167,650,279 177,982,469 (562,583) 177,419,886 The accompanying notes from pages 80 to 113 form part of these financial statements. These Financial Statements for Kore Potash plc, registered number 10933682, were approved by the Board of Directors on 30 March 2023 and were signed on its behalf by: ___________________________ David Hathorn Non-Executive Chairman _______________________________ Brad Sampson Chief Executive Officer 76 Consolidated Entity Balance at 1 January 2021 Loss for the period Other comprehensive loss for the year Total comprehensive loss for the year Transactions with shareholders Cancellation of options Conversion of performance rights Cancellation of performance rights Share issues Share issue costs Share based payments Balance at 31 December 2021 Loss for the period Other comprehensive loss for the year Total comprehensive loss for the year Kore Potash ltd SA Divestment Transactions with shareholders Conversion of performance rights Share issues Share issue costs Share based payments Balance at 31 December 2022 STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 Ordinary Shares USD Note Share-Based Payments Reserve USD Share Premium Reserve USD Foreign Currency Translation Reserve USD Merger Reserve USD Accumulated Losses USD Equity Attributable to the Shareholders of Kore Potash plc USD Non- Controlling Interest USD Total Equity USD 2,451,768 9,866,536 32,004,080 (7,093,823) 203,738,800 (62,743,176) 178,224,185 (562,583) 177,661,602 - - - - - - - - - - (11,529,680) (11,529,680) - - - (1,941,196) - (1,941,196) 11(b) 11(b) 11(b) 11(b) 11(a) - 6,024 - 917,702 - - 3,375,494 (6,015,412) (446,583) (2,799,598) - - 103,543 708,486 - 51,772 - 13,108,861 (958,742) - 44,205,971 - - - - - - - - - - - - - - - - - - (18,623,503) - (8,660,408) (8,660,408) (139,989) - - - - - - 203,738,800 - - - - 6,015,412 446,583 2,799,598 - - - (55,422,779) (1,513,822) - (1,513,822) (1,941,196) (11,529,680) (13,470,876) - 57,796 - 14,026,563 (958,742) 103,543 177,982,469 (1,513,822) (8,660,408) (10,174,230) - - - - - - - - (562,583) (1,941,196) (11,529,680) (13,470,876) - 57,796 - 14,026,563 (958,742) 103,543 177,419,886 (131) - (131) (1,513,953) (8,660,408) (10,174,361) 138,501 (1,488) - (1,488) 11(a) 11(b) 11(a) - 44,683 - - 3,420,177 (4,449) - 11,895 18,327 734,259 - 331,338 - - 44,537,309 - - - - (27,423,901) - - - - 203,738,800 4,449 - - - (56,793,651) - 376,021 11,895 18,327 168,212,994 - - - - (562,714) - 376,021 11,895 18,327 167,650,280 The accompanying notes from pages 80 to 113 form part of these financial statements. STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 Parent Balance at 01 January 2021 Loss for the year Total comprehensive loss for the year Transactions with shareholders Conversion of performance rights Cancellation of options Cancellation of performance rights Share issue Share issue costs Share based payments Balance at 31 December 2021 Loss for the year Total comprehensive (loss)/income for the year Transactions with shareholders Conversion of performance rights Share issue Share issue costs Share based payments Balance at 31 December 2022 Note Ordinary Shares USD Share Based Payments Reserve USD Share Premium Reserve USD Merger Reserve USD Reorganisation Reserve USD Accumulated Losses USD Total Equity USD 2,451,768 9,866,536 32,004,080 203,738,800 (76,011,124) (19,104,403) 152,945,657 - - 6,024 - - 917,702 - - 3,375,494 - - - 44,683 - - 3,420,177 - - - - - - - - (2,010,799) (2,010,799) (2,010,799) (2,010,799) (446,583) (6,015,412) (2,799,598) - - 103,543 708,486 51,772 - - 13,108,861 (958,742) - 44,205,971 - - - - - - 203,738,800 - - - - - - (76,011,124) 446,583 6,015,412 2,799,598 - - - (11,853,609) 57,796 - - 14,026,563 (958,742) 103,543 164,164,018 - - - - - - - - (1,410,306) (1,410,306) (1,410,306) (1,410,306) (4,449) - 11,895 18,327 734,259 - 331,338 - - 44,537,309 - - - - 203,738,800 - - - - (76,011,124) 4,449 - - - (13,259,466) - 376,021 11,895 18,327 163,159,955 11(b) 11(b) 11(b) 11(b) 11(b) 11(b) 11(b) 11(b) The accompanying notes from pages 80 to 113 form part of these financial statements. 78 STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers Payments to employees Net cash (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Payments for exploration activities Amounts advanced to related parties Interest received Net cash (used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payment for share issue costs Net cash provided by financing activities Net (decrease)/increase in cash & cash equivalents held Cash and cash equivalents at beginning of financial year Foreign currency differences Cash and cash equivalents at end of financial year Parent Consolidated Entity Note Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD 13 6 7 5 11 11 (593,005) (538,184) (1,131,189) (1,297,463) (552,462) (1,849,925) (1,151,137) (85,108) (1,236,245) (1,491,849) (209,230) (1,701,079) - - (4,532,663) 66,956 (4,465,707) - - (5,683,153) 14,698 (5,668,455) (633) (4,574,363) - 66,956 (4,508,040) (2,216) (5,811,225) - 14,709 (5,798,732) 550 - 550 14,026,563 (958,742) 13,067,821 550 - 550 14,026,563 (958,742) 13,067,821 (5,596,346) 5,549,441 (5,743,735) 5,568,010 10,916,397 (320,162) 5,443,551 (76,595) 11,092,509 (302,145) 5,555,000 (30,501) 4 4,999,889 10,916,397 5,046,629 11,092,509 The accompanying notes from pages 80 to 113 form part of these financial statements. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company is a public company incorporated and registered in England and Wales with primary dual listing on the AIM market and on the ASX, and a secondary listing on the JSE. The consolidated financial statements of the Company as at and for the year ended 31 December 2022 comprise the Company and its subsidiaries which are disclosed in Note 8 (together referred to as the “Group”). The Group is involved in mining exploration activity in the RoC. The Company is limited by shares. The registered office of Kore Potash Plc is 45 Gresham Street, London, United Kingdom EC2V 7BG. Basis of Preparation (a) Statement of Compliance The annual financial statements of the Company and the Group have been prepared in accordance with UK adopted international accounting standards. The principal accounting policies adopted by the Group and Company are set out below. The financial statements were authorised for issue by the Directors on 30 March 2023. New standards, interpretations and amendments effective from 1 January 2022 which have no impact on the group • Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37); • Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16); • Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and • References to Conceptual Framework (Amendments to IFRS 3). None of these standards are deemed to have an impact on the Group for the year ending 31 December 2022. New standards, interpretations and amendments issued by the IASB not yet effective There are a number of standards, amendments to standards, and interpretations which have been issued by that are effective in future accounting periods that the group has decided not to adopt early as they are not expected to have a material impact on the Group. The following amendments are effective for the period beginning 1 January 2023: • Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2); • Definition of Accounting Estimates (Amendments to IAS 8); and • Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12). The following amendments are effective for the period beginning 1 January 2024: • IFRS 16 Leases (Amendment -Liability in a Sale and Leaseback) • IAS 1 Presentation of Financial Statements (Amendment -Classification of Liabilities as Current or Non-Current) • IAS 1 Presentation of Financial Statements (Amendment -Classification of Liabilities with Covenants) 80 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (b) Going Concern The 31 December 2022 full-year report has been prepared on a going concern basis that contemplates the continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. In determining the appropriateness of the basis of preparation, the directors have considered the impact of COVID-19 and other global macro- economic conditions on the position of the Group at 31 December 2022 and its operations in future periods. Cash and cash equivalents, at 31 December 2022 were USD 5,046,629 (31 December 2021: USD 11,092,509) the decrease was driven by parent expenditure USD 1,236,245 and exploration expenditure USD 4,574,363. For the Period ended 31 December 2022 the Group recorded a net loss of USD 1,513,953 (31 December 2021: USD 1,941,196) and at 31 December 2022 had a net working capital of USD 4,497,385 (31 December 2021: USD 10,215,877). The Group also recorded a net cash (used in) operating activities for the Period ended 31 December 2022 of USD 1,236,245 (31 December 2021: USD 1,701,079). The Group’s financial projections and cash flow forecasts covering a period of more than twelve months from the date of approval of these financial statements show that the Group will have insufficient available funds in order to meet its current planned activities over the next 12 months. This does not include funding for the construction of the Kola project which is subject to agreement to the EPC and Financing proposal from the Summit Consortium. The Group's financial projections and cash flow forecasts indicate that it has sufficient funding until Q4 2023 and therefore will need to complete a capital raise prior to this in order to meet its current planned activities for the full12 months. The directors have considered various mitigating actions, which includes raising additional capital to enable the Group to continue to fund its working capital requirements. The Directors note the Group has a history of successfully raising capital on the AIM and JSE, and in the past on the ASX with the support from its two major shareholders. If this was not successful further mitigating action would include raising funds through the sale of assets. However, factors beyond the Group’s control, including pandemic diseases such as COVID-19, the Russian/Ukraine conflict impact on macro-economics, inflation, interest rates and the banking crisis and uncertainty in the overall public markets, which affect the stock markets, may in turn have a negative impact on any fund raising. The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that there are reasonable grounds to believe that funding will be secured and therefore that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due. The Directors will continue to pursue further capital raising initiatives in order to have sufficient funds to continue the work to finalise the Kola Project EPC and Financing Proposal for the complete construction of Kola. The ability of the Group to continue as a going concern is dependent on the matters set out above. As at of the date of approving the financial statement none of these matters are complete. These conditions indicate that a material uncertainty exists which may cast significant doubt as to the Group’s ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. The directors reviewed a cash flow forecast for the period ending 31 December 2024, which indicates that the Group will have insufficient liquidity to meet its working capital requirements to the end of the going concern period (March 2024). 81 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (c) Basis of Measurement The consolidated financial statements have been prepared on the basis of historical cost, adjusted for the treatment of certain financial instruments, as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. (d) Functional and Presentation Currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates. The functional currency of the ultimate parent entity (Kore Potash plc) is US dollars. The functional currency of the subsidiaries are: • Kore Potash Limited – US Dollars (USD) • Sintoukola Potash S.A. - CFA Franc BEAC (XAF) • Dougou Potash Mining S.A. - CFA Franc BEAC (XAF) • Kola Potash Mining S.A. - CFA Franc BEAC (XAF) The presentational currency of the Group is US dollars. (e) Foreign Currency Transactions and Balances Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All differences in the consolidated financial report are taken to the Statement of Profit or Loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate at the date the fair value was determined. As at the reporting date, the assets and liabilities of the foreign subsidiaries are translated into the reporting currency of the Company at the rate of exchange ruling at the reporting date and the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income are translated at the weighted average exchange rates for the period. The exchange differences on the retranslation are taken directly to Other Comprehensive Income. On disposal of a foreign entity, the deferred cumulative amount recognised in equity is recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. The functional currency for Sintoukola Potash S.A. is expected to change to US dollars upon the commencement of mining, as potash is priced in US dollars. (f) Basis of Consolidation Subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Control, under IFRS10, is achieved when the Company: • has power over the investee; • • has the ability to use its power to affect its returns. is exposed, or has rights, to variable returns from its involvement with the investee; and 82 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (f) Basis of Consolidation (Cont) The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group, other than in the event of a Group re-organisation as occurred during the year as described below. The acquisition of Kore Potash Limited by the Company on 20 November 2017 is considered outside the scope of IFRS 3 Business Combinations and accordingly has been accounted for as a common control transaction. The investment in Kore Potash Limited acquired by the Company as a result of the internal reorganisation was recognised at a value consistent with the carrying value of the equity items in the Kore Potash Limited accounts immediately prior to the Scheme. In the Parent entity, the difference between the carrying amount of share capital and options issued by the Company under the Scheme and the investment in Kore Potash Limited has been recognised in a Reorganisation Reserve. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-Group transactions have been eliminated in full. The acquisition of subsidiaries has been accounted for using the purchase method of accounting, other than in the Group re- organisation described above. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their acquisition. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated Statement of Profit or Loss and Other Comprehensive Income and within equity in the consolidated Statement of Financial Position. In the Company’s financial statements, investments in subsidiaries are carried at cost. A list of controlled entities is contained in Note 8 to the financial statements. (f) Income Tax The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised, or liability is settled. Deferred tax is recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income except where it relates to items that are recognised directly in equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. 83 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (g) Property, Plant and Equipment Property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses. The carrying amount of property, plant and equipment is reviewed at each reporting date to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the asset’s employment and subsequent disposal. Property plant and equipment includes Drill Equipment, Camp buildings, machinery, office equipment and other transport machinery and equipment. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over their estimated useful lives to the Group commencing from the time the asset is held ready for use. The depreciation rates used for the plant and equipment is in the range of 10% - 40%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. Depreciation of property, plant and equipment in SPSA is included in Capitalised Exploration and Evaluation Expenditure. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. (i) Financial Instruments (i) Financial Assets Financial assets are recognised in the statement of financial position when the Group becomes party to the contractual provisions of the instrument. Trade receivables are held in order to collect the contractual cash flows and are initially measured at the transaction price as defined in IFRS 15, as the contracts of the Group do not contain significant financing components. Impairment losses are recognised based on lifetime expected credit losses in profit or loss. Trade and other receivables are initially measured at fair value plus any direct attributable transaction costs. Subsequent to initial recognition, trade and other receivables are measured at amortised cost using the effective interest method, less any impairment losses. Other receivables are held in order to collect the contractual cash flows and accordingly are measured on initial recognition at fair value, which ordinarily equates to cost and are subsequently measured at cost less impairment due to their short-term nature. A provision for impairment is established based on 12-month expected credit losses unless there has been a significant increase in credit risk when lifetime expected credit losses are recognised. The amount of any provision or reversal is recognised in profit or loss. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability. . 84 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (i) Financial Instruments (Cont) (ii) Financial Liabilities and Equity Financial liabilities and equity instruments issued by the Group are classified in accordance with the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. The Group derecognises a financial liability when its contractual obligations are discharged, cancelled, or expire. (iii) Effective Interest Rate Method The effective interest rate method is a method of calculating the amortised cost of a financial asset or liability and allocating interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows through the expected life of the financial asset or liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. (iv) Impairment of Non-Financial Assets Other Than Exploration and Evaluation Assets The carrying amounts of the Group’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss in the Statement of Profit or Loss and Other Comprehensive Income. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exist. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised. (j) Revenue Recognition Revenue Is recognised from the provision of services has been provided under the contractual obligations. Revenue for the provision of services to a group entity is recognised when the services have been provided to that entity as per the Intra-Group Service Agreement. (k) Trade and Other Payables These amounts represent liabilities for goods and services provided to the entity prior to the end of the financial year and which are unpaid. Trade and other payables are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, trade and other payables are measured at amortised cost using the effective interest rate method. (l) Cash and Cash Equivalents For purposes of the statement of cash flows, cash includes deposits at call with financial institutions and other highly liquid investments with short periods to maturity which are readily convertible to cash on hand and are subject to an insignificant risk of changes in value. Cash held in currencies other than USD is measure based on the USD equivalent exchange rate at the end of the period and cash flows are measured at the average USD equivalent exchange rate over the period. 85 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (m) Capitalisation of Exploration and Evaluation Expenditure Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: the rights to tenure of the area of interest are current • • at least one of the following conditions is also met • the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; and • exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount at the reporting date. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years. Where a decision is made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is assessed for impairment and the balance is classified as a development asset. The point at which an area of interest is considered developmental is based on finalisation of a DFS, a bankable feasibility study and the finalisation of appropriate funding. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Depreciation of fixed assets is also capitalised; this will then be amortised over the useful economic life of the asset. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. (n) Share Based Payments Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. The fair value grant rate is independently determined using the different option pricing models that takes into account the exercise price, the term of the option, the market and non-market based vesting and performance criteria, the impact of dilution, the tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. 86 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (n) Share Based Payments (Cont) When share options and performance rights are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values (o) Employee Benefits (i) Wages, salaries and annual leave Liabilities for wages, salaries and annual leave are recognised in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. (ii) Pension contributions Contributions are made by the Group to pension funds as stipulated by statutory requirements and are charged as expenses when incurred. (iii) Employee benefit on costs Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs when the employee benefits to which they relate are recognised as liabilities. (p) Earnings per Share (i) Basic earnings per share Basic earnings per share is determined by dividing the net profit after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (q) Issued Capital Ordinary shares and CDIs are classified as equity. CDIs are instruments traded on the ASX that allow non-Australian companies to list their shares on the exchange and use the exchange’s settlement systems. In the Company’s case, one CDI is equivalent to one share traded on the AIM market or on the JSE, as a result, CDIs are considered to be equity. Costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Costs directly attributable to the issue of new shares or options incurred in connection with a business combination, are included in the cost of the acquisition as part of the purchase consideration. (r) Critical Accounting Judgements and Estimates In the application of the Group’s accounting policies, which are described in this note, the directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 87 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (r) Critical Accounting Judgements and Estimates (Cont) The areas involving significant accounting judgment are set out in the tables below: Critical accounting judgement Impairment of exploration and evaluation assets, recovery of parent company investments and intercompany balances Classification of capitalised exploration and evaluation costs to date Details The ultimate recovery of the value of exploration and evaluation assets, the Company’s investment in subsidiaries, and loans to subsidiaries is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets. Please see note 7 (p.93) for the disclosure of the exploration and evaluation asset On a regular basis, management consider whether there are indicators as to whether the asset carrying values exceed their recoverable amounts. This consideration includes assessment of the following: (a) expiration of the period for which the entity has the right to explore in the specific area of interest with no plans for renewal; (b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned; (c) exploration for and evaluation activities have not led to the discovery of commercially viable quantities of mineral resources and the entity has decided to discontinue such activities in the specific area; and (d) whether sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or by sale. Management judgement is required to determine whether the expenditures which are capitalised as exploration and evaluation assets will be recovered by future exploitation or sale or whether they should be impaired. In assessing this, management determines the possibility of finding recoverable ore reserves related to a particular area of interest, which is a subject to significant uncertainties. Many of the factors, judgements and variables involved in measuring resources are beyond the Group’s control and may prove to be incorrect over time. Subsequent changes in resources could impact the carrying value of exploration and evaluation assets. Management judgement is required as to whether the assets associated with the Kola Potash Project represents an exploration asset to be accounted for under IFRS 6 Exploration for and Evaluation of Mineral Resources, or a development asset to be accounted for under IAS 16 Property, Plant and Equipment. A conclusion that consideration is required under IAS 16 or IAS 36 would mean that a full impairment test of the assets associated with the Kola Potash Project would have been required during 2022. In reaching the judgement that the assets associated with the Kola Potash Project should remain capitalised as exploration and evaluation assets, management has assessed whether technical and commercial viability of extracting mineral resources has been demonstrated. Given the ongoing work with the Summit Consortium to finalise EPC terms and conditions and the receipt of a financing proposal and remaining permits to be obtained from the RoC, the Group has concluded that final technical and commercial viability of the Kola Potash Project has yet to be finalised. Management have considered the appropriateness of the carrying value of the Dougou Potash Project based on the updated DX PFS and Production Target on 24 January 2023. Where the Company reported a NPV10 (real) of USD 275 million and 27% IRR on a real post tax basis at life of project average granular MoP price of USD 450/t. The reduced NPV for the DX Project is higher than the current carrying value of the asset. 88 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT) Basis of Preparation (Cont) (s) Assumptions and Estimation Uncertainties No assumptions and estimation uncertainties have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities at 31 December 2022 (t) Segment Reporting Operating segments are reported in a manner that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors, which is responsible for allocating resources and assessing performance of the operating segments. NOTE 2: LOSS FOR THE YEAR (a) Revenue Intra group services Expenses (b) Equity based payments Directors, KMP and other employees (i) (c) Administration Expenses Accounting, company secretarial and audit fees Insurance expenses Legal fees Compliance, registration and other tax fees Marketing and investor relations Premises and office related costs South Africa Recharge Professional fees Other expenses Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD 1,092,147 834,158 - - 9,412 34,596 9,412 34,596 237,473 54,164 - 120,404 86,481 8,285 - 72 35,267 542,146 305,518 79,929 6,238 131,665 119,847 4,737 176,187 148 26,155 850,424 237,473 54,164 - 120,404 86,481 8,285 - 72 39,628 546,507 305,518 79,981 6,238 131,665 119,847 4,842 - 148 26,935 675,174 (i) (ii) Details of KMP and employee share-based payments can be found in Note 21. Kola and DX projects are in Exploration & Evaluation (E&E) phase. No amortisation and depreciation is recognised for E&E assets. Any Property Plant & Equipment (PP&E) used in E&E phase are depreciated and depreciation charge is capitalised in E&E assets accordingly. 89 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 2: LOSS FOR THE YEAR (CONT) (d) Salaries, employee benefits and consultancy expense Wages and Salaries Social Security costs Consultancy costs Staff Costs capitalised as Exploration and Exploration Asset Parent Consolidated Entity Dec 2022 Dec 2021 Dec 2022 Dec 2021 USD USD USD USD 528,514 9,670 352,334 890,518 740,722 37,245 335,999 1,113,966 75,438 9,670 208,184 293,292 397,490 37,245 252,888 687,623 Wages and Salaries - - 860,314 698,428 Total staff costs for the Group in the year ended 31 December 2022 were USD 945,423 (2021: US USD 1,133,163) The staff costs incurred during the year at a subsidiary, SPSA, of USD 860,314 has been capitalised as Exploration and Exploration Asset (2021: USD 698,428). (e) Average number of employees Operational Head Office NOTE 3: INCOME TAX EXPENSE Parent Consolidated Entity Dec 2022 Number - 5 5 Dec 2021 Number - 6 6 Dec 2022 Number 18 5 23 Dec 2021 Number 19 6 25 Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD Loss before tax (1,410,306) (2,010,799) (1,513,953) (1,941,196) Parent company tax on loss at the UK corporation tax rate of 19% (2021: 19%) Different tax rates of subsidiaries operating in different jurisdictions Tax effect of: Net non-deductible expenses Income not taxable for tax purposes Deferred tax asset not recognised Permanent differences Remeasurement of deferred tax for change in tax rate (267,958) (382,052) (287,651) (368,827) - (267,958) - (382,052) - (287,651) - (368,827) 1,788 - 266,170 - 14,696 (6,571) 486,293 - - (112,366) - 17,120 270,531 - - - (113,433) 482,260 - - 267,958 382,052 287,651 368,827 Income tax expense - - - - 90 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 3: INCOME TAX EXPENSE (CONT) The statutory tax rate of Kore Potash plc is 19% (2021: 19%), representing the UK corporation tax rate. The Group is subject to varying statutory rates, primarily being Australia (30%), and the RoC (see Note 7 regarding corporate tax concessions applicable under the new mining convention). The current tax charge is USD Nil (2021: charge of USD Nil). An increase in the UK corporation tax rate to 25% (effective from April 2023) was substantially enacted in May 2021. This is likely to impact on the Group’s potential deferred tax asset not yet recognised in respect of tax losses and didn’t impact on the reported tax charge in the financial statements for the year ended 31 December 2022. No deferred tax has been recognised in respect of the Group’s tax losses of USD 19,763,277 (2021: USD 19,763,277) that are available for offset against any future taxable profits in the companies in which the losses arose. NOTE 4: CASH AND CASH EQUIVALENTS Cash at bank NOTE 5: TRADE AND OTHER RECEIVABLES Current Advance to employees Net GST, PAYE and VAT recoverable Prepayments Other receivables Non-Current Bank guarantee Rental deposits Others Amounts due from subsidiaries (i) (ii) Parent Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD 4,999,889 4,999,889 10,916,397 10,916,397 5,046,629 5,046,629 11,092,509 11,092,509 Parent Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD - (11,046) 108,033 15,285 112,272 - (23,971) 97,807 15,000 88,836 - 1,212 - 158,443,522 158,444,734 - 1,046 - 153,514,579 153,515,625 17,742 (11,046) 140,765 52,790 200,251 - 36,801 1,796 - 38,597 28,515 (23,971) 138,721 54,731 197,996 51,882 53,793 1,902 - 107,577 Total Trade and Other Receivables 158,557,006 153,604,461 238,848 305,573 (i) (ii) The amount due from a subsidiary is interest-free and is repayable on demand. The increase in the year relates to the transfer of funds from Kore Potash Plc to the Congolese entity in order to further fund the development of the exploration asset. IFRS 9 requires the Group to recognise an allowance for ECLs for all debt instruments not held at fair value through profit or loss. The loans to the subsidiaries, SPSA and Kore Potash Limited, are classified as repayable on demand. IFRS 9 requires consideration of the expected credit risk associated with the loan. As the subsidiary company does not have any liquid assets to sell to repay the loan, should it be recalled, the conclusion reached was that the loan should be categorised as stage 3. As part of the assessment of expected credit losses of the intercompany loan receivable, the Directors have assessed the cash flows associated with a number of different recovery scenarios. This included consideration of the exploration project risk, country risk and the value of the potential reserves. 91 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 5: TRADE AND OTHER RECEIVABLES (CONT) EXPECTED CREDIT LOSS PROVISION Parent Dec 2022 USD Dec 2021 USD As at 1 January Increase in the year in relation to Kore Potash Limited Reversal in the year in relation to Kore Potash Limited As at 31 December 14,582,887 14,582,887 - - 14,582,887 14,582,887 - - As at 31 December 2022 there were no other receivables that were past due but not impaired. NOTE 6: PROPERTY, PLANT AND EQUIPMENT Parent Dec 2022 USD Dec 2021 USD Plant and equipment – at cost Less accumulated depreciation Reconciliation: Opening balance Additions Depreciation capitalised under exploration and evaluation Disposals Foreign exchange differences Closing balance at period end -) -) -) -) -) -) -) -) -) Consolidated Entity Dec 2022 USD 1,964,294 (1,579,191) 385,103 Dec 2021 USD 2,095,475 (1,612,945) 482,530 482,530 645 (60,701) (10,332) (27,039) 385,103 542,418 2,361 (35,799) - (26,450) 482,530 -) -) -) -) -) -) -) -) -) 92 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 7: EXPLORATION AND EVALUATION EXPENDITURE Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Opening balance Exploration and evaluation expenditure capitalised during the year Foreign exchange differences Closing balance at period end - Exploration and evaluation expenditure relating to: Kola Potash Mining project Dougou Potash Mining project - - -) -) -) -) -) Dec 2022 USD 166,613,902 Dec 2021 USD 172,025,750 5,064,934 (8,949,642) 162,729,194 6,581,097 (11,992,945) 166,613,902 131,725,943 31,003,251 162,729,194 134,392,245 32,221,657 166,613,902 - -) -) -) -) -) -) On 8 June 2017, a mining convention was signed by the Group and the Government of the RoC. The convention governs the conditions of construction, operation and mine closure of the Kola and Dougou (including DX) mining projects. The terms and conditions of the mining convention include key investment promotion provisions, including the following: • Corporate tax concessions applicable for the first ten years of each mining permit as production capacity is extended, which includes zero corporation tax for the first five years from profitability, and a corporation tax rate of 7.5% for the next five years; • An ongoing corporation tax rate of 15% for the rest of the life of mine; • Exemptions from withholding taxes including interest, dividends and capital gains during the term of the mining convention; • VAT and import duty exemptions (including all subcontractors) during construction; • Royalties of 3% payable to the RoC, which is based on an equivalent to EBITDA; • Guarantee from the RoC that it will facilitate and support the implementation of the project, as defined in the convention (for example, in granting the necessary consents to permit export of the final product through the use of a dedicated jetty); and • The RoC to be granted a 10% carried equity interest (subject to signing shareholders agreement) in the project companies, which are currently wholly-owned by Kore Potash Limited’s subsidiary, SPSA. The mining convention has a term which covers the life of the Kola and Dougou mining permits including any extension (25 years plus 15-year extension, renewable indefinitely upon proven mineable ore resources). The Group was awarded the Sintoukola 2 Exploration Permit dated 9 February 2018 by the government of the RoC. The Sintoukola 2 exploration permit expired in February 2021 and the company relinquished this tenement there is no value allocated to this tenement or costs incurred in relation to this tenement. On 7 December 2018, the Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licences was gazetted into law following ratification by the Parliament of the RoC. The result of this law being gazetted was that the RoC government were now entitled to a 10% equity interest in Dougou and Kola. There is currently no shareholder agreement in place for this change in equity interest agreement. Further information regarding the non-controlling interest is available in Note 11 (f). The ultimate recoupment of costs carried forward for exploration expenditure phases is dependent on the successful development and commercial exploitation, or alternatively, the sale of the respective areas of interest. 93 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) Percentage Owned Investment 31 Dec 2022 31 Dec 2022 Percentage Owned Investment 31 Dec 2021 31 Dec 2021 NOTE 8: CONTROLLED ENTITIES Controlled Entities Country of Incorporation Kore Potash Limited (i) Australia Sintoukola Potash S.A. (“SPSA”) (ii) Kore Potash South Africa (Pty) Ltd (“KPSA”) (iii) Republic of Congo South Africa % 100 97 - USD 67 1 - Held through Sintoukola Potash S.A.: Kore Potash Mining S.A. (“KPM”) Dougou Potash Mining S.A. (“DPM”) Republic of Congo Republic of Congo 100 100 18,264 18,264 % 100 97 100 100 100 USD 67 1 1 18,264 18,264 (i) The principal activity of Kore Potash Limited during the financial year was for administrational and operational support for the exploration for potash minerals prospects. The registered office of Kore Potash Limited is Level 3, 88 William Street, Perth WA 6005. (ii) The principal activity of SPSA and its two subsidiaries, KPM and DPM, during the financial year was exploration for potash minerals prospect. The Registered office for the three entities is 91 Germain Bikoumat centre-ville route de la radio, Immeuble Abdallah BP 662 Pointe Noire, République du Congo. (iii) During the financial year Kore Potash South Africa (Pty) Ltd was voluntarily liquidated. NOTE 9: TRADE AND OTHER PAYABLES Current Trade and other creditors Accruals Employee benefits and related payables Total Trade and Other Payables Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD 30,959 137,793 228,230 396,982 623 127,598 228,661 356,882 47,162 311,409 390,898 749,469 47,457 684,299 342,846 1,074,602 Trade and other creditors are non-interest bearing and are normally settled on 30-day terms. 94 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 10: ISSUED CAPITAL Parent Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD 3,420,177,120 Fully Paid Ordinary Shares at par value of USD 0.001 each (31 December 2021: 3,375,494,446 Fully Paid Ordinary Shares at par value of USD 0.001) 3,420,177 3,375,494 3,420,177 3,375,494 Fully Paid Ordinary Shares 3,420,177 3,375,494 3,420,177 3,375,494 Date 31 Dec 2020 09 Apr 2021 06 May 2021 11 May 2021 01 Jun 2021 08 Jul 2021 31 Dec 2021 05 May 2022 13 June 2022 31 Dec 2022 Details Closing balance Equity issued to directors in lieu of payment, Fundraise Tranche 1 admitted to market and Director’s performance rights (i) Issue of Equity - Fundraise Tranche 2 admitted to market (ii) Issue of Equity - Fundraise OIA Princess Aurora Company (iii) Issue of Equity (iv) Issue of Equity (v) Closing balance Issue of Equity (vi) Issue of Equity – SQM in lieu of fees payable (vii) Closing balance No. of Shares) 2,451,768,173 365,518,522 462,310,392 92,226,613 716,667 2,954,079 3,375,494,446 550,000 44,132,674 3,420,177,120 USD) 2,451,768 365,518 462,310 92,227 717 2,954 3,375,494 550 44,133 3,420,177 (i) On 9 April 2021, a total of 1,103,296 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash fees for the quarter ended 31 March 2021. Additionally, a total of 1,250,000 ordinary shares due under the third and final tranche of the Company’s performance rights plan for NEDs, were issued to David Hathorn, David Netherway, Jonathan Trollip and Timothy Keating, at a subscription price of USD 0.001 per ordinary share. The Company issued 363,165,226 ordinary shares to new and existing institutional investors at the Placing Price of 1.1p per share. (ii) On 6 May 2021, 462,310,392 ordinary shares were issued at 1.1p (2.0 Australian cents) per share in line with the Company’s announcements of 19 April 2021, of which 23,056,653 ordinary shares were issued to David Hathorn. (iii) On 11 May 2021, the company issued 92,226,613 ordinary shares to OIA as a substantial shareholder, after confirmation of the Fundraise in April, OIA signed a subscription agreement at 1.1p for a total cash consideration of USD 1.4 million (iv) On 1 June 2021, a total of 716,667 ordinary shares were issued to certain employees and ex-employees following the vesting of Performance Rights awarded under the Company's Employee Performance Incentive Plans of which 516,667 ordinary shares were issued to Gavin Chamberlain, COO. (v) On 8 July 2021, a total of 2,954,079 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash fees for the quarter ended 30 June 2021. (vi) On 5 May 2022, a total of 550,000 ordinary shares were issued to certain employees and ex-employees following the vesting of Performance Rights awarded under the Company's Employee Performance Incentive Plans of which 283,333 ordinary shares were issued to Gavin Chamberlain, COO. (vii) On 13 June 2022, the Company issued 44,132,674 ordinary shares to SQM in lieu of fees payable for the DX DFS Phase 1 work completed under the Technical Services Agreement. 95 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 11: RESERVES SBP reserve (a) Share premium reserve (b) Foreign currency translation reserve (c) Merger reserve (d) Reorganisation reserve (e) Total Reserves Parent Consolidated Entity Dec 2022 USD 734,259 44,537,309 - 203,738,800 (76,011,124) 172,999,244 Dec 2021 USD 708,486 44,205,971 - 203,738,800 (76,011,124) 172,642,133 Dec 2022 USD 734,259 44,537,309 (27,423,901) 203,738,800 - 221,586,467 Dec 2021 USD 708,486 44,205,971 (18,623,503) 203,738,800 - 230,029,754 (a) SBP Reserve Opening balance Value performance rights converted in ordinary share capital Value of performance rights cancelled in the period Value of cancelled options transferred to accumulated losses (i) Share based payment vesting expense (ii) Closing balance 708,486 9,866,536 708,486 9,866,536 (4,449) (446,583) (4,449) (446,583) - (2,799,598) - (2,799,598) - 30,222 734,259 (6,015,412) 103,543 708,486 - 30,222 734,259 (6,015,412) 103,543 708,486) (i) For further details, refer to Note 11(a). (ii) For parameters used in the valuation of the above options and performance rights see Note 21. Movement in SBP Reserve of the Consolidated Entity Date 31 Dec 2020 15 Jan 2021 15 Jan 2021 15 Jan 2021 09 Apr 2021 09 Apr 2021 09 Apr 2021 01 Jun 2021 01 Jun 2021 01 Jun 2021 24 Jun 2021 23 Aug 2021 31 Dec 2021 31 Dec 2021 31 Dec 2021 05 May 2022 09 Jun 2022 31 Dec 2022 31 Dec 2022 Details Closing balance Conversion of performance rights Cancellation of performance rights Cancellation of share options Conversion of performance rights Cancellation of performance rights Cancellation of share options Conversion of performance rights Cancellation of performance rights Cancellation of share options Issue of share options Cancellation of share options Transfer of SBP previously lapsed to retained earnings SBP charge Closing balance Conversion of performance rights (i) Issue of share options SBP charge Closing balance No. of Options 59,900,000 - (6,000,000) (3,000,000) - - (4,000,000) 12,000,000 (12,000,000) - - 46,900,000 - 9,000,000 - 55,900,000 No. of Performance Rights 14,091,918 (3,071,251) (2,044,001) - (1,250,000) (4,500,000) (716,667) (199,999) - - -) - - 2,310,000 (550,000) - - 1,760,000 USD 9,866,536 (247,269) (235,777) (67,758) (194,114) (2,443,910) (19,294) (5,200) (2,736) (25,725) - (4,398) (6,015,412) 103,543 708,486 (4,449) - 30,222 734,259 (i) On 5 May 2022, 550,000 performance rights were converted into ordinary shares. A reversal of USD 4,449 from the SBP reserve was recognised in respect of this. 96 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 11: RESERVES (CONT) (a) SBP Reserve (Cont) The SBP reserve is used to accumulate proceeds received from the issuing of options and accumulate the value of options and performance rights issued in consideration for services rendered and to record the fair value of options and performance rights issued but not exercised. The reserve is transferred to accumulated losses upon expiry, cancellation or recognised as share capital if exercised (b) Share Premium Reserve Movements during the period Opening balance Capital raising on 8 April 2021 at GBP 0.011 each Share based payments Less: Capital raising costs Closing balance Parent Dec 2022 USD 44,205,971 - 331,338 - 44,537,309 Parent Dec 2021 USD 32,004,080 13,108,861 51,772 (958,742) 44,205,971 Consolidated Entity Dec 2022 USD 44,205,971 - 331,338 - 44,537,309 Dec 2021 USD 32,004,080 13,108,861 51,772 (958,742) 44,205,971 The share premium reserve is used to record the difference between the monies received from capital raising and the par value of the Company’s shares, being USD 0.001 per fully paid ordinary share (see Note 10). (c) Foreign Currency Translation Reserve Movements during the period Opening balance Currency translation differences arising during the year Closing balance Parent Dec 2022 USD Parent Dec 201 USD -) -) -) Consolidated Entity Dec 2022 USD (18,623,503) (8,800,398) (27,423,901) Dec 2021 USD (7,093,823) (11,529,680) (18,623,503) -) -) -) The foreign currency translation reserve is used to record currency differences arising from the translation of the financial statements of the foreign subsidiary. (d) Merger Reserve In November 2017, the Company issued 771,395,768 shares with a par value of USD 0.001 each in respect of the shares on Kore Potash Limited, which had issued share capital at the date of the transaction with a value of USD 204,510,196. As a result of this transaction, a Merger Reserve of USD 203,738,800 was created in both the Parent and Consolidated Entity. (e) Reorganisation Reserve In accordance with the Scheme of Arrangement, the Company became the new parent on 20 November 2017 and Kore Potash Limited is the wholly-owned subsidiary of the Company. The Company elected to account for the acquisition of Kore Potash Limited as a common control transaction. As a consequence, no acquisition accounting under IFRS 3 Business Combination has arisen. The investment in Kore Potash Limited acquired by the Company as a result of the internal reorganisation was recognised at a value consistent with the carrying value of the equity items in the Kore Potash Limited accounts immediately prior to the Scheme. In the Parent entity, the difference between the carrying amount of share capital and options issued by the Company under the Scheme and the investment in Kore Potash Limited totalling USD 76,899,326 76,011,124 was recognised in a Reorganisation Reserve in the parent company accounts during the year ended 31 December 2017. During the year ended 31 December 2018, 8,191,226 SBP options expired. The value of the options of USD 888,802 was transferred to Accumulated Losses in the Australian subsidiary Kore Potash Limited, and to the Reorganisation Reserve in the Parent company. 97 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 11: RESERVES (CONT) (f) Non-controlling interest reserve On 7 December 2018, the Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licences was gazetted into law following ratification by the Parliament of the RoC. Pursuant to the Mining Convention, the RoC Government were granted a 10% equity interest in KPM and DPM, which are wholly owned by SPSA. The Group will recognise an increase in non-controlling interest from the 3% to 10%, upon the signing of the shareholder agreement. However, this had not occurred at the end of the period. Movements during the period Opening balance Loss/(profit) for the year (i) Closing balance Parent Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD -) -) - -) -) - 562,583 131 562,714 562,583 - 562,583 NOTE 12: DIVIDENDS No dividends have been proposed or paid during the year ended 31 December 2022 (2021: Nil). NOTE 13: NOTES TO STATEMENT OF CASH FLOWS Parent Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD Reconciliation of cash flows from operating activities: Loss for the year (1,410,306) (2,010,799) (1,513,953) (1,941,196) Adjustments for: Equity compensation benefits Net realised and unrealised foreign exchange losses Interest income not classified as operating activities cash inflow Intra group services included in Investing Activities Operating loss before changes in working capital 9,412 320,162 34,596 113,729 9,412 320,162 34,596 117,153 (66,956) - (1,147,688) (14,698) - (1,877,172) (66,956) - (1,251,335) (14,709) 75,833 (1,728,323) Increase in receivables Decrease in payables Net cash used in operating activities (10,676) 27,175 (1,131,189) (24,134) 51,381 (1,849,925) (10,597) 25,687 (1,236,245) (24,137) 51,381 (1,701,079) 98 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 14: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS Overview The Group has exposure to the following risks from their use of financial instruments: • market risk, • • credit risk, and liquidity risks. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the business. The Group will use different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ageing analysis for credit risk. This note presents information about the Group’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk, and the management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Group through regular reviews of the risks. Financial Instruments by category Group FINANCIAL ASSETS Cash at bank Trade and other receivables Total financial assets FINANCIAL LIABILITIES Trade and other payables Derivative financial liability Total financial liabilities Parent Fair value through profit or loss Dec-22 USD Dec-21 USD Amortised Cost Interest Rate Dec-22 USD Dec-21 USD - - - - (26) (26) - - - - (26) (26) 5,046,629 98,083 5,144,712 (358,571) - (358,571) 11,092,509 190,824 11,283,333 (731,756) - (731,756) Fair value through profit or loss Dec-22 USD Dec-21 USD Amortised Cost Interest Rate Dec-22 USD Dec-21 USD FINANCIAL ASSETS Cash at bank Investments in subsidiaries Trade and other receivables Amounts due from subsidiaries Total financial assets FINANCIAL LIABILITIES Trade and other payables Derivative financial liability Total financial liabilities - - - - - - (26) (26) 4,999,889 10,916,397 68 1,213 69 16,115 158,443,522 163,444,692 153,514,579 164,447,160 (168,752) - (168,752) (128,221) - (128,221) - - - - - - (26) (26) 99 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 14: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT) (a) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. (i) Foreign currency risk The Group undertakes certain transactions denominated in foreign currency and are exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cashflow forecasting. As a result of the operating activities in the RoC and the ongoing funding of overseas operations from the United Kingdom, the Group's Statement of Financial Position can be affected by movements in the Canadian Dollar (CAD) / US Dollar (USD) exchange rate, British Pound (GBP) / US Dollar (USD) exchange rate, Congolese Franc (XAF) / US Dollar (USD) exchange rate, South African Rand (ZAR) / US Dollar (USD) exchange rate, Euro (EUR) / US Dollar (USD) exchange rate and Australian Dollar (EUR) / US Dollar (USD the exchange rate. A substantial portion of the Group's transactions are denominated in USD, with historically, the majority of costs relating to drilling activities also denominated in the unit's functional currency. The summary quantitative data about the Group’s financial instruments’ exposure to significant currency risk as presented in USD is as follows: 31 December 2022 XAF GBP CAD ZAR AUD EUR CAD GBP XAF 31 December 2021 ZAR AUD EUR FINANCIAL ASSETS Cash at bank Trade and other receivables FINANCIAL LIABILITIES Trade and other payables Derivative financial liability Net exposure - (6,601) (14,571) 7,970 463,487 46,740 5,548 23 206 3,920,715 174,624 9,111 587 67 - (8,735) 92,631 - - - - - - 1,046 174,778 (623) (603,535) - - - - - - (146,202) (189,819) (518) (1,337) (3,725) (26) 308,524 - (50,448) - 5,030 (1,337) - (3,702) - (26) 206 3,921,112 - (254,133) 9,111 - 587 - 67 Sensitivity analysis (Group) A reasonably possible strengthening (weakening) of the CAD, GBP, XAF, ZAR, AUD and EUR, against USD at 31 December 2022 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss for the Group by the amounts shown below. This analysis assumes all other variables, in particular interest rates, remain constant. 100 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 14: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT) (a) Market Risk (Cont) (i) Foreign currency risk (Cont) 31 December 2022 CAD (5% movement) GBP (5% movement) XAF (5% movement) ZAR (5% movement) AUD (5% movement) EUR (5% movement) Equity Profit or Loss Strengthening Gain/(Loss) USD Weakening Gain/(Loss) USD Strengthening (Gain)/Loss USD Weakening (Gain)/Loss USD (330) 15,426 (2,522) 252 (67) (185) 330 (15,426) 2,522 (252) 67 185 330 (15,426) 2,522 (252) 67 185 (330) 15,426 (2,522) 277 (67) (185) The summary quantitative data about the Parent’s financial instruments’ exposure to significant currency risk as presented in USD is as follows: 31 December 2022 ZAR GBP CAD AUD EUR CAD GBP ZAR 31 December 2021 EUR AUD FINANCIAL ASSETS Cash at bank Trade and other receivables 7,970 463,487 5,548 - (8,735) - - - 23 - Trade and other payables Derivative financial liability Net exposure (14,571) (146,202) (518) (1,337) (3,725) - (6,601) (26) 308,524 - 5,030 - (1,337) - (3,702) - 206 (26) 3,921,112 - 7,623 - 587 206 3,920,715 7,623 587 67 - - 1,046 (623) - - - - - - - 67 Sensitivity analysis (Parent) A reasonably possible strengthening (weakening) of the CAD, GBP, ZAR, AUD and EUR, against USD at 31 December 2022 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss for the Parent by the amounts shown below. This analysis assumes all other variables, in particular interest rates, remain constant. Equity Profit or Loss 31 December 2022 CAD (5% movement) GBP (5% movement) ZAR (5% movement) AUD (5% movement) EUR (5% movement) Strengthening Gain/(Loss) USD Weakening Gain/(Loss) USD Strengthening (Gain)/Loss USD Weakening (Gain)/Loss USD (330) 15,426 252 (67) (185) 330 (15,426) (252) 67 185 330 (15,426) (252) 67 185 (330) 15,426 277 (67) (185) Interest rate risk (ii) The Group is exposed to movements in market interest rates on short term deposits. The Group and Company’s policy is to retain its surplus funds on the most advantageous term of deposit available. Given the Directors do not consider interest income is significant in respect of the Group’s and Company’s operations and as the Group does not currently have any debt, no sensitivity analysis has been performed. 101 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 14: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT) (a) Market Risk (Cont) (ii) Interest rate risk (Cont) The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial liabilities is set out in the following table: Weighted Average Effective Interest Rate Dec 2022 Dec 2021 % % Fixed Interest Rate Dec 2022 Dec 2021 USD USD Floating Interest Rate Non-Interest Bearing Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD 2.01% 0.14% 3,338,818 7,870,120 191,889 190,507 1,515,992 3,031,882 - 3,338,818 - 7,870,120 - 191,889 - 190,507 98,083 1,614,075 190,824 3,222,706 - - - - - - - - - - - - (358,571) (731,756) (26) (358,597) (26) (731,782) FINANCIAL ASSETS Cash at bank Trade and other receivables Total financial assets FINANCIAL LIABILITIES Trade and other payables Derivative financial liability Total financial liabilities All receivables and payables in the Parent at 31 December 2022 and at 31 December 2021 are non-interest bearing. Financial assets carried at amortised cost Trade receivables from other entities are carried at cost less any allowance for doubtful debts. Other receivables are carried at cost. Interest is recorded as income using the effective interest rate method. Financial liabilities carried at amortised cost Liabilities are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the Group. Net fair value of financial assets and liabilities The carrying amount of financial assets and liabilities at 31 December 2022 and 31 December 2021 is equivalent to the fair value. (b) Credit risk Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. Credit risk arises when a failure by counterparties to discharge their obligations could reduce the amount of future cash inflows from financial assets on hand at the reporting date. The Group manages the credit risk associated with cash by investing these funds with highly rated financial institutions, and by monitoring its concentration of cash held in any one institution. As such, the Group deems the credit risk on its cash to be low. At 31 December 2022 66% of the Group's cash balances were invested in A rated financial institutions (2021:71% with A+ rated) according to Fitch Ratings. The Group closely monitors its financial assets (excluding cash) and does not have any significant concentration of credit risk. The Company has Intercompany balances that are received from the subsidiaries and the associated risk is covered in Note 5. 102 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 14: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT) (b) Credit risk (Cont) The Group has a significant concentration of credit risk arising from its bank holdings of cash and cash equivalent. This risk is mitigated by credit control procedures. (c) Liquidity and capital risk management The Group’s total capital is defined as the shareholders’ net equity plus any net debt. The objectives when managing the Group’s capital is to safeguard the business as a going concern, to maximise returns to shareholders and to maintain an optimal capital structure in order to reduce the cost of capital. The Group does not have a target debt / equity ratio but has a policy of maintaining a flexible financing structure so as to be able to take advantage of investment opportunities when they arise. There are no externally imposed capital requirements. There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year. The table below analyses the Group’s financial liabilities into maturity groupings based on the remaining period from the balance date to the contractual maturity date. 31 Dec 2022 Non-derivatives Non-interest bearing Trade and other payables Total Financial Liabilities 31 Dec 2021 Non-derivatives Non-interest bearing Trade and other payables Total Financial Liabilities Within 1 Month USD 1-3 Months USD 3-12 Months USD 358,571 358,571 Within 1 Month USD 1-3 Months USD 731,756 731,756 - - - - 3-12 Months USD - - - - The table below analyses the Parent's financial liabilities into maturity groupings based on the remaining period from the balance date to the contractual maturity date. 31 Dec 2022 Non-derivatives Non-interest bearing Trade and other payables Total Financial Liabilities 31 Dec 2021 Non-derivatives Non-interest bearing Trade and other payables Total Financial Liabilities Within 1 Month USD 1-3 Months USD 3-12 Months USD 168,752 168,752 Within 1 Month USD 1-3 Months USD 128,221 128,221 103 - - - - 3-12 Months USD - - - - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 14: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS (CONT) (c) Liquidity and capital risk management (Cont) Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. If the Group anticipates a need to raise additional capital within 6 months to meet forecasted operational activities, then the decision on how the Company will raise future capital will depend on market conditions existing at that time. Please see note 1(b) Going Concern for further information on liquidity risk. NOTE 15: SEGMENT INFORMATION Management has determined that the Company and the Group has one reporting segment being mineral exploration in Central Africa. As the Group is focused on mineral exploration in Central Africa, management make resource allocation decisions by reviewing the working capital balance, comparing cash balances to committed exploration expenditure and reviewing the current results of exploration work performed. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date and capital available to the Company. NOTE 16: EVENTS SUBSEQUENT TO REPORTING DATE Gavin Chamberlain, who served as COO since September 2017, concluded his employment with Kore Potash at the end of January 2023 to take up a role located closer to his home. Gavin left within the Company highly experienced engineering capability to progress the development of the Company’s potash projects. Mr Ryan Leland, who has been the Project Director for Kola since 2017, now reports directly to the Chief Executive Officer. On the 24 January 2023 the Company announced an update of the JORC (2012) compliant Mineral Resource, Ore Reserve, PFS information and Production Target at the DX Project. The updated Mineral Resource incorporates the most recent drilling results and interpretation of the geophysical data. The highlights of the results were: • Production Target of 15.5MT sylvinite at a grade of 30.63 % KCl demonstrates initial project life of 12 years at a production rate of 400,000 tpa MOP. • Production Target based on Proven and Probable Ore Reserves and 13% of the Inferred Mineral Resources that represents 30% of the life of project MOP production. • NPV10 (real) of USD 275 million and 27% IRR on a real post tax basis at life of project average granular MOP price of USD 450/t. • Approximately 2.9 years post-tax payback period from first production. • Proven and Probable Ore Reserve of 9.31 Mt sylvinite at an average grade of 35.7% KCl. • Mineral Resource of 129 Mt at an average grade of 24.9% KCl. • Higher confidence in the distribution of Sylvinite within the Top Seams and improved understanding of the Sylvinite/Carnallite boundary within the Hanging Wall Sea. 104 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 17: COMMITMENTS FOR EXPENDITURE Exploration and Evaluation Expenditure Commitments There are no minimum expenditure requirements with respect to the Group’s mining licences. One of the key investment promotion provisions for the Mining Convention includes that the RoC is to be granted a 10% carried equity interest (subject to signing shareholders agreement) in the project companies, which are currently wholly owned by the Group’s subsidiary, SPSA. NOTE 18: AUDITOR’S REMUNERATION Fees payable to the Company’s external auditor and their associates for the audit of the Company’s annual accounts BDO LLP – Group Auditor. 4S Advisory – Component Auditor Total audit fees Fees payable to the Company’s auditor and their associates for other non-audit services to the Group Half-year review Total fees payable to the Company’s external auditor and their associates Fees payable to the Company’s external auditor for the local audit of the Subsidiary’s annual accounts Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD 125,296 - 125,296 71,649 - 71,649 125,296 - 125,296 71,649 72,490 144,139 20,730 20,730 21,731 21,731 20,730 20,730 21,731 21,731 146,026 93,380 145,966 165,870 Cairq Conseil - - 17,157 - NOTE 19: RELATED PARTY TRANSACTIONS Directors’ remuneration The expense of USD 814,597 recognised (2021: USD 743,353) includes directors fees paid and remuneration for the current CEO. The Group issued to certain directors’ performance rights and share options, details of these issues can be found in notes 11 and 21. Other transactions with the Company and the Group Evelyn Partners LLP and Nexia Perth Pty Ltd are engaged to provide accounting, administrative and company secretarial services for the Group on commercial terms. Mr Henko Vos, who is based in Perth, Australia has been appointed as joint company secretary and is also currently an employee with Nexia Perth. During the year, the total amount paid to Nexia Perth by the Group for providing accounting, administration and company secretarial services was USD 89,232 (2021: USD 63,427) and USD 1,310 (2021: USD 91,453) to Evelyn Partners LLP. There were no amounts outstanding owed in respect of services provided by Nexia Perth or Evelyn Partners LLP at 31 December 2022 (2021: USD nil) 105 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 19: RELATED PARTY TRANSACTIONS (CONT) St James’s Corporate Services Limited was engaged to provide company secretarial services for the Company on commercial terms. During the year, the total amount paid to St James’s Corporate Services Limited by the Group for providing company secretarial services was USD 118,870 (2021: USD 64,635). There were no amounts outstanding owed to in respect of services provided by St James’s Corporate Services Limited at 31 December 2022 (2021: USD nil). On 13 June 2022, the Company issued 44,132,674 ordinary shares to SQM in lieu of fees payable of USD 375,470 for the DX DFS Phase 1 work completed under the Technical Services Agreement. There were no other transactions with KMP and its related parties. NOTE 20: KMP DISCLOSURES The following were a KMP of the Company and the Group at any time during the reporting period and unless otherwise indicated were a KMP for the entire period. Executive Directors Brad Sampson Non-Executive Directors David Hathorn Jonathan Trollip David Netherway Sameer Oundhakar Pablo Hernandez Mac-Donald Chief Executive Officer (appointed on 4 June 2018) Non-Executive Chairman (appointed on 25 August 2017) Non-Executive Director (appointed on 17 November 2017) Non-Executive Director (appointed on 12 December 2017) Non-Executive Director (appointed on 01 April 2021 and resigned on 21 December 2022) Non-Executive Director (appointed on 30 November 2021) Executives Henko Vos St James’s Corporate Services Limited Amanda Farris Gavin Chamberlain Joint Company Secretary (appointed on 7 November 2017) Joint Company Secretary (appointed on 1 October 2018) Chief Financial Officer (appointed 16 July 2021) Chief Operating Officer (appointed 1 October 2017) KMP compensation The KMP compensation included in “Directors Remuneration”, “Equity Compensation Benefits” “Employee and Consultant Expenses” and “Exploration Expenditure” is as follows: Short-term employee benefits Equity compensation benefits Consolidated Entity Dec 2022 USD 1,396,971 30,222 1,427,193 Dec 2021 USD 1,480,218 184,732 1,664,950 There were five directors who held office at the end of the 2022 (2021: six). Details of directors’ remuneration are provided in the Directors’ Remuneration Report on pages 53 to 62 of this Annual Report. Individual directors and executives’ compensation disclosures Information regarding individual directors and executives’ compensation and equity instruments disclosures are provided in the Remuneration Report section of the Directors’ Report. Apart from the details disclosed in this note, no Director has entered into a material contract with the Company or the Group since the end of the previous financial year and there were no material contracts involving directors’ interests existing at year-end. 106 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 21: SHARE-BASED PAYMENTS Recognised share-based payments The expense recognised for employee and consultant services during the year is shown in the table below: Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD Expense arising payment transactions (Note 13) from equity-settled share-based 9,412 34,596 9,412 34,596 In addition, the amounts capitalised to exploration and evaluation expenditure from share-based payment transactions for staff whose services are directly attributable to the operational activities of the Kola and Dougou mining projects are as follows: Parent Dec 2022 USD Dec 2021 USD Consolidated Entity Dec 2022 USD Dec 2021 USD Amounts capitalised expenditure arising payment transactions to exploration and evaluation from equity-settled share-based 20,810 20,810 68,947 68,947 Consolidated Entity The Group granted shares rights and options to KMP and other employees as part of as an incentive for future services and as a reward for past services. The table above shows the vesting expense recognised during the year of USD 30,222 (2021: USD 176,388) and vesting expenses capitalised to exploration and evaluation expenditure of USD 20,810 (2021: USD 68,947). Details of the share options outstanding during the year are as follows: Outstanding at beginning at year Granted during the year Cancelled during the year Outstanding at the end of the year 2022 2021 Number of share options 46,900,000 9,000,000 - 55,900,000 Weighted average exercise price Number of share options Weighted average exercise price GBP 0.022 GBP 0.022 - GBP 0.022 59,900,000 12,000,000 (25,000,000) 46,900,000 GBP 0.024 GBP 0.022 GBP 0.022 GBP 0.022 The share options outstanding at 31 December 2022 had a weighted average exercise price of GBP 0.022 and a weighted average contractual life of 1.79 years. 107 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 21: SHARE-BASED PAYMENTS (CONT) Details of options and performance rights issued to KMP Performance Rights Rights Issue 15 25 Performance Rights Rights Issue 9 12 13 14 15 16-20 25 Number of rights at 31 December 2021 1,760,000 550,000 2,310,000 Number of rights at 31 December 2020 5,031,250 605,000 660,000 1,536,666 2,759,002 1,250,000 2,250,000 14,091,918 Cancelled in period Exercised Issued in the period Lapsed rights - - - - (550,000) (550,000) - - - - - - Cancelled in period Exercised Issued in the period Lapsed rights (4,500,000) (530,000) - (131,665) (499,002) - (1,083,333) (6,744,000) (531,250) (75,000) (660,000) (1,405,001) (500,000) (1,250,000) (616,667) (5,037,918) - - - - - - - - - - - - - - - - Number of rights at 31 December 2022 1,760,000 - 1,760,000 Number of rights at 31 December 2021 - - - - 1,760,000 - 550,000 2,310,000 Time to expiry (Years) - - Time to expiry (Years) - - - - - - 3.24 The following Performance Rights from share-based payment arrangements were in existence during the current and prior periods: Rights Series 9 Rights Series 12 Rights Series 13 Rights Series 14 Rights Series 15 Rights Series 16 Rights Series 17 Rights Series 19 Rights Series 20 Rights Series 25 Grant Date 6/07/2016 29/05/2017 31/05/2017 29/05/2017 29/05/2017 27/06/2018 27/06/2018 27/06/2018 27/06/2018 17/03/2020 Vesting Date Refer below Refer below 4 June 2018 Refer below Refer below Refer below Refer below Refer below Refer below Refer below Number of Rights 5,881,250 1,405,000 660,000 3,747,003 11,734,855 1,000,000 500,000 500,000 500,000 2,500,000 Expiry Date 30/06/2021 31/05/2022 31/05/2022 31/05/2022 31/05/2022 22/05/2022 22/05/2022 22/05/2022 22/05/2022 17/03/2025 Fair Value at Grant Date AUD 0.1867 AUD 0.1700 AUD 0.1700 AUD 0.1700 AUD 0.17 / AUD 0.104 GBP 0.0564 GBP 0.0564 GBP 0.0564 GBP 0.0564 GBP 0.0615 The total charged for the year ended 2022 in respect of the above performance rights was USD 181. 108 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 21: SHARE-BASED PAYMENTS (CONT) Details of options and performance rights issued to KMP (Cont) Option Series 33 At the Company’s General Meeting on 17 July 2019, the Company’s shareholders approved the grant of 26,900,000 unlisted options to Brad Sampson. The vesting conditions for the unlisted options include milestones being achieved in relation to the Kola Project, as follows: Brad Sampson (Option Series 33) 26,900,000 Vesting conditions Total Exercise price Exercisable First, second and third anniversary of issue date 19/07/2024 GBP 0.022 Expiry The fair value at grant date of the unlisted options issued to Brad Sampson was estimated at GBP 0.0151, using the Black Scholes Option Pricing Model taking into account the terms and conditions as set out above. The input used in the measurement of the fair value at grant date of the unlisted options were as follows: These options have been treated in the accounts as a modification to Option Series 31. Input into the model Grant Date Share Price Expected Volatility Annual risk-free rate Maturity Grant date fair value Option Series 33 GBP 0.01625 91.97% 0.57% 5 Years GBP 0.0151 109 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 21: SHARE-BASED PAYMENTS (CONT) Details of options and performance rights issued to KMP (Cont) Options Series 34, 35 & 36 The Board approved the grant of 33,000,000 unlisted options to certain employees on 5 September 2019 under the Company’s LTIP. The options were issued on 25 June 2020 in accordance with the Company’s LTIP. The options vest over 3 years on a one third basis per annum. These include the award of 12,000,000 options to Gavin Chamberlain (COO). The vesting conditions of the options were as follows: Vesting conditions Total Exercise price Exercisable: Expiry 33,000,000 GBP 0.022 First, second and third anniversary of issue date 01/01/2024 The fair value of the options at grant date of GBP0.0092 was estimated using the Black-Scholes Option Pricing Model. The input used in the measurement of the fair value at grant date of the options were as follows: Input into the model Grant date share price Expected volatility Annual risk-free rate Expiry date Grant date fair value Series 34,35 and 36 GBP 0.0145 99.7% -0.04% 4.3 years GBP 0.0092 Options Series 38 At the Company’s General Meeting on 9 June 2022, the Company’s shareholders approved the grant of 9,000,000 unlisted options pursuant to the Directors and Executives Share Option Plan to David Hathorn. The options will only vest, and be exercisable into shares, subject to the Company obtaining a financing package to fully fund the development of the Company’s Kola Project approved by the Board. Vesting conditions Total Exercise price Exercisable: Expiry 9,000,000 GBP 0.022 Upon obtaining a financing package to fully fund the development of the Company’s Kola Project approved by the Board. 09/06/2027 The fair value of the options at grant date of GBP0.0089 was estimated using the Black-Scholes Option Pricing Model. The input used in the measurement of the fair value at grant date of the options were as follows: Input into the model Grant date share price Expected volatility Annual risk-free rate Expiry date Grant date fair value Series 38 GBP 0.0143 89.3% 1.80% 5 years GBP 0.0089 110 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 21: SHARE-BASED PAYMENTS (CONT) Details of options and performance rights issued to KMP (Cont) Rights Series 15 On 29 May 2017, the Group announced that the Board resolved and agreed to issue up to 11,734,853 performance rights available to employees under the LTIP. These performance rights vest as one fully paid ordinary share for each performance right, of which the final amount issued may be reduced by the Board (in its discretion) depending upon the employee’s performance against certain non-market and market performance conditions. The fair value of the performance rights attached to the non-market performance conditions was estimated at AUD 0.17 per performance right. The fair value of the performance rights attached to the market performance condition was estimated at AUD 0.104 per performance right at grant date. During the year ended 31 December 2021, 500,000 performance rights relating to rights series 15 were converted into ordinary share capital and 499,002 were cancelled as the vesting conditions was not met. At the end of the year 1,760,000 (2021; 1,760,000) remained in existence. Employee Gavin Chamberlain (COO) Total Series 15 1,760,000 1,760,000 Rights Series 25 During the 2020 financial year, the Company issued 2,250,000 Performance Rights to employees under its Short-Term Incentive Plan with the same performance criteria as the performance rights currently in issue with vesting conditions based on required service periods. These Performance Shares vests a third on award, a third after 1 year of continuous service and a third after 2 years continuous service. Employee Gavin Chamberlain (COO) Other employees Total Series 25 850,000 1,400,000 2,250,000 The fair value of the Performance Rights is estimated at GBP 0.0615 per Performance Right, calculated based on the share price at grant date using the Cox, Ross and Rubinstein Binomial Option Pricing Model. The input used in the measurement of the fair value at grant date were as follows: Input into the model Grant date spot price Expected volatility Life of performance right Grant date fair value Series 25 GBP 0.0615 99.7% 5 years GBP 0.0615 During the year ended 31 December 2022, 550,000 performance rights relating to rights series 25 were converted into ordinary share capital and no shares remained in existence at the year end. 111 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 21: SHARE-BASED PAYMENTS (CONT) Share based payment arrangements in existence The following options from share-based payment arrangements were in existence during the current and prior periods: Option Series 33 (i) Options Series 34, 35 and 36 (ii) Option Series 37 (iii) Option Series 38 (iv) Grant Date 17/07/2019 15/09/2019 01/06/2021 13/06/2022 Vesting Date 17/07/2022 Number of Options 26,900,000 Expiry Date 17/07/2024 Fair Value at Grant Date GBP 0.0070 Exercise Price GBP 0.022 15/09/2022 01/06/2024 08/06/2027 33,000,000 12,000,000 9,000,000 01/01/2024 01/06/2026 12/06/2027 GBP 0.0092 GBP 0.0053 GBP 0.0089 GBP 0.022 GBP 0.022 GBP 0.022 (i) Were issued in the year ended 30 September 2019 to Brad Sampson. All 26,900,000 remained outstanding at year end. (ii) The Board approved the grant of 33,000,000 unlisted options to certain employees on 5 September 2019 under the Company’s LTIP. The options were issued on 25 June 2020 in accordance with the Company’s LTIP. The options vest over 3 years on a one third basis per annum. These include the award of 12,000,000 options to Gavin Chamberlain (COO). At year end 20,000,000 options were outstanding. (iii) Were issued on 01 June 2021 and subsequently cancelled upon the resignation of Jean-Michel Bour (CFO). (iv) Were granted on 13 June 2022 to David Hathorn. All 9,000,000 remained outstanding at year end. NOTE 22: LOSS PER SHARE Classification of securities as ordinary shares The Company has only one category of ordinary shares included in basic earnings per share. Classification of securities as potential ordinary shares – share options and rights outstanding The Company has granted 55,900,000 share options in respect of a total of ordinary shares at 31 December 2022 (31 December 2021: 46,900,000) and 1,760,000 performance rights (31 December 2021: 2,310,000). Options, and rights are considered to be potential ordinary shares. However, as the Company and Group are in a loss position, they are anti-dilutive in nature, as their exercise will not result in a diluted earnings per share that shows an inferior view of earnings performance of the Company and Group than is shown by basic earnings per share. The options warrants and performance rights have not been included in the determination of basic earnings per share. Basic and diluted loss per share from continuing operations Earnings reconciliation Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD (0.04) (0.06) (0.04) (0.06) Parent Consolidated Entity Dec 2022 USD Dec 2021 USD Dec 2022 USD Dec 2021 USD Loss attributable to ordinary shareholders (1,410,306) (2,010,799) (1,513,953) (1,941,196) Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 3,400,159,288 3,179,304,188 3,400,159,288 3.179,304,188 Parent Consolidated Entity Dec 2022 Number Dec 2021 Number Dec 2022 Number Dec 2021 Number 112 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 (CONT) NOTE 22: LOSS PER SHARE Headline earnings/loss per share It is a JSE listing requirement to disclose headline earnings/loss per share, a non-IFRS measure, calculated in terms of Circular 1/2021 as issued by the South African Institute of Chartered Accountants. It is considered to be a useful metric as it presents the earnings/loss per share after removing the effect of re-measurements to assets and liabilities (for example impairment of property, plant and equipment) otherwise recognised in the profit/loss for the year. During the current and prior year there was no difference between earnings/loss per share and headline earnings/loss per share and therefore no reconciliation between the two measures has been presented. NOTE 23: CONTINGENT LIABILITIES There is a claim from a former Finance and Administration Manager who claims unfair dismissal. This claim has been brought to court by the complainant as the mediation attempt at the Inspector of Labour office in Pointe Noire failed. 113 ASX ADDITIONAL INFORMATION (UNAUDITED) Registered office and principal place of business Principal and Registered Office (UK) 45, Gresham Street, London United Kingdom EC2V 7BG Telephone: +44 20 3963 1776 Australian Office Level 3, 88 William Street, Perth WA 6000 Telephone: +61 (8) 9463 2463 Facsimile: +61 (8) 9463 2499 Sintoukola Potash S.A. Level 3, Apartment C 91 Germain Bikoumat centre-ville route de la radio Immeuble Abdallah BP 662 Pointe Noire République du Congo Telephone: +242 22 294 1924 Registers of securities are held at the following address: Computershare Investor Services Plc The Pavilions, Bridgwater Road Bristol BS99 6ZZ United Kingdom Telephone: +44 (0)370 707 1258 Fax: +44 (0)370 703 6101 Computershare Investor Services (Pty) Ltd Rosebank Towers 15 Biermann Avenue Rosebank 2196 South Africa Telephone: +27 11 370 5000 Computershare Investor Services Pty Ltd Level 11, 172 St George’s Terrace Perth WA 6000 Telephone: +61 (8) 9323 2000 Facsimile: +61 (8) 9323 2033 The shareholder and CDI holder information set out below was applicable as at 28 February 2023: Number of holders of ordinary shares 3,420,177,120 fully paid ordinary shares and CDIs are held by shareholders. Distribution of fully paid ordinary share and CDI holders Size of Holding 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over No. of holders Units 2,761 1,142 375 1,048 791 6,117 670,098 2,944,266 2,926,184 44,536,261 3,369,100,311 3,420,177,120 Percentage % 0.02 0.09 0.08 1.30 98.51 100.00 The number of holdings comprising less than a marketable parcel was 1,177 with a given a share value of AUD 0.0150 per share. 114 ASX ADDITIONAL INFORMATION (UNAUDITED) (CONT) Substantial shareholders and CDI holders Substantial shareholders and CDI holders listed in the Company’s share register as at 28 February 2023: Name Princess Aurora Company Pte Ltd (i) Sociedad Quimica y Minera Harlequin Investments (ii) Dingyi Group Investment (iii) No. of fully paid ordinary shares / CDIs 661,885,171 538,210,503 368,451,313 198,520,782 1,767,067,769 Percentage % 19.35 15.74 10.77 5.80 51.66 No. of unlisted options / equity warrants held - - - - - (i) Includes 629,520,171 ordinary shares held by Forest Nominees Limited on behalf of Princess Aurora Company Pte Limited and 32,365,000 ordinary shares held directly. (ii) Includes 368,451,313 ordinary shares held by Huntress (CI) Nominees Limited on behalf of Harlequin Investments. (iii) Includes 177,665,258 ordinary shares held by Golden Season International Limited and 20,855,524 ordinary shares held directly. On-market buy-back There is no current on-market buy-back. Twenty largest holders of quoted equity securities (ordinary shares / CDIs) Number of Shares / CDIs 661,885,171 538,210,503 368,451,313 198,520,782 144,237,061 114,878,334 114,358,478 85,318,906 54,702,070 43,365,347 34,639,580 30,182,760 27,334,093 27,253,031 26,569,500 26,053,948 25,232,511 22,830,283 20,029,487 14,900,001 2,578,953,159 % Held 19.35% 15.74% 10.77% 5.80% 4.22% 3.36% 3.34% 2.49% 1.60% 1.27% 1.01% 0.88% 0.80% 0.80% 0.78% 0.76% 0.74% 0.67% 0.59% 0.44% 75.41% Top 20 Shareholders and CDI Holders as at 28 February 2022 Princess Aurora Company Pte Ltd Sociedad Quimica y Minera Harlequin Investments Dingyi Group Investment Mr David Halthorn Mr David Stevens Wadeville International Hargreaves Lansdown Asset Mgt Ninety One Gardenrose Investing Limited Interactive Brokers Glen Deveron Investments Pty Ltd Interactive Investor Services Nominees Limited SegalInterSettle Settlement The Vee Trust Halifax Share Trading Jarvis Investment Mgt A J Bell Securities UBS Mr Mohammed I Al-abdulla 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total 115 ASX ADDITIONAL INFORMATION (UNAUDITED) (CONT) Unquoted equity securities Class Unlisted options exercisable at GBP 0.022 expiring 1 Jan 2024 Unlisted options exercisable at GBP 0.022 expiring 19 Jul 2024 Unlisted options exercisable at GBP 0.022 expiring 8 Jun 2027 Performance Rights (Long Term Plan) Unquoted equity security holdings greater than or equal to 20% Unlisted options exercisable at GBP 0.022 expiring 19 July 2024 Gavin Chamberlain Andrey Maruta Unlisted options exercisable at GBP 0.022 expiring 19 July 2024 Brad Sampson Unlisted options exercisable at GBP 0.022 expiring 8 June 2027 David Hathorn Performance Rights (Long Term Plan) Gavin Chamberlain Voting Rights The voting rights attaching to ordinary shares are: Number of unquoted equity securities Number of holders 20,000,000 26,900,000 9,000,000 1,760,000 57,660,000 2 1 1 1 N/A Number of holders holding 20% or more in the class 2 1 1 1 N/A Number of unlisted options 12,000,000 8,000,000 20,000,000 Number of unlisted options 26,900,000 Number of unlisted options 9,000,000 Number of unlisted rights 1,760,000 Percentage 60% 40% 100% Percentage 100% Percentage 100% Percentage 100% On a show of hands, every member present in person or by proxy shall have one vote, and upon a poll, each share shall have one vote. Options, Performance Rights and Equity Warrants do not carry any voting rights. Securities exchange listing Quotation has been granted for all the ordinary shares of the Company on all Member Exchanges of the ASX. The Company’s ASX code is “KP2”. On the ASX they are traded as CDIs. On 29 March 2018, the Company completed secondary listings on the AIM market operated by the LSE and on the JSE. Restricted securities There are no restricted securities or securities in voluntary escrow at the date of this report. Company Secretary The names of the joint company secretaries are St James’s Corporate Services Limited and Henko Vos. 116 ASX ADDITIONAL INFORMATION (UNAUDITED) (CONT) Company Structure and Tenement Details The Company is incorporated and registered in England and Wales. Kore Potash Limited incorporated in Australia is wholly owned by Kore Potash. The Company also has a 97% holding in SPSA in the RoC (see Note 11(f)). SPSA is the 100% owner of KPM which is the sole owner of the Kola Mining Tenement and 100% owner of DPM, which is the sole owner of the Dougou Mining Tenement (which has not been transferred from SPSA at the reporting date). The Kola deposit is located within the Kola Mining Tenement. The Dougou Mining Tenement hosts the Dougou deposit and the DX deposit. Under the Mining Convention the RoC government is granted a 10% equity interest in DPM and KPM. The Company continues to work with government to transfer this interest to the State. Schedule of Tenements A schedule of mining tenements held at 31 December 2022 (and the date of this report) and a table showing changes to the Potash Mineral Resources and Ore Reserves between 2021 and 2022 is included in the Review of Operations on pages 7 to 23. Project Overview A project overview for the Group is included in the Review of Operations and Strategic Report on pages 7 to 23. 117 

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