11th Dec 2015 14:27
LONDON (Alliance News) - African Potash Ltd shares rose on Friday after announcing it has signed a fertiliser deal with a private company based in Southern Africa, building on its joint venture deal signed last week.
African Potash shares were trading up 12.7% to 2.0 pence on Friday afternoon.
At the start of the month, African Potash formed a long-term deal with South African investment company Beryl Holdings Pty Ltd to collaborate on its fertiliser operations in southern and eastern Africa.
Under the deal, Beryl's main fertiliser trading activities will be restructured into a newly-formed Mauritian company, which will become a wholly-owned African Potash subsidiary.
On Friday, African Potash built on that joint venture by signing a fertiliser trade agreement with another third party, Windmill (Pvt) Ltd, a private fertiliser producer. African Potash will purchase 3,000 tonnes of urea fertiliser stock from Beryl to supply to Windmill.
African Potash said it expects to receive net revenue of around USD300,000 from the fertiliser trade deal, and is separate to the other memorandum of understandings with offtake partners that have been signed throughout 2015.
Importantly, African Potash will not have to pay Beryl for the fertiliser it buys until Windmill has made a payment, meaning the company has no obligations in terms of funding the transactions. Windmill is expected to make payment before the end of January at the latest, it said.
"African Potash continues to make important strides towards achieving our aim of becoming a significant new vertically integrated fertiliser company, focussed on Africa," said Chairman Chris Cleverly.
"This agreement, which is significant not only for the near-term revenue it should generate for the company, forges an important additional affiliation between us and a major player in our target market, which should prove to be mutually beneficial for both African Potash and Windmill moving forward," it added.
By Joshua Warner; [email protected]; @JoshAlliance
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