News Announcement

African Potash First Day of Dealings on AIM RNS Number : 2341P African Potash Ltd 30 September 2011  African Potash Limited / Index: AIM / Epic: AFPO / Sector: Mining 30 September 2011 African Potash Limited ('African Potash' or 'the Company') First Day of Dealings on AIM African Potash Limited, an investing company focussed on potash assets within sub-Saharan Africa, is listing on AIM today. The Company has raised £4.185 million before expenses by way of a placing of 83,700,000 million new Ordinary Shares at 5 pence per share ('the Placing'), giving it a market capitalisation of approximately £7.935 million on Admission. The money raised will be used to acquire potash assets or projects in sub-Saharan Africa and advance these through the exploration and development cycle. Seymour Pierce Limited is Nominated Adviser to the Company who, along with GMP Securities Europe LLP, are acting as Joint Brokers. Overview: · Listing on AIM having raised £4.185 million before expenses to facilitate the acquisition and development of one or more potash projects and provide access to equity capital markets · Strong global market fundamentals supporting long term fertiliser-feed growth · Sub-Saharan Africa hosts sizeable, undeveloped potash deposits · Highly skilled Board and Management team - extensive experience developing resource projects in Africa · Assessing a number of potash projects in sub-Saharan Africa with the aim of rapidly delivering on strategy African Potash Chairman and CEO, Edward Marlow, said, "The Board sees a huge opportunity for a dedicated pan-African, London listed vehicle, focussed on potash given the backdrop of attractive global potash market fundamentals. We have a highly experienced Board who have a successful track record of identifying, acquiring and advancing resource assets and we are already assessing a number of potential projects that fit our stringent investment criteria. "Potash is primarily used as a source of potassium fertiliser. A combination of rising demographics and growing affluence in the developing world has led to a structural shift resulting in higher global demand for agricultural produce. Accommodating the increase in demand for foodstuffs will require a greater use of fertilisers, which in turn creates an opportunity for a vehicle such as ours." For further information and the full Admission document visit www.africanpotash.com or contact the following: Ed Marlow African Potash Limited +44 (0) 20 7408 9200 Jonathan Wright Seymour Pierce Limited +44 (0) 20 7107 8000 David Foreman Seymour Pierce Limited +44 (0) 20 7107 8000 Richard Greenfield GMP Securities Europe LLP +44 (0) 20 7647 2836 Hugo de Salis St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Susie Geliher St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Full Details The Company African Potash has been recently formed to acquire potash (and associated minerals) assets and/or acquire or invest in one or more businesses with potash (and associated minerals) assets or projects in sub-Saharan Africa. The Directors have well established business contacts and connections in sub-Saharan Africa and intend to use their experience of working within companies focussed on operating in sub-Saharan Africa to enable them to identify prospective acquisition and/or investment targets with scope for growth. The Company is a newly incorporated Guernsey registered company and an application has been made for the Ordinary Shares to be admitted to trading on AIM. The Company is raising £4.185 million in the Placing and intends to pursue appropriate acquisitions and/or investments which meet the investing policy described below after the Ordinary Shares have been admitted to AIM. The Directors expect that they will need to raise additional finance in the future, either through raising debt and/or through the issue of further equity, to complete any acquisitions and/or investments that the Company may agree and to develop the assets or business acquired and/or invested in. Potash Potash is the common name for various potassium-bearing materials and compounds. The term is widely applied to naturally occurring potassium salts, as well as the commercial products derived from them. The majority of the world's potassium reserves were deposited when ancient inland oceans evaporated, crystallising potassium salts into beds of potash ore. The resultant deposits are a naturally-occurring mixture of potassium chloride and sodium chloride (better known as common table salt). Potassium is the seventh most abundant element in the Earth's crust and is the third major plant and crop nutrient after nitrogen and phosphorus. Its primary use is as a soil fertilizer (which represents about 90 per cent. of current use) but potassium has a diverse range of uses and can be found in ceramics, pharmaceuticals and detergents. Potash improves the water retention, yield, nutrient value, taste, colour and texture of crops and is commonly applied to a wide range of fruits and vegetables, as well as rice, wheat, corn and other grains, sugar, soybeans, palm oil and cotton, all of which benefit from the nutrient's quality enhancing properties. A deficiency in potassium makes plants less resistant to disease and pests and this can impact the size, shelf life and taste of the crop. Continuous growing and harvesting of crops also removes potassium, nitrogen and phosphate from soil, all of which need to be added back in consistent ratios to maintain the fertility of the soil. Historically, it was standard practice in the agricultural industry to leave land fallow for a number of years so that the soil could be replenished. However, as demand for food has risen, in line with global population growth, leaving fields fallow is becoming less practical. Higher demand for food is having to be satisfied by obtaining higher yields from existing acreage, which in turn requires the increased use of fertilizers such as potash to maintain the balance of nutrients found in soil. Crucially, potassium's role cannot be replicated by other nutrients and currently there is no commercially viable alternative to potash as a source of potassium fertilizer. Most existing potash mines are deep shaft mines that can be as much as 4,400 feet below ground. Other deposits were formed in horizontal layers as sedimentary rock and are mined as strip mines. Potash can be extracted by employing one of four mining techniques: underground, solution mining, open pit or solar evaporation. The method used depends on the characteristics of the specific deposit such as depth, geometry and mineralisation. The majority of potash is recovered from buried deposits using conventional, mechanised mining methods. Solution mining involves injecting underground seams bearing the potash with a brine solution which dissolves the potash from the seams. The solution is then brought to the surface for processing where potassium chloride is separated from the mixture to produce a granular potassium fertilizer. Existing Commercial Potash Operations Potash is commercially mined in a number of countries around the world. Canada and Russia are, by some distance, the top two producing nations, accounting for 49 per cent. of world production in 2010. Of the two, Canada has the largest reserves with 46 per cent. of the global total, while Russia has 34 per cent. Global reserves are estimated at 9,500 million tonnes. In Africa, large potash deposits have been found in Congo (Brazzaville) and Ethiopia. Potash Prices The main potash miners of Canada, Russia and Belarus have each formed consortia that negotiate fixed term contracts with major customers. In Canada, the Canadian Potash Exporters (Canpotex), which is jointly owned by three Canadian fertilizer producers, exports and markets potash produced in the province of Saskatchewan. The Belarussian Potash Co is another consortium performing a similar function for Russian and Belarussian producers. The price agreed by the consortia and the customers acts as a benchmark for global spot prices. For years, Vancouver potash prices were stable at just over US$100 a tonne. Growing consumption of food over the last decade led to a demand/supply in-balance, which saw prices rise to almost US$900 a tonne in 2008 before dropping back as the world economy slipped into recession. By the end of July 2011, spot potash prices at the Port of Vancouver had climbed to US$490/t. PotashCorp, a major Canadian producer, forecasts 2011 global potash demand will be in the region of 55-60 million tonnes with China expected to account for a fifth of the total. In recent years, growth in potash consumption has been greatest in developing countries. In 2010, over 60 per cent. of world potash exports went to Asian and Latin American countries with China and India alone accounting for almost half of that amount. Over the past 20 years, Asian and Latin American imports have more than doubled as developing nations address the need to improve crop yields. Investing Policy The Company's investing policy is to acquire potash (and associated minerals) assets and/or acquire or invest in one or more businesses with potash (and associated minerals) assets or projects in sub-Saharan Africa. The Company's investment objective is to provide Shareholders with an attractive return on their investment predominantly through capital appreciation generated by the growth of any acquired assets and/or businesses. The Company proposes to adopt the following investing policy: · the Company will consider acquiring potash (and associated minerals) assets or acquiring or investing in businesses with potash (and associated minerals) assets or projects in sub-Saharan Africa. The investing policy is to acquire or invest in potash, although the Company will consider complementary mining businesses, assets and/or projects which focus on other minerals, which in the opinion of the Board offer better value to Shareholders; · the Company will focus on potash (and associated minerals) assets and/or businesses with potash (and associated minerals) assets located in sub-Saharan Africa which the Board considers to be businesses, assets and/or projects suitable for an investment by the Company; and · the Company intends to be an active investor and will seek to add substantial value, both operationally and strategically, to the businesses and/or assets acquired or in which investments are made. The Company does not currently anticipate making minority investments but intends to focus on owning the whole of or majority interests in a small number of businesses, assets and/or projects. With reference to the potential acquisitions of businesses with potash (and associated minerals) assets and/or projects, the Directors will, in particular, seek businesses with the following criteria: · they have the potential for rapid sustainable growth; · they are at an early stage with scope for utilising the Directors' logistical experience and network of contacts to the benefit of Shareholders; and · they already possess a business model which is expected to provide attractive returns on capital. The Directors have many years experience working with and for companies operating in sub-Saharan Africa. They will use their extensive business contacts and knowledge to source the most attractive transactions and assess potential targets for acquisition. The Company has not set any duration on making or holding any investment and is not limited in time. There is no time limit for the Company to return funds to Shareholders and the Directors do not anticipate returning funds to Shareholders in the short to medium term. However, the Directors expect to make one or more acquisitions and/or undertake a reverse takeover transaction within 12 months of Admission. Although the Directors are already appraising and evaluating potential assets for acquisition or investment, no agreements have as yet been entered into. In particular, the Directors have held initial discussions with one potential acquisition target but have not received a significant amount of information on it. Directors and Management Edward Marlow, aged 48 (Chairman and CEO) Mr Marlow was until recently a Managing Director at Credit Suisse. Previously he was Global Head of Coverage for Principal Investments at HSBC. In September 2007, Mr Marlow founded HSBC's Principal Investments Africa team having worked and travelled extensively in Africa for more than 20 years. He has over 9 years of specific investment and advisory experience in sub-Saharan Africa with a particular emphasis on natural resources. Mr Marlow also has considerable experience of the Canadian resource market and is Chairman of Sanatana Resources Inc (TSX). He was formerly on the boards of ESO Uranium (TSX) and Kopane Diamonds (AIM). An ex British Army Officer, he has an MBA from Cranfield University, a PGDipL from the University of Northumbria, is a graduate of the US Army CGSC and Manchester University and is a member of the UK CFA Society. During his career, Mr Marlow has also worked for Insinger De Beaufort, UBS and Citigroup. Philippe Edmonds (MA Cantab), aged 60 (Non-Executive Director) Mr Edmonds is a director of a number of public and private companies and has considerable experience introducing African focussed companies to AIM, including African Platinum Plc (formerly Southern African Resources Plc), Central African Mining & Exploration Company Plc, Central African Gold Plc, Agriterra Limited (formerly White Nile Limited), Sable Mining Africa Limited and African Medical Investments plc. Mr Edmonds is currently Chairman of Agriterra Limited, Sable Mining Africa Limited and African Medical Investments plc. He holds an honours degree in land economy from Cambridge University. Mr Edmonds was born in Lusaka, Zambia, educated in Zambia and England and played cricket for England and Middlesex from 1974 to 1987. Andrew Groves, aged 43 (Non-Executive Director) Mr Groves has significant experience in operations management in Southern and Central Africa and is a director of a number of public and private companies, including companies in Zambia and Zimbabwe. Mr Groves also has experience of introducing several African focussed companies to AIM together with Mr Edmonds. Mr Groves' current directorships include Agriterra Limited, Sable Mining Africa Limited and African Medical Investments plc. He was born in Harare, Zimbabwe and educated in Zimbabwe and South Africa. There are no other officers or employees of the Company as at the date of this document. It is intended that further directors and employees will be recruited following Admission and on completion of a suitable acquisition. The Directors intend to retain key members of any target's management team although they expect to supplement this as required with additional experienced management. The Directors are of the opinion that incentivisation of staff and management is a key factor to growing a successful business and therefore incentives will be put in place, which may include cash bonuses and equity participation in the Company. In this regard, the Share Option Scheme has been adopted but no awards have yet been made under the Scheme. Details of the Placing The Company is proposing to raise £4.185 (before expenses) pursuant to the Placing. The Placing comprises a total of 83.7 million new Ordinary Shares representing 52.74 per cent. of the issued share capital of the Company on Admission. Upon Admission, there will be 158.7 million Ordinary Shares in issue and the market capitalisation of the Company at Admission based on the Placing Price will be £7.935 million. The Placing Shares will rank in full for all dividends declared, paid or made after the date of issue and otherwise pari passu with the existing Ordinary Shares. The Board are also in discussions with several international investors who have expressed an intention to acquire up to 40 million Ordinary Shares at the Placing Price. These potential investments of up to £2 million (in aggregate) will be confirmed within 10 working days from Admission. An announcement will be made in due course. Future Prospects and further share issues The Company has not traded since incorporation. There have been no transactions other than the share transactions described in paragraph 2.4 of Part III of the Admission Document. Following Admission, the Company will have approximately £4.66 million (after payment of expenses) available for investment. Pending investment, the Company intends to hold cash in pounds sterling in cash deposit or cash equivalent accounts. Whilst the Directors believe they are well placed to access potential targets in the African region there is no guarantee that the Company will be able to make any investments which will realise any commercial return. No representation, warranty or guarantee is or can be made as to the future operating performance of the Company, which will depend on future events or circumstances, including events and circumstances which cannot be currently predicted and over which the Company has no control. Although the Directors have held initial conversations with a potential acquisition opportunity which may fit the Company's investing policy, there is no guarantee that any negotiations will lead to an investment by the Company or to the completion of an acquisition. Lock-in arrangements The Directors, who on Admission, will be interested in 45 million Ordinary Shares are prevented by the AIM Rules from disposing of any interests in Ordinary Shares held by them for a period of 12 months from Admission, except in limited circumstances. Accordingly they and Matt Mason, who is interested in 5 million Ordinary Shares have undertaken to the Company and to Seymour Pierce not to sell or dispose of any of their Ordinary Shares for a period of 12 months from Admission except in limited circumstances. At Admission, the Directors will be interested in 45 million Ordinary Shares representing 28.4 per cent. of the enlarged issued share capital of the Company. Further details of the lock-in undertakings are set out in paragraph 7.5 of Part III of the Admission Document. Reasons for Admission and Use of Proceeds The proceeds of the Placing will be used to provide the funds needed by the Company to identify and carry out due diligence on potential target acquisitions and to provide working capital for the Company's initial operations in line with its acquisition strategy. The Directors believe that Admission will have the following benefits: · quoted shares may be an attractive form of consideration to potential vendors and it will also facilitate acquisitions to be financed by vendor placings; · the status of being a company with shares publicly traded is likely to enhance the Company's reputation; and · the ability to incentivise staff through the use of share options may be important in retaining key managers. A full copy of the Company's Admission Document can be found on the Company's website at www.africanpotash.com. * * ENDS * * This information is provided by RNS The company news service from the London Stock Exchange END