Unsecured Bridge Loan

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

2 December 2015

African Potash Limited ('African Potash' or 'the Company')Unsecured Bridge Loan

African Potash, the AIM listed exploration company focused on sub-Saharan potash assets and the vertical integration of fertiliser operations in Africa, announces that it has signed an agreement for a bridge loan with a term of 9 months for an amount of £750,000 ('Bridge Loan') from Katrina Clayton, the wife of Neil Clayton, the CFO of the Company. A fee of £60,000 (8% of the loan amount) applies to the Bridge Loan and results in a total amount of £690,000, which may be drawn down with immediate effect.

The Bridge Loan will provide funding to the Company to bridge its short term working capital requirements for the next 3 months. If the Company is not able to generate sufficient cash-flows from its trading operations after that three month period to cover its ongoing working capital requirements, then further funding will be required.

An interest rate of 1.5% per month over the 9 month term is charged on the Bridge Loan and is payable in arrears on the amount of the loan outstanding at the start of each month. The Bridge Loan will be repaid in full on the earlier of 1 September 2016, completion by the Company of an equity financing which raises more than £1.5m and completion of any non-trade finance debt financing. In the event that the Company fails to make any payment of interest due under the Bridge Loan, a penalty of 1% per week will apply on any unpaid interest amount and will accrue daily.

In the event of default under the provisions of the Bridge Loan (including a failure to make interest payments), the lender may require the Company to conduct a placing (at a 30% discount to the share price on the day preceding the date on which an application is made for admitting the placing shares to trading) to raise funds to satisfy all outstanding sums plus an additional facility fee of 5%, or elect to convert all sums then due into new ordinary shares in the capital of the Company (at a price per share equal to 90% of the lowest daily VWAP of the 20 trading days preceding the date of the conversion request).

The Bridge Loan is deemed to be a related party transaction pursuant to AIM Rule 13. The Independent Directors of the Company, having consulted with Cantor Fitzgerald Europe, its nominated adviser, consider that the terms of the Bridge Loan are fair and reasonable in so far as its shareholders are concerned. 

African Potash Executive Chairman Chris Cleverly said, "This bridge funding enables us to continue to make progress in the transformation of our business and illustrates the faith and commitment of senior management and their families to this project, as we remain focused on the roll-out of our integrated fertiliser operations across Africa. With funding in place to cover our short term requirements we look forward to finalising our trade finance facility, which we continue to negotiate in order to secure up to US$50m of funding to support the trading strategy. Further details will be provided on this as and when appropriate."

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