African Potash Limited trading update – new supply agreement secured

African Potash, the AIM listed exploration company focused on the vertical integration of fertiliser operations in Africa and Sub-Saharan potash assets, is pleased to announce that it has signed a fertiliser supply agreement with Rockwell Fertilisers Limited (‘Rockwell’), a supplier and distributor of fertilisers in Zambia.

African Potash will supply Rockwell with fertiliser products (NPK and Urea) to be sold on to prospective buyers, namely retail outlets who sell fertilisers to farmers in Zambia.  This is supported by the Common Market for Eastern and Southern Africa (‘COMESA’), with whom African Potash has an existing agreement, and Nutri-Aid Trust, a Zambian non-profit enterprise (‘Nutri-Aid’), with whom African Potash has a trading agreement to sell Urea and other fertiliser products to Nutri-Aid’s supply network, which includes over 2,500 agro-outlets certified by COMESA and managed by Nutri-Aid (with each outlet serving on average 300 farmers each).

Under the agreement it is anticipated that the value and quantity of each order will vary in accordance with buyer demand.  African Potash will receive an up-front payment of 50% of the total order value for each purchase by prospective customers. Payment for the remaining 50% of the total order value due to African Potash will be required on or before the day falling 45 days after the relevant invoice has been issued, as is customary for purchase agreements of this nature.  African Potash would need to meet the costs of purchases of stock made from its suppliers.

In consideration for introducing and arranging new customers Rockwell will receive 30% of the net profit generated from sales of fertiliser products under this agreement (net profit is the selling price minus the supply price, which includes supply chain costs incurred in the sourcing, storage and movement of fertiliser).  The Company will retain the remaining 70%.  The agreement is valid for a minimum of 12 months and shall be subject to quarterly reviews.  This agreement is in settlement of the previously announced agreement for the supply of 20,000Mt of Urea to a customer introduced by COMESA, as announced on 6 January 2016 and in the subsequent announcements on 9 February 2016, 29 March 2016 and 22 April 2016.

African Potash is also pleased to confirm that its on-going trading agreement, as per the RNS dated 22 April 2016, is progressing in accordance with its contractual commitments.  Payment is now subject to the African Potash’s trading partner successfully concluding its obligations and receiving payment in accordance with its sales agreement.

African Potash Executive Chairman Chris Cleverly said, “We are delighted to have further strengthened our trading presence in Zambia and the southern African region through the signing of this trading agreement with Rockwell, which complements our recently announced trading agreement with Nutri-Aid.  With a number of strategic partners in place through whom we can secure off-take agreements for the purchase of our fertiliser product, and the results of this strategy already showing success, I believe African Potash is well set for continued growth.”

The information contained within the announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").  Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

About African Potash

 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 fertiliser 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.