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African Potash Ltd. (AFPO) African Potash Ltd.: Conditional Agreement to Farm-Out Interests in Lac Dinga Project 19-Jul-2017 / 10:50 GMT/BST Dissemination of a Regulatory Announcement that contains inside information according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain. 19 July 2017 AFRICAN POTASH LIMITED ("African Potash" or the "Company") African Potash Limited / Epic: AFPO / Sector: Mining Conditional Agreement to Farm-Out Interests in Lac Dinga Project African Potash Limited is pleased to announce that it has entered into an agreement with African Agronomix Limited ("AAX") pursuant to which AAX will, subject to the satisfaction of certain conditions precedent, have the right to acquire up to 100% of the Company's interest in Lac Dinga project in the Republic of Congo (the "Project") structured over four distinct phases (the "Earn-In"). As shareholders will be aware, the Company's interest in the Project is held via a 70% interest in La Société des Potasses et des Mines S.A. ("SPM"), a Congolese company which holds the exclusive right to conduct exploration activities for potash salts over the Lac Dinga project area. Conditions Precedent Completion of the Earn-In is subject to the satisfaction various conditions including: - establishment of a newly incorporated holding company ("HoldCo") and completion of the transfer to HoldCo of the Company's interest in the Lac Dinga Project to HoldCo (with the consent of the Ministry of Mines in the Republic of Congo and in compliance with all relevant provisions of the laws of the Republic of Congo) and restructuring of existing inter-group borrowings; - completion of renegotiation and execution of certain existing agreements relating to the Project; - AAX having completed and being satisfied with its due diligence (legal and technical) on all aspects of the Earn-in; and - all necessary and applicable third party, shareholder and similar or equivalent approvals having been obtained in all relevant jurisdictions to enable the Parties to complete the Transaction as contemplated by this Agreement. Consideration On the date of satisfaction of the Conditions Precedent (the "Effective Date"), AAX will: - issue to the Company 5 million new ordinary shares in AAX (the "Consideration Shares"); and - issue a 3-year warrant to the Company (subject to extension in certain circumstances), granting the right for the Company to purchase 2.5 million AAX ordinary shares at a price per share of 5p per share, (together, the "Consideration") each of which shall be held in escrow pending the earlier of completion of the Phase 1 undertakings, completion of an initial public offering of AAX and the date falling 18 months after the Effective Date. During the course of the Earn-In the Company will retain an interest in the Project through the Consideration Shares issued to it as well as a reducing direct shareholding in SPM. Earn-In Phases During each phase AAX will have funding and performance obligations, completion of which result in AAX acquiring a greater interest in the Project. The material aspects of phases 1 and 2 of the Earn-In are described below: Phase 1 Phase 2 Duration 18 months 18 months commencing upon completion of Phase 1 or 18 months and one day from the Effective Date, which ever date is the later Interest earned by AAX 51% upon completion 14% upon completion of Phase 1 of Phase 2 Mandatory Funding into No less than No less than Project GBP450,000 GBP600,000 less any amounts expended over and above the minimum Phase 1 Mandatory Funding Performance Conduct Conduct professional Requirements & professional exploration exploration activities to obtain activities. certification of a JORC-compliant Use of Funds Resource and (subject to Phase 1 results yielding evidence of likely economic viability), conduct at least one bulk sampling of at least 10 tonnes of material. Upon completion of Phase 2 and Phase 3 respectively, the Company may elect in writing to participate in co-funding Phase 3 and/or Phase 4 respectively alongside AAX by providing the proportion of total funding required for Phase 3 and/or Phase 4 (as applicable) equal to the Company's remaining interest in the Project at the relevant time. Phase 3 Phase 4 Duration 18 months commencing 12 months commencing within 90 days after 90 days after completion of Phase completion of Phase 3 2 (provided that it (provided that it has has been determined been determined that that the Project the Probable Mineral includes at least Reserve - as and if one mineral deposit successfully defined likely to be by Phase 3 - warrants mineable at a development into a profit) profitable mine) Interest earned by Up to a maximum of Up to a maximum of AAX 15% (should the 10% (should the Company elect not Company elect not co-fund) upon co-fund) upon completion of Phase completion of Phase 3 3 Mandatory Funding Sufficient to cover Sufficient to cover into Project the use of funds the use of funds Performance Develop the project Develop the project Requirements & to the point of to the point of certifying a certifying a JORC pre-feasibility compliant Bankable study sufficient to Feasibility Study Use of Funds declare a Probable ("BFS") sufficient to Mineral Reserve for declare a Proven an economically Mineral Reserve of viable quantum of sufficient size for ore an economically viable mine of at least 10 years' operations. Under the terms of the Earn-In, AAX have undertaken to provide minimum levels of mandatory funding (as set out above) and further committed to ensuring that agreed liabilities of SPM are settled from such mandatory funding. From the Effective Date, AAX shall act in the capacity as the operator of the Project on behalf of SPM and shall have freedom to execute on-ground and other work towards the application of funds and agreed milestones, under the direction of a Management Committee composed of 5 members, 3 of whom shall be appointed by AAX, 1 of whom shall be appointed by the Company and 1 of whom shall be appointed by Mr M G Mouanda Makosso, a local partner in the Project. African Potash Executive Chairman, Chris Cleverly, said: "This is a positive move for all concerned and fits in with our long-held ethos of helping the African farmer. The transaction endorses our belief in the long-term viability of the Lac Dinga project. We are excited about working with our new colleagues in moving toward a food secure future for some of the world's poorest people." Conal Bunnett, founder director of AAX said: "We are delighted to embark upon this mutually advantageous arrangement with our project partners, African Potash. The Lac Dinga prospect offers high hopes of a significant potash resource on the African West Coast, the success of which will cement a key strategic component in the ambitious rollout of our plan to create a vertically-integrated, pan-African fertiliser business." Background Information on African Agronomix Limited AAX is a private, multi-national company with a well-defined strategy, conceptually driven by the long-overdue beneficiation of Africa's raw materials. Currently in the portfolio-building stage, AAX is building a platform of fertiliser-source mineral deposits with potentially profitable agricultural and industrial by-product opportunities. The portfolio is targeted to control resources through key regions within sub-Saharan Africa, aligned within the west coast, the interior and the east coast geographies. From this platform, the AAX goal is to create (in the medium term) a widely-distributed manufacturing base for the entire range of plant-nutrient products at optimum distances between raw materials and agricultural consumers. The over-arching strategy is to out-compete and replace expensive, trade-balance-destroying imports which carry a significant carbon footprint in transport from offshore. The list of benefits offered to the continent's economies, its food security, poverty reduction, job creation, deforestation control, and other environmental advantages are numerous. AAX already holds several rights and licences with respect to other projects relating to the same industry as the Project (such as Phosphates) and in implementing its business plan has in the past completed, and will in the future remain open to complete, many further partnerships which are or may be similar in nature to the Earn-In. The Directors of the Company accept responsibility for the content of this announcement. For further information, please contact: African Potash Limited Chris Cleverly +44 (0) 20 7408 9200 African Agronomix Limited Conal Bunnett rgsafrica@gmail.com Alexander David Securities Limited James Dewhurst, David Scott +44 (0) 20 7448 9820 Language: English ISIN: GG00B4QYTJ50 Category Code: AGR TIDM: AFPO Sequence No.: 4434 End of Announcement EQS News Service 593891 19-Jul-2017
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July 19, 2017 05:51 ET (09:51 GMT)