Fans of British mining stock Sirius Minerals (SXX) may be interested in another potash company called Kore Potash (KP2:AIM) which has just listed on the UK stock market.

Analysts reckon it has a world class project which is likely to have some of the lowest operating costs in the industry, implying scope to make healthy profit margins if potash prices hold up.

Later this year Kore will have to raise a very large amount of money. Current estimates suggest its Kola project in the Republic of Congo will cost $1.8bn to build.

Chief executive Sean Bennett believes one third of the money will have to be raised from investors, adding up to $600m (£427m). That’s more than four and a half times its current market cap (£90.2m). The remaining $1.2bn will come from debt finance.

‘Our big investors know we have to raise a lot of money once our definitive feasibility study is out at the end of the second quarter or in the third quarter this year,’ explains Bennett. ‘They wouldn’t have backed us if they weren’t willing to help with the costs of the mine build.’

Kore (when known as Elemental Minerals) received a $123m takeover offer from Asian investor Dingyi Group in 2013 but the deal fell through for technical reasons linked to red tape around a stock market listing in Hong Kong.

Dingyi now owns 8.82% of Kore and is the fourth largest shareholder. Other big investors include SGRF (Oman’s state general reserve fund) at 19.06%, Chile lithium producer SQM at 17.55%, and Harlequin Investments at 12.55%.

Bennett says Kore will look to switch listings from AIM to London’s Main Market when it raises money for the mine build, similar to the route followed by Sirius Minerals.

He hopes to start construction next year and begin production in 2022, meaning it is just behind Sirius which is already building and eyeing a 2021 start-up for its potash project in Yorkshire.

Kore has an advantageous position thanks to its ore body being relatively shallow compared to many potash mines at 190m to 340m deep. In comparison, Sirius is sinking a shaft to a depth of 1,500m.

Kore will produce MOP which is the most common potassium source used in agriculture, accounting for approximately 95% of all potash fertilisers used worldwide. Sirius plans to produce polyhalite which has an unproven market.

Kore is at a disadvantage to Sirius from a financing perspective. The latter has already raised its mine money and arguably operates in a lower risk geography from an investment perspective.

The pair could soon be joined on the London stock market by another potash miner, Danakali. It has a joint venture in Eritrea on the Colluli project which could start production in 2020 via open pit mining. (DC)

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