African Potash Limited ("African Potash" or "the Company")
African Potash, the AIM listed exploration company focused on sub-Saharan potash assets and the vertical integration of fertiliser operations, is pleased to announce that agreement has been reached to establish a sale price of US$500 per metric tonne ('MT') in respect of 50,000MT fertiliser product to be sold pursuant to the Memorandum of Understanding ('MOU') announced on 24 August 2015. The agreement on price follows conclusion of recent meetings in Lusaka, Zambia between representatives of the Company, the Common Market for Eastern and Southern Africa ('COMESA/ACTESA'), fertiliser suppliers and the Zambian distributor - recommended by COMESA/ACTESA - who will purchase the fertiliser. The MOU remains subject to a legally binding agreement and further updates will be provided in due course.
Having set this sale price, the Company's pre-tax profit margin on this transaction is expected to be 6%. Initial fertiliser deliveries (of NPK and UREA) have arrived in Africa and are awaiting customer approval. The advisors to this transaction are Butterfly Corporate Finance.
In addition, a trade finance facility of up to US$50m is currently being arranged through African Potash's exclusive banking adviser Loita Capital Partners International Limited. The facility will remain in place until the Company's fertiliser trading operations become self-funding and further details of the facility will be announced once finalised.
African Potash Executive Chairman Chris Cleverly said, "We are delighted to have concluded negotiations on pricing relating to our first MOU, which will see delivery of 50,000MT of both NPK and UREA fertilisers in Zambia at a price that supports the growth and development of the African farmer. With a competitive sale price of US$500 per MT agreed, we are confident that we remain on track to meet the 500,000 tonnes delivery target of NPK and UREA within a year of agreeing our trading MOU with COMESA/ACTESA, which was signed in August 2015."