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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
(END) Dow Jones Newswires
July 19, 2017 05:51 ET (09:51 GMT)
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