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African Potash Limited, the AIM listed African exploration company, has announced its results for the six months ended 31 December 2013.
Chairman’s Statement:
The Company’s focus continues to be on its 70% interest in the Lac Dinga Potash Project (‘Lac Dinga’ or ‘the Project’), located in a world-class potash-bearing region in the south-west of the Republic of Congo. The Board believes Lac Dinga could be a strategically important asset, which has the potential to combine significant sylvinite tonnage at attractive depths with solid infrastructure, proximity to a port, and relatively cheap energy, demonstrating its potential to add significant value to the Company and to become another high value potash asset in the region.
The focus during the period under review has been to collate the appropriate information in order to launch a successful and efficient exploration programme at Lac Dinga. This has involved the joint acquisition of historic data with Elemental Minerals Limited (‘Elemental’), which is developing the Sintoukola Potash Project (‘Sintoukola’) on the contiguous licence to Lac Dinga. This historic information has facilitated the Company’s evaluation of the Project area for drilling targets during future exploration activities. Furthermore, the appointment of CSA Global as lead technical consultants provides the Company with knowhow and expertise, as the team can draw on their experience of developing Sintoukola, to advance Lac Dinga. In tandem with this, the appointment of Dr. Simon Dorling, an exploration and structural geologist to our Board provides further invaluable expertise as he recently, as a Competent Person, helped develop and delineate Sintoukola from a conceptual target to classified resource stage.
With the intention of refining the Company’s targeting criteria of the Project, post period end, African Potash acquired exploration seismic data to constrain areas for drilling and support the advancement of its on-ground exploration activities. A total of 415 line kilometres of recent oil industry standard regional 2D seismic data covering about 470km2 on and around the Lac Dinga licence area was acquired in March 2014, together with data for two historic oil exploration boreholes. This data allows for the identification of drill targets, providing a solid platform for the next stage of exploration. The Company is also pleased to announce that the Ministry of the Environment has fully approved the terms of reference for our Environmental and Social impact assessment in connection with the exploration programme submitted.
Financial Results
The Group is reporting a loss attributable to equity shareholders of USD 554,000 (2012: profit of USD 1,153,000 following the write back of an impairment provision of USD 1,441,000). At 31 December 2013 cash balances were USD 2,563,000 (30 June 2013: USD 3,488,000).
Outlook
We remain confident that Lac Dinga has the potential to deliver significant value to shareholders through the application of a systematic exploration campaign. Whilst drilling has not commenced according to our original schedule, we believe that the information and data we have now obtained, combined with the interpretations made from it, will allow us to develop a more cost effective and efficient exploration programme. Planning for this has now begun. This combined with the approval of the Terms of Reference for our Environmental and Social impact assessment by the Ministry of the Environment leads us to expect commencement of our drilling campaign during the dry season of 2014. Further news regarding our exploration plans will be made to the market in due course.
In respect of Lac Dinga in the wider context of the region, the inherent value of this asset remains attractive to parties wanting exposure or access to potash. As previously reported, the A$190 million offer for Elemental by Hong Kong based Dingyi Group Investment Limited (‘Dingyi’) highlighted the strategic status of potash exploration licences in this basin of coastal Republic of Congo. Whilst the planned takeover has been terminated due to regulatory protocols on the Stock Exchange of Hong Kong, Dingyi remains a significant shareholder of Elemental and has reiterated its support for the development of Sintoukola, Elemental’s flagship project. The Board therefore are confident this region will continue to be an area of interest for many international corporates and governments looking for access to a low cost potash asset.
I would like to thank both our shareholders and our team for their support and look forward to providing updates on the Company’s activities as we look to further our position as an emerging potash exploration and development company.
Jean-Pierre Conrad
Chairman
31 March 2014
