African Potash Limited ('African Potash' or 'the Company')
20,000MT Trade under COMESA Agreement
African Potash, the AIM listed exploration company focused on the vertical integration of fertiliser operations in Africa and sub-Saharan potash assets, is delighted to announce the dispatch of 20,000 metric tonnes ("MT") in partial satisfaction of the sale agreement previously announced on 1 October 2015.
· Dispatch of the initial 20,000MT of urea fertiliser stock ('Urea Stock') in partial satisfaction of the 50,000MT purchase order with a Zambian customer as previously announced on 1 October 2015, introduced by COMESA under its trading agreement as previously announced on 4 August 2015
· On 1 October 2015, the Company signed a sale agreement with the customer for the supply of 50,000MT of fertiliser (25,000MT of NPK D Compound and 25,000MT urea), of which 20,000MT Urea Stock has been satisfied today
· The Urea Stock was delivered to the port of Beira, Mozambique, and was subsequently inspected and approved by an agent acting on behalf of COMESA and the Zambian Agriculture and Livestock Minister, Right Honourable Given Lubinda
· $10,160,000 gross revenue (gross revenue being the price payable by the buyer of the stock, before deduction of any costs including the purchase cost of the Urea Stock) attributable to African Potash with a sale price of $508 per MT achieved
· Payment by the buyer will be made via a Letter of Credit from an internationally accredited bank within 30 days of delivery of the Urea Stock
· African Potash will be paid on the basis of a 30 day back to back Letter of Credit
· Delivery of the Urea Stock to the customer in Lusaka, Zambia, is expected within 3-5 days - transport costs undertaken by the supplier of the Urea Stock and included in the Cost, Insurance & Freight price
· The trading process, which includes collateral management and credit risk management, will be conducted by Loita Capital Partners, under the trade finance facility previously announced, via its network of international banks
· The adviser and facilitator to the transaction was Butterfly Corporate Finance
African Potash Executive Chairman Chris Cleverly said, "I am delighted to advise shareholders of this landmark trade - our first executed under our agreement with COMESA. We are now starting to gain real momentum as our strategy to generate immediate cash flow from trading begins to reshape our Company and its potential future financial performance. Today's trade alone will generate a gross revenue of $10,160,000 for African Potash, achieving a margin within the previously announced range, clearly highlighting the considerable value of participating in the fertiliser trading market.
"I believe we have still only begun to scratch the surface of the potentially enormous market for fertiliser in Africa. We remain committed to exploring new opportunities to expand our market share and geographic reach."
COMESA Chief Executive Officer Mr Argent Chuula said, "We are pleased to see the culmination of all our collaborative work with African Potash resulting in our inaugural trade with them."
African Potash is an AIM quoted company focussed on building a vertically integrated platform for the mining, production and distribution of fertiliser, primarily within Africa.
The Company has a trading agreement with the Common Market for Eastern and Southern Africa ('COMESA'), a free trade union for twenty African member states, to supply and deliver at least 500,000 metric tonnes of fertilisers on an annual basis to off-takers identified and introduced by COMESA.
The Company also operates the Lac Dinga Project in the Republic of Congo, which is prospective for potash, a key source of potassium fertiliser.
This information is provided by RNS
The company news service from the London Stock Exchange