Final Results

African Potash Limited / Index: AIM / Epic: AFPO / Sector: Mining

29 December 2015

African Potash Limited ('African Potash' or 'the Company')

Final Results

African Potash Limited, the AIM listed exploration company focussed on the vertical integration of fertiliser operations in Africa and sub-Saharan potash assets, is pleased to announce its final results for the year ended 30 June 2015.

Copies of the Annual Report and Accounts for the year ended 30 June 2015 will be posted to shareholders on 30 December 2015 and will also be available on the Company's website at www.africanpotash.com.

HIGHLIGHTS:

· Defined strategy to create a vertical platform for the mining, production and distribution of fertiliser

· Established portfolio providing exposure to both the exploration & extraction and trading sectors of the fertiliser industry

· Maiden sale agreement achieved for the purchase of 3,000 tonnes of UREA fertiliser stock - expected to generate a net revenue of US$300,000

· Trading agreement with the Common Market for Eastern and Southern Africa to supply and deliver at least 500,000 metric tonnes of fertilisers on an annual basis for an initial three year period - multiple supply agreements identified

· Agreement with Beryl Holdings Pty Limited to collaborate and strengthen fertiliser trading and delivery capabilities utilising Beryl Holdings' established trading, logistics and financing network

· Planning underway for drilling campaign at Lac Dinga Potash Project in the Republic of Congo - targeting issue of a maiden resource statement

· Trade finance facility of up to US$50m in negotiation to enable the delivery and roll-out of fertiliser operations

· Strengthened board with experience in commodities and African operations to support active growth strategy

· Loss for the year of US$8.8m (2014: US$1.0m) and net asset value of US$9.5m (2014: US$16.1m) - follows an impairment charge in respect of Lac Dinga of $7.5m (2014: $nil) due to a fall in valuations

African Potash Executive Chairman Chris Cleverly said, "Since taking the helm at African Potash in March this year, my mandate has been to transform the Company into a dynamic new business capable of capitalising on the highly attractive inherent demand fundamentals for fertiliser and fertiliser constituents across the African continent. In tandem with this, I have listened to the demands of shareholders as to how we can enhance the value of our business in the near term, and this centres on the need for revenue generation. Using this as a basis for our future growth, within nine months of taking stewardship of African Potash, I was delighted to announce earlier this month our maiden fertiliser trade and revenue generation. Although a relatively small step in terms of volume and revenue, this deal is transformational as it demonstrates our ability to generate healthy margins as a fertiliser trader, which will support our future development as a vertically integrated fertiliser business and potash developer/miner as we look to deliver tangible value for shareholders in the near term."

Chairman's Statement:

I joined the Board of African Potash in March this year, having been drawn to the Company for two reasons. Firstly, as a veteran of business across Africa it is clear to me that a key requirement for this rapidly developing continent is the ability to feed itself. Africa does not lack land suitable for agricultural deployment, but shortages of fertiliser, and pricing which make fertiliser prohibitively expensive, mean that land is not being effectively utilised; accordingly much of Africa remains reliant on external sources of food when this great continent could become the world's breadbasket. By investing in potash related projects or businesses, with potash remaining an important constituent of fertiliser, African Potash has the potential to be an important player in Africa's green revolution - benefitting the continent and in the process, the Company's shareholders. Secondly, and at this point I owe a huge debt of thanks to the previous leadership team of Ed Marlow and Jean-Pierre Conrad, African Potash has a majority interest in what we believe to be a potentially world class potash asset of its own, the Lac Dinga Potash Project in the Republic of Congo ('the Project' or 'Lac Dinga') . Taking account of these two factors and by implementing a new dual strategy, focussed on unlocking both the short term fundamentals of the African fertiliser market and the longer term value of a domestic potash project, I believe we have a compelling proposition which should benefit our current shareholders and attract new investors to the evolving African Potash story.

In order to execute this strategy, it is of paramount importance to have a team in place with the knowledge and influence to push aggressive growth objectives forward. With this in mind, I am proud to say that we have built a Board with exemplary commodities and African business experience, and perhaps more importantly, a deep and intimate knowledge of doing business in Africa. In October 2015, the Company announced the appointment of four new directors; Mr Elias Pungong, Rt Hon Mark Simmonds, Mr Declan O'Brien and Rt Hon Lord Peter Hain; providing us with a Board comprising pre-eminent figures in the worlds of politics, finance, business and development. I will expand on each of the appointments in greater detail below.

With a new strategy in place, and an exceptional Board pushing this forward, the Company has delivered numerous notable achievements during the period and in the months post period end, all of which create a foundation for the growth of a potentially significant operator in the African fertiliser industry.

Commercial Agreements

In August 2015 African Potash entered into a trading agreement with the Common Market for Eastern and Southern Africa ('COMESA') and the Mask Africa Crowd Farm Fund Limited ('MACFF'), with a view to creating a vertical platform for the mining, production and distribution of fertiliser, focussed on the COMESA region and beyond. This agreement marked a milestone development in the establishment of the Company's fertiliser operations, giving the Company an entry into the trading sectors of the fertiliser industry to complement its established exploration interests thereby implementing part of its strategy to create a vertical platform for the mining, production and distribution of fertiliser.

Under the terms of the deal, African Potash has agreed to supply and deliver at least 500,000 metric tonnes ('MT') of fertilisers on an annual basis for an initial three year period to off-takers identified and introduced by COMESA. With this secured, the Company wasted no time in identifying supply opportunities and entered into a number of Memorandum of Understanding ('MOU') agreements for the supply of 50,000MT in Zambia, 50,000MT in Malawi, 150,000MT in Zimbabwe and 150,000MT in the Democratic Republic of Congo between August and September, underpinning its active growth strategy.

The Company's current focus is now on securing the necessary financing to enable the delivery and roll-out of its fertiliser operations. In line with this a trade finance facility of up to US$50m (the 'Finance Facility') is currently being arranged through African Potash's exclusive banking adviser Loita Capital Partners International Limited ('Loita'). The Finance Facility will be required until the Company's fertiliser trading operations become self-funding.

Whilst the Finance Facility has taken longer to conclude than initially expected, discussions continue to progress well. Indeed, in October 2015 Loita arranged an off-taker finance facility term sheet (the 'Term Sheet') with Ecobank Malawi (the 'Bank'), to support the conclusion of trading operations. The Term Sheet indicates that the Bank will engage with the Company's off-take partners with a view to providing off-takers finance by way of letters of credit, issued by the Bank on behalf of off-takers. Any letters of credit granted by the Bank in this context will in effect provide a guarantee of payments to African Potash, thereby enabling the Company to finalise its own trade finance facilities.

Importantly, whilst the Company continues to conclude the larger Finance Facility, it has secured a bridge loan of $1,125,000 to cover short term working capital requirements. This loan has a term of nine months (from December 2015).

African Potash continues to identify means through which it can accelerate its roll-out strategy and in line with this, in December 2015 the Company entered into an agreement with Beryl Holdings Pty Limited ('Beryl Holdings'), a South African investment firm, to collaborate and strengthen its fertiliser trading and delivery capabilities.

Under the terms of this agreement, Beryl Holdings' main fertiliser trading activities (which include trading, logistics and financing) will be restructured and operated via a newly formed Mauritian company, which will become a wholly owned subsidiary of African Potash ("Trading Co"). Beryl Holdings' current shareholding in logistics company, Bollore Logistics South Africa, which forms part of Bollore Africa Logistics, is expected to further enhance the intrinsic value of this partnership, as it is anticipated that this logistics company will enter into a trading relationship with Trading Co.

Separate to agreement with Beryl Holdings, the Company has also signed a further contract with Beryl Holdings for the purchase of 3,000 tonnes of UREA fertiliser stock. The stock has been sold to Windmill (Pvt) Ltd ('Windmill'), a privately-owned fertiliser producer in Southern Africa, thus marking the major milestone of African Potash's first fertiliser sale. This inaugural trade is expected to generate a net revenue of US$300,000, with payment contracted to take place by 30 January 2016. Importantly African Potash will have no obligation to make any payment to Beryl Holdings until such time as it receives sales proceeds from Windmill.

 The Company is now focussed on finalising current agreements and securing new prospective contracts as it continues to build revenue generative, fully integrated fertiliser operations across Africa.

On 16 December 2015 the Company made an investment of $105,000 in Blenheim Natural Resources Plc ('Blenheim'), an AIM quoted investment company focussed on the mineral exploration, mining and extraction sectors. This establishes a relationship between both parties looking for value opportunities, particularly in Africa, as African Potash continues to build its vertically integrated fertiliser model and seek complementary investment and development opportunities.

Lac Dinga

African Potash retains its interest in the exploration side of the fertiliser industry through its 70% interest in La Société des Potasses et des Mines S.A. ('SPM'), which holds the exclusive right to conduct exploration activities for potash salts over the 702.5 sq km Lac Dinga Project Area ('Lac Dinga' or the 'Project') in highly prospective Kouilou region in the Republic of Congo.

The initial three year licence period expired on 3 December 2015 and is in the process of being renewed. The renewal application was filed in August 2015 and a draft of the renewal decree was forwarded by the Minister of Mines to the Secrétaire Général du Gouvernement on 18 September 2015. Although not yet confirmed, formal approval is expected in due course.

Whilst the Project is still at an early stage of exploration, work conducted to date has returned encouraging results regarding its potential to host significant potash deposits. A drilling campaign undertaken in Q3 2014 confirmed the presence of multiple potash seams with individual sample grades of up to 25% KCl (~15.8% K2O) received. Furthermore, approximately 250km2 of the licence area is interpreted to be underlain by salt-bearing strata, which occurs at depths of about 300m to 420m below surface, and results generated suggested the potash mineralisation to be characteristic of similar commercial deposits in the Congolese coastal basin.

Encouraged by these results, an independent valuation of the licence was commissioned by the board. It is clear that the challenging environment facing many resource projects globally has led to a fall in valuations compared to those at the time of original acquisition of the Lac Dinga project in February 2013. Consequently the board have decided to write down the value of the project from a book value of $17.5m to $10m, within the valuation range provided in August 2015.

The Company is currently determining the best ways in which to advance and realise value from Lac Dinga as part of its integrated fertiliser model. The success of the initial programme has significantly de-risked the project and underlined the potential for the establishment of an economic resource in the project area. Planning for the next phase of drilling to enable the Company to issue a maiden resource statement is underway subject to raising sufficient finance to fund the programme.

Board Appointments

As part of the Company's evolution from a pure exploration play to a company which is interested in the full value chain of the fertiliser industry, African Potash has made a number of Board appointments to ensure we have the necessary skill set and experience to drive the scale of growth we are targeting.

In October 2015 the Company appointed Mr Elias Pungong to the Board as a non-executive Director. With a distinguished career spanning 25-years, Mr Pungong has a proven, native understanding of Francophone Africa, and in particular resource development in the region; this will be pivotal in orchestrating the development of the Lac Dinga Project and other potentially compatible resources.

Shortly following this, Mr Declan O'Brien joined the Board as a non-executive Director. As a veteran of the African commodity space, Declan brings with him significant financial and commercial experience which will be invaluable in supporting the Company's development.

In November 2015 Rt Hon Mark Simmonds joined the Board as a non-executive Director. His significant political experience, particularly within Africa, will support the finalisation of current agreements and the negotiation of future contracts.

Finally, the Right Honourable Lord Peter Hain was appointed to the Board as a non-executive Director in December 2015. As a previous Cabinet and government minister Peter has notable experience in diplomacy, negotiation and conflict resolution. He is also involved in multiple charitable organisations and recognises the need for food security in Africa, understanding the crucial role fertiliser will play in achieving this.

As part of this restructured Board, we said goodbye to Ed Marlow and Jean-Pierre Conrad, both of whom have left the Company to concentrate on their other business interests. We would like to extend our thanks again for their commitment shown and wish them the very best in their future endeavours.

Financial Results

Following the impairment charge in respect of Lac Dinga of $7.5m (2014: $nil impairment), the Company is reporting a loss for the year of $8.8m compared with a loss of $1.0m in the prior year. Net Assets have fallen to $9.5m (2014: $16.1m) and at 30 June 2015, cash balances were $0.6m (2014: $2.2m).

Outlook

Africa is a continent of 1.1 billion people with 60% of the world's undeveloped arable land. As the continent transforms with rapid urbanisation and fast growing economies, the requirement for a developed agriculture industry to feed Africa grows with it. Indeed, the International Monetary Fund estimates that Sub-Saharan Africa is growing most rapidly, with a projected population of 2 billion by 2050, whilst worldwide food production is expected to be needed to increase by an estimated 60-70% to feed a global population of more than 9 billion. In line with this, according to the African Development Bank, the size of Africa's food and agribusiness will be $1 trillion by 2030 and foreign direct investment in this sector is expected to increase to $45 billion by 2020. African Potash is committed to being at the fore of this trend.

In order to keep pace with this rapid growth, African Potash, with a newly aligned Board experienced in commodities and African operations, and a diverse portfolio spanning the exploration, extraction and trading sectors of the fertiliser industry, is ideally positioned to meet and deliver on these demands. Fertilisers help maximise agricultural potential and our strategy is centred on ensuring quality fertilisers are readily available for local farmers, crucially at a price which they can afford.

With our maiden fertiliser sale secured and multiple trade agreements in the pipeline - all achieved within less than 5 months of signing the initial supply agreement with COMESA - I truly believe this is a transformational time for African Potash. I believe that you know that you are in the right place at the right time when circumstances and events conspire together to create such rapid and successful change. Looking ahead to 2016 we look forward to finalising current agreements, the renewal of the licence for the Lac Dinga Project, and identifying new development opportunities as we focus on the roll-out of our integrated model.

Finally, I would like to thank my team (internal and external) both in London and in Africa for working so hard and with such commitment. I would also like to thank shareholders for their on-going support and look forward to keeping the market updated with our progress in the New Year.

Chris Cleverly

Executive Chairman

24 December 2015

UNAUDITED CONSOLIDATED INCOME STATEMENT

For the year ended 30 June 2015

All results relate to continuing activities.

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2015

There is no taxation arising on other comprehensive income

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2015

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 June 2015

Non cash transactions

The principal non cash transactions relate to shares issued in settlement of:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2015

1. General Information

African Potash Limited is incorporated and domiciled in Guernsey. The nature of the Company's operations and its principal activities are set out in the Chairman's Statement.

The presentational currency of the Group is US Dollars as this reflects the Group's business activities in the fertiliser trading and resource exploration sectors in sub-Saharan Africa and therefore the Group's financial position and financial performance.

Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted by the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRSs nor constitute statutory financial statements.

The financial information is based on the statutory accounts for the financial year ended 30 June 2015. The auditors reported on those accounts: their report was (i) unqualified, (ii) included an emphasis of matter in relation to going concern without qualifying their report, and (iii) did not contain statements where the auditor is required to report by exception.

The Company's Annual Report, will be available on the Company's website by 31 December 2015.

2. Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS as adopted in the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

Intangible exploration and evaluation assets

In February 2013, the group purchased a 70% interest in the Lake Dinga licence which the board believes is highly prospective for commercial deposits of potash. The initial three year licence period expired on 3 December 2015 and is in the process of being renewed, albeit formal approval has not yet been received. During the year the Group has conducted a successful proof of concept drilling campaign confirming laterally extensive potash mineralisation which is characteristic of the Congolese coastal basin and further underpins the project's potential to host significant potash deposits. In order to develop the asset and issue a maiden resource statement, the Group will need to raise additional capital to fund a comprehensive drilling programme to support a resource estimate. Under the terms of its licence, the group is required to undertake some exploration activity in any nine month period. The board remains confident that the highly prospective nature of the asset will enable them to raise the additional capital to fund these programmes.

The valuation of intangible exploration and evaluation assets is dependent upon the discovery of economically recoverable deposits which in turn is dependent upon the future potash prices, capital expenditures and environmental and regulatory restrictions. During the year, an independent valuation of the group's interest in the Lake Dinga licence indicated that market conditions had resulted in a fall in value compared to that at the time of the original acquisition. Consequently the board have decided to write down the value of the asset to $10m to reflect the results of that valuation.

Trading activities

The Group's fertiliser trading operations have commenced since the year end and are subject to commodity price and foreign exchange fluctuations, credit risk, together with the practical and logistical challenges of operating in sub-Saharan Africa. Policies are in place to address these risks.

Management's critical judgements in determining the value of assets, liabilities and equity within the financial statements relate to the valuation of intangible exploration and evaluation assets of $10m (post impairment) (2014: $14.5m), the timing volume and margins of anticipated trading contracts and the going concern assumptions.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimates are revised or in future periods if applicable.

Going concern

As indicated above, current cash resources and anticipated cash flows from trading activities are not sufficient to enable the Group to complete a full evaluation of the Lac Dinga project or to continue to invest in exploration activities.

The Board has prepared forecasts for the Group covering the period to 31 December 2016. The principal assumption is that fertiliser trading will pick up during 2016, with the Group commencing deliveries under the COMESA and Beryl agreements in Q1 2016.

However, the group's forecast trading cashflows are dependent on the negotiation and fulfillment of new contracts that are not yet finalised and the successful conclusion of related financing lines. Without these trading cashflows the group will need to raise additional finance either through borrowing or the issue of new equity.

Notwithstanding the above uncertainty, the directors are confident that with the current cash and forecasted cash flows from the trading operations, there will be sufficient cash resources to enable the Group to pay debts as they fall due and to continue its operations for the foreseeable future and thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. The board will not commit to a major exploration programme without raising sufficient finance to fund the planned expenditure.

3. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

The asset comprises the Lac Dinga exploration licence in the Republic of Congo held by La Societé des Potasses et des Mines SA ("SPM") in which the Group has a 70% interest. The licence is for three years, with two renewals of two years each. The initial three year licence period expired on 3 December 2015 and is in the process of being renewed. The renewal application was filed in August 2015 and a draft of the renewal decree was forwarded by the Minister of Mines to the Secrétaire Général du Gouvernement on 18 September 2015. The board expect formal approval to be received in due course.

It is clear that the challenging environment facing many resource projects globally has lead to a fall in valuations compared to those at the time of original acquisition of the Lac Dinga project in February 2013. Consequently the board have decided to write down the value of the project from a book value of $17.5m to $10m, within the valuation range provided.

5. Share capital

The Company has one class of ordinary share which carries no right to fixed income.

On 12 May 2014, 53,762,073 shares were issued at 1.9p for cash to fund the Phase 1 drilling and exploration programme.

On 12 May 2014 4,648,447 shares were issued at 1.9p under the terms of the management agreement with Hedgestone Advisory (Pty) Ltd to lead and facilitate the infrastructure and logistics operations supporting the drilling programme.

On 8 August 2014 6,330,613 shares were issued at 3.5p in connection with the Bergen facility (see note 18). A further 1,417,686 shares were issued at 3.5p in settlement of advisory fees.

The following shares were issued upon the conversion of Bergen Convertible Securities during the year:

On 21 April 2015 and 22 May 2015 425,000,000 shares were issued for cash at 0.3p to redeem the outstanding loan notes under the Bergen facility and to fund the working capital requirements of the group.

6. Convertible loan notes

On 8 August 2014 the company announced that it had entered into a convertible securities issuance deed (the "Deed") with Bergen Opportunity Fund, LP ("Bergen"), an institutional investment fund managed by Bergen Asset Management, LLC, a New York asset management firm, in connection with an issuance by the Company of zero coupon convertible securities having a nominal amount of up to US$3,750,000 (the "Convertible Securities").

On 14 August 2014 the initial Convertible Security was issued with a nominal value of US$830,000 and a purchase price of US$750,000. On 13 November 2014 the Company issued a second Convertible Security with a nominal value and purchase price of US$500,000.

During the year, Bergen exercised its right to convert its Convertible Securities as follows:

On 9 February 2015 the Deed was terminated by mutual consent of the parties.

The outstanding Convertible Securities were repaid from the proceeds of the placing on 21 April 2015 with a penalty charge of US$135,000.

7. Post balance sheet events

On 1 December 2015 it has entered into an agreement with Beryl Holdings Pty Limited ('Beryl Holdings'), a South African investment firm, to collaborate in terms of its fertiliser trading operations in Southern and Eastern Africa, whereby Beryl's main fertiliser trading activities (which include trading, logistics and financing) will be restructured and operated via a newly formed Mauritian company, which will become a wholly owned subsidiary of African Potash. On the basis that the new company achieves an EBITDA of at least US$4m it the first twelve months from the date of acquisition, then the company will issue 306,513,410 new ordinary shares representing a value of $12,000,000.

On 2 December 2015, the Company announced that it has entered into a unsecured bridge loan agreement with a term of 9 months for an amount of $1,125,000. An arrangement fee of $90,000 was payable on drawdown and interest is charged at 1.5% per month.

On 16 December 2015, the Company subscribed for 8,750,000 ordinary shares at a price of 0.8 pence per ordinary share, representing 4.74 per cent. of the enlarged share capital of Blenheim Natural Resources Plc.