20th Mar 2014 12:00
LONDON (Alliance News) - Premier African Minerals Ltd Thursday said it has entered into an option agreement to purchase AgriMinco Corp's 30% interest in the Danakil Potash Project in Ethiopia for roughly CAD4.9 million.
The natural resource company with mineral projects in Africa already has a 42% holding in AgriMinco Corp, which has a joint venture agreement with the owner and operator of the Danakil site, Danakil Potash Corporation.
Premier African said that, under the terms of the option agreement, it will acquire the entire share capital of Mandalore Development Ltd, a subsidiary of AgriMinco, which owns 30% of Danakil.
In return, Premier will cancel its 120 million shares in AgriMinco ,which have an approximate value of CAD2.4 million based on AgriMinco's March 18 closing price of CAD0.02 per share.
The company said it also will settle a maximum of CAD1.5 million worth of debt obligations owed by AgriMinco to third parties as part of the deal.
Furthermore, Premier will issue AgriMinco with CAD1 million worth of shares in the company based on the weighted average trading price of Premier shares for the 20 consecutive trading days leading up to the exercise of the option.
The company noted that the option agreement is exercisable at its sole discretion on or before April 30, subject to TSX Venture Exchange approvals.
As such, the deal has an estimated present pricing of CAD4.9 million.
"Premier is engaged in advanced negotiations intended to provide the necessary finance to exercise this option and in so doing, place Premier in a position to monetise the whole or a portion of this asset," Chief Executive George Roach said in a statement.
The Danakil Project encompasses a potentially significant potash deposit in Ethiopia with a total mineral resource of 230.0 million tonnes at 19.2% potassium chloride or 44.2 million tonnes and 12.1% potassium oxide or 28.0 million tonnes of potassium chloride. Potash is used in making fertilizer.
Premier African Minerals shares were down 0.1% to 0.749 pence Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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