African Potash announce final year results

The Company has achieved numerous milestones during the year under review and the months since. The first development, formalised in January 2013, was the formal agreement to acquire an indirect 70% interest in La Société des Potasses et des Mines S.A. (‘SPM’), which holds the exclusive right to conduct mining research activities for potash salts over the Lake Dinga license area. This area has long been the focus of our attention due to the combination of high grade sylvinite mineralisation at attractive depths, together with the extensive exploration and seismic data available from Société Nationale des Pétroles du Congo (‘SNPC’) and finally the established infrastructure in the area and its proximity to the port of Pointe-Noire, which is approximately 60km away. Together, these important fundamentals place this area of south-western Republic of Congo as a highly strategic region for potash production.

The potential of this area has been recognised by numerous other parties, and in recent years it has become one of the most exciting and prospective potash location in Africa. Our Lake Dinga project is surrounded by significant world-class potash development projects including the Sintoukola Potash deposit, owned by Elemental Minerals Limited (‘Elemental’), and the Mengo Potash Project, owned by Evergreen Resources Holdings (BVI) Ltd following its acquisition of Mag Industries Corp. Elemental’s Sintoukola Potash Project, which is contiguous to Lake Dinga, is probably the main value driver behind Hong Kong based Dingyi Group Investment Limited’s current A$190m bid for Elemental. The stratigraphy of the high grade sylvinite and carnallitite mineralisation is thought to be very similar to the stratigraphy of our own project.

With this in mind, a primary objective during the period has been on furthering our understanding of the Lake Dinga project. A key component of this has been the signing of a joint historic data acquisition and sharing agreement with Elemental, leveraging of the considerable historic data that has been compiled, for the Congo basin. This information has allowed African Potash to evaluate further the areas it plans to focus future exploration activities on and generate drill targets at Lake Dinga. Furthermore, the appointment of CSA Global, the lead consultants, used on the neighbouring Sintoukola project, as exploration consultants for Lake Dinga provides a further dimension of understanding and expertise which will be invaluable during the year ahead.

The African Potash team received a further injection of operational expertise through the appointment of Dr. Simon Dorling, an exploration and structural geologist who most recently helped develop and delineate the contiguous Sintoukola potash deposit from a conceptual target to a classified resource stage as the project’s Competent Person. This recent experience, and his on-going position as Principal Consultant with CSA Global Pty Ltd, makes Simon almost uniquely qualified to assist in the onward development of the Lake Dinga project and we were delighted to welcome him to the team as a Non-Executive Director. Together with the historic data sharing agreement with Elemental and the deployment of CSA Global, I am confident that African Potash is ideally positioned to launch a successful exploration programme in 2014,

Financial Results:

As a result of the acquisition of the Lake Dinga project, net assets have increased to $15.4m (2012: $8.1m). The acquisition also enabled the Group to reverse the impairment provision of $1.4m made in the prior year against the prefunding loan. Consequently the Group is reporting a reduced loss for the year of $0.2m (2012: $2.8m) and, at 30 June 2013, cash balances were $3.5m (2012:$ 8.2m).

Outlook:

Potash has received a great deal of publicity over recent weeks, providing significant exposure for this important commodity, which is processed and used as an agricultural fertiliser. This publicity, whilst negatively impacting on some potash producers, has highlighted the market opportunity for emerging low-cost potash explorers and developers, a niche which we believe African Potash can capitalise on as we continue to advance the Lake Dinga project in the Republic of Congo.

With attractive long-term fundamentals underpinned by increasing demand for potash from the agricultural sector, we believe that the Lake Dinga Potash Project could be one of the few remaining undeveloped commercially attractive potash projects to be held by a junior resource company. With this in mind, our focus remains centred on proving up the resource potential of this asset, and in doing so, move Lake Dinga up the value curve. We have now commissioned an Environmental and Social Impact Assessment ahead of the commencement of drilling activities in 2014, although it will be necessary to raise additional capital prior to embarking on a significant commercial exploration programme. I look forward to reporting on the advancement of our exploration efforts in due course.

I would like to thank both our shareholders and our team for their support and look forward to providing updates on the Group’s activities as we look to further our position as an emerging potash exploration and development company.