9th Feb 2016 11:42
LONDON (Alliance News) - Investors appeared to lose some confidence in African Potash Ltd on Tuesday after the company conceded it is still awaiting to receive its maiden revenue of over USD10.0 million.
African Potash shares were trading down 7.4% to 1.48 pence per share on Tuesday morning.
African Potash looked to have reached a significant milestone in early January after the company said it had sent its first shipment of fertiliser to a customer in Zambia, which generated USD10.2 million in maiden revenue for African Potash and sent shares soaring.
However, the company admitted Tuesday that it is still awaiting for that USD10.2 million payment and provided no guidance on when it expects to receive it, stating it would inform the market "in due course" when the payment is received.
The shipment of 20,000 metric tonnes of fertiliser in early January partly satisfied the 50,000 metric tonnes sale agreement with the Zambian customer that was signed back in October last year. The agreement was sourced through a deal between African Potash and the Common Market for Eastern and Southern Africa (COMESA) to create a production and distribution platform for fertiliser in Eastern and Southern Africa.
Through COMESA, African Potash has secured a string of sale deals, including the one with the Zambian customer, with companies in several countries to supply 500,000 metric tonnes of fertiliser per year.
In late 2015, African Potash reported its full-year results that showed its pretax loss had widened to USD8.8 million from only USD1.0 million a year earlier with no revenue booked in. The miner and its shareholder will be hoping it can report maiden revenue in its next set of financial results.
The COMESA deal was significant to African Potash because it enhanced its 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 as the deal signed between African Potash and COMESA was "the first agreement of its nature" whilst it advances its Lac Dinga project which will come into play at a later date.
By Joshua Warner; [email protected]; @JoshAlliance
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