AMN - REP OF CONGO: African Potash in fertiliser supply deal

African Potash, the AIM-listed exploration company focused on the vertical integration of fertiliser operations in Africa and Sub-Saharan potash assets, has signed a fertiliser supply agreement with Rockwell Fertilisers, a supplier and distributor of fertilisers in Zambia.

African Potash will supply Rockwell with fertiliser products (NPK and urea) to be sold on to prospective buyers, namely retail outlets who sell fertilisers to farmers in Zambia. This is supported by the Common Market for Eastern and Southern Africa (COMESA), with whom African Potash has an existing agreement, and Nutri-Aid Trust, a Zambian non-profit enterprise, with whom African Potash has a trading agreement to sell Urea and other fertiliser products to Nutri-Aid’s supply network, which includes over 2,500 agro-outlets certified by COMESA and managed by Nutri-Aid (with each outlet serving on average 300 farmers each).

Under the agreement it is anticipated that the value and quantity of each order will vary in accordance with buyer demand. African Potash will receive an up-front payment of 50% of the total order value for each purchase by prospective customers. Payment for the remaining 50% of the total order value due to African Potash will be required on or before the day falling 45 days after the relevant invoice has been issued, as is customary for purchase agreements of this nature. African Potash would need to meet the costs of purchases of stock made from its suppliers.

In consideration for introducing and arranging new customers Rockwell will receive 30% of the net profit generated from sales of fertiliser products under this agreement (net profit is the selling price minus the supply price, which includes supply chain costs incurred in the sourcing, storage and movement of fertiliser). The company will retain the remaining 70%. The agreement is valid for a minimum of 12 months and shall be subject to quarterly reviews. This agreement is in settlement of the previously announced agreement for the supply of 20,000 t of Urea to a customer introduced by COMESA.

African Potash executive chairman Chris Cleverly says: “We are delighted to have further strengthened our trading presence in Zambia and the southern African region through the signing of this trading agreement with Rockwell, which complements our recently announced trading agreement with Nutri-Aid. With a number of strategic partners in place through whom we can secure off-take agreements for the purchase of our fertiliser product, and the results of this strategy already showing success, I believe African Potash is well set for continued growth.”

African Potash is focussed on building a vertically integrated platform for the mining, production and distribution of fertiliser, primarily within Africa. It has a trading agreement with COMESA, a free trade union for twenty African member states, to supply and deliver fertiliser to off-takers identified and introduced by COMESA. It also operates the Lac Dinga project in the Republic of Congo, which is prospective for potash.

http://africanpotash.com

News courtesy of International Mining