29th Mar 2016 07:51
LONDON (Alliance News) - African Potash Ltd shares dropped on Tuesday after it said it is still trying to secure over USD10.0 million in revenue that was deferred in early 2016.
African Potash shares were down 14% to 1.47 pence per share on Tuesday morning.
The company, which is looking to create a vertically integrated fertiliser business in Africa, was set to reach a significant milestone by booking in USD10.2 million of maiden revenue in early 2016 after making a shipment of fertiliser to a customer in Zambia, but that revenue was delayed for unspecified reasons in February.
African Potash has signed numerous fertiliser trading deals with companies in Africa through an agreement signed with COMESA, which enhanced the company's Lac Dinga project in the Republic of Congo and gave it exposure to the trading sectors of the fertiliser industry as part of strategy to create a vertical platform for the mining, production and distribution of fertiliser.
The idea is to use the exposure to trading fertiliser to generate near-term revenue and to benefit from a first-mover advantage whilst it advances the Lac Dinga project to come into play at a later date.
Although the company said it managed to book in a small amount of revenue in the first half of its current financial year, the current concerns focus on whether the company will be able to book in that substantial amount of revenue due from Zambia before the end of the current financial year on June 30.
"As is not untypical with any rapid expansion in a business' strategy or business model, there are often unforeseen teething problems or delays - and African Potash is no exception to this rule," said Executive Chairman Chris Cleverly on Tuesday.
"Whilst the period under review has delivered the first revenues for the company, the delivery and payment schedule originally envisaged under the Zambian COMESA agreement, announced on January 6, 2016, has been protracted and I am aware of the frustration and, for some, concern, which this has brought," Cleverly added.
"I would like to comfort investors and state that I have confidence that African Potash will deliver and that we will receive the full amount originally reported," he said.
The company reported a USD716,000 pretax loss in the six months to the end of 2015, slightly wider than the USD660,000 loss booked the year before as its operating expenses increased.
African Potash is still generating very little in revenue, but managed to book its maiden revenue - though totalling just USD59,000 - in the period. The delayed revenue from the customer in Zambia was supposed to be booked in after the first half ended, meaning it would not have impacted first half results in any case.
The company had USD509,000 in cash at the end of December, lower than the USD679,000 in the bank at the end of 2014.
By Joshua Warner; [email protected]; @JoshAlliance
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