Placing to Fund Exploration Programme at Lac Dinga

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

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

Placing completed to enable commencement of Exploration Programme at Lac Dinga Potash Project, Republic of Congo 

African Potash Limited, the AIM listed African exploration company, is pleased to announce that it has secured financial and technical resources with an aggregate value of approximately $2m to commence its "Phase 1" drilling and exploration programme at its Lac Dinga Potash Project ('Lac Dinga') in the Republic of Congo. The Company has raised approximately $1.7 million through a conditional placing of 53,762,073 new ordinary shares of 1.9p each and has finalised a camp build, logistics support and operations management agreement valued at $0.3m.

Overview

· $1.7m raised at a price of 1.9p to fund the exploration programme

· Hedgestone Advisory (Pty) Ltd, a logistics and operations specialists group with extensive knowledge of the Republic of Congo, has been engaged to lead and facilitate the infrastructure and logistics operations supporting an initial exploration programme at Lac Dinga Project in an "equity for services" agreement (the 'Management Agreement')

· Commencement of the exploration campaign targeted in Q3 2014 with two holes scheduled to be drilled by September 2014

· Maiden drilling campaign designed to further the understanding of potash mineralisation at Lac Dinga and determine the resource potential of the Lac Dinga Project

· Lac Dinga Potash Project is located in a world-class potash bearing region and is contiguous to the Sintoukola Potash Project, which has a reported Measured and Indicated sylvinite Resource of 573Mt grading 20.92% K2O

African Potash CEO, Edward Marlow, said, "The funds raised today, coupled with the engagement of Hedgestone Advisory (Pty) Ltd, a company owned and run by Paul Quirk, a pre-eminent figure in the Congolese mining industry, strengthens our ability to rapidly implement our exploration plans for 2014 and begin to determine the resource potential of Lac Dinga. The Lac Dinga licence is surrounded by world-class potash projects, including Elemental Mineral Limited's Sintoukola Project; projects in this area are located in a strategically important region with a historic record for potash production. However, this drilling programme is the first step in defining the tangible value of our exciting greenfield project. I look forward to presenting further updates in due course as we look to demonstrate the resource potential of Lac Dinga."

Details of the Placing

The Company has conditionally raised approximately $1.7m (before expenses) through the issue of 53,762,073 new ordinary shares of no par value (the 'Placing Shares') at a price of 1.9 pence per share (the 'Placing Price') to new and existing shareholders (the 'Placing').

As part of the Placing, one warrant will be issued for every Placing Share, with an exercise price of 5p per ordinary share in the capital of the Company and an exercise period of 2 years ('Placing Warrants').

The Placing will be effected by way of a placing agreement with Cantor Fitzgerald Europe (the 'Placing Agreement') and certain direct subscription agreements with the Company. The Placing Agreement contains customary warranties and indemnities given by the Company to Cantor Fitzgerald Europe as to matters relating to the Company and its business; Cantor Fitzgerald Europe is entitled to terminate the Placing Agreement in certain limited circumstances prior to admission of the Placing Shares to trading on AIM ('Admission'), including circumstances where any of the warranties are found to be untrue or inaccurate or misleading in any material respect or upon the occurrence of certain force majeure events. 

Details of Directors' Participation in the Placing

Certain directors of the Company have participated in the Placing. Details of their participation and changes in holdings of Ordinary Shares in the Company are set out in the table below.

* 10 million of the ordinary shares in which Mr Groves is noted as having an interest are controlled by a trust, the beneficiaries of which include relatives of Mr Groves.

Details of the Management Agreement

African Potash has signed the Management Agreement with Hedgestone Advisory (Pty) Ltd, a company owned and run by Mr Paul Quirk, a mining and logistics entrepreneur with considerable experience operating in the Republic of Congo. Pursuant to the Management Agreement Hedgestone Advisory (Pty) Ltd will manage the support operations in preparations for the Company's "Phase 1" drilling and exploration programme at Lac Dinga providing, directly or indirectly, through camp build, logistics support and operations management services to the Company (the 'Services') in addition to overseeing the development of the associated exploration infrastructure. The consideration for the Services will be satisfied by the issue of new ordinary shares in the capital of the Company. By structuring the consideration in this manner, the Company will conserve its cash treasury and promote continued alignment between the Company, Hedgestone Advisory (Pty) Ltd and Mr Quirk, with a view to expedition of the Company's works programmes by benefiting from an established network of operational contacts within the Republic of Congo.

Under the terms of the Management Agreement, an initial payment to the value of US$150,000 will be made immediately by the issue of 4,648,447 new Ordinary Shares at the Placing Price (the 'Agreement Shares'). A further of payment of US$150,000 will be made on completion of the "Phase 1" drilling and exploration programme by the issue of a further 4,648,447 new ordinary shares (at which time the Company will make a further application to have such shares admitted to trading on AIM). Under the Management Agreement the Company has also granted warrants as consideration for the Services (the 'Agreement Warrants'). Summary details of the Agreement Warrants are set out below:

Mr Quirk has personally demonstrated himself to be ideally qualified to manage the logistics of a range of mineral exploration programmes in the Republic of Congo. Recently working as the Country Manager of MPD Congo SA, a subsidiary of Republic of Congo focused Zanaga Iron Ore, his background also incorporates infrastructure experience, most notably through his role as co-founder of Fortis Logistique, a transport and logistics provider to industrial, construction and mining clients across the Republic of Congo.

Exploration Programme

The combination of the funds raised from the Placing together with the engagement of Hedgestone Advisory (Pty) Ltd will enable the Company to commence final preparations for an exploration programme which is anticipated to begin in Q3 2014. This campaign will consist of two holes at predetermined targets on the Lac Dinga Project, generated from analysis of historical data and the 415 line kilometres of oil industry standard regional 2D seismic data covering 470km2 on and around the licence area, which was acquired in March 2014.

The objective of the exploration programme is to further the Company's understanding of the potash mineralisation underlying the Lac Dinga Project. Lac Dinga is located in a world-class potash-bearing region in the south-west of the Republic of Congo and is contiguous to the Sintoukola Potash Project, owned by Elemental Minerals Limited, which has a reported Measured and Indicated sylvinite Resource of 573Mt grading 20.92% K2O (33.14% KCl) and a Proven and Probable Reserve of 151.7Mt grading 20.02% K2O (31.69% KCl). A review of historic data suggests that the style of potash mineralisation intercepted on the Sintoukola Project and at the historic Holle mine can be extrapolated into the Lac Dinga licence area, and the exploration programme planned for 2014 is intended to provide further evidence to support this geological interpretation.

Admission of new Ordinary Shares to trading on AIM

Application has been made for the Placing Shares and the Agreement Shares, which will rank pari passu in all respects with the existing Ordinary Shares of the Company, to be admitted to trading on AIM ('Admission'), which is expected to be effective from 8.00 a.m. on 15 May 2014.

Total Voting Rights

The Company has no Ordinary Shares held in treasury. The total number of voting rights in the Company following the issue of the Placing Shares and Agreement Shares will therefore be 284,993,582. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

**ENDS**

For further information visit www.africanpotash.com or contact the following:

About African Potash

African Potash was established to invest in/acquire potash assets or projects in sub-Saharan Africa. The Directors believe the fundamentals of the global potash market, a key source of potassium fertiliser, represent a compelling opportunity to create shareholder value.

The Company is currently focussed on the Lac Dinga Project in the Republic of Congo and has a highly experienced Board with a proven track record in identifying, operating and developing resource projects in Africa.

Notes

This announcement is for information purposes only and shall not constitute an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Cantor Fitzgerald Europe ("Cantor") is authorised and regulated in the United Kingdom by the Financial Conduct Authority and acting as Nominated Adviser and Corporate Broker to the Company in respect of the Placing.

Cantor is acting for the Company and for no-one else in connection with the Placing, and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Cantor nor for providing advice in connection with the Placing or any other matters referred to herein.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by Cantor or by any of its affiliates or agents or brokers as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

The distribution of this announcement and the Placing in certain jurisdictions may be restricted by law. No action has been taken by the Company or Cantor that would permit the Placing or possession or distribution of this announcement or any other offering or publicity material relating to the Placing in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement becomes available are required by the Company and Cantors to inform themselves about, and to observe, such restrictions.