African Potash Regulatory News (AFPO)

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

22 April 2016

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

Operational Update

African Potash, the AIM listed exploration company focused on the vertical integration of fertiliser operations in Africa and Sub-Saharan potash assets, announces an update in connection with its fertiliser trading activities.

As announced on 6 January 2016 and in the subsequent announcements on 9 February 2016, and 29 March 2016, the Company agreed to supply 20,000Mt of urea to a customer (the 'Original Customer'), introduced by COMESA, in partial satisfaction of the sale agreement announced on 1 October 2015. The Company has an agreement to draw-down on inventory held in Lusaka, Zambia, to be able to immediately satisfy any off-take required by the Original Customer. To date, no draw-down requests have been received and the Company understands that the Original Customer is still awaiting confirmation of order from its customers.

The Company is pleased to announce that on 21 April 2016, the Company signed a participation agreement with Safyr Commodities ("Safyr") which in turn has secured conditional sales agreements with one of Zambia's leading fertiliser distributors, Nyiombo Investments Ltd ("Nyiombo"), for 50,000Mt in aggregate, of urea and NPK (the "Offtake"). Under the participation agreement, the Company will be paid a fee of 25% of the Net Income received by Safyr, up to a maximum of US$4 million. Net Income is defined as the net margin received by Safyr under the Offtake before deducting any associating financing costs. Delivery is contracted to take place by 31 July 2016, with any fee being paid to the Company being subject to Safyr and Nyiombo successfully concluding delivery and payment in accordance with the sales agreement. Safyr is jointly owned by Mr Neverl Kambasha and the Safyr Group in Mauritius.

The drought currently affecting much of southern Africa has had a marked impact on the fertiliser market and in particular the demand for urea in Zimbabwe. The agreement with Windmill (Pvt) Ltd originally announced on 11 December 2015 has been terminated. The Company's supplier, Beryl Holdings Pty Limited, has withdrawn the inventory held on consignment. No further sales or liabilities are expected to arise following the termination of the agreement.

The Company continues to build a promising pipeline of supply opportunities within its relationship with COMESA. The Company will make further announcements when appropriate.

African Potash Executive Chairman Chris Cleverly said: "I am pleased to provide an update on our fertiliser trading activities at a time of considerable flux within the southern African fertiliser market due to the drought conditions prevalent within the region. However, despite the current market drivers in the fertiliser industry, we are confident that the fundamentals remain highly attractive, and building on our relationship with COMESA, we are well positioned to capitalise on the demographics which point towards the critical need for increased food production and fertiliser provision across sub-Saharan Africa."

"With the lateness and lack of rains in the region and the onset of drought and state of emergency in some nations, there have been delays with some trades, however, this has worked so as to reduce the number of competitors in the market and the need to develop agriculture in the region has only increased which means that our partnership with African Potash has increased in strategic importance" said Neverl Kambasha.

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

About African Potash

African Potash is an AIM quoted company focussed on building a vertically integrated platform for the mining, production and distribution of fertiliser, primarily within Africa.

The Company has a trading agreement with the Common Market for Eastern and Southern Africa ('COMESA'), a free trade union for twenty African member states, to supply and deliver fertiliser to off-takers identified and introduced by COMESA.

The Company also operates the Lac Dinga Project in the Republic of Congo, which is prospective for potash, and currently subject to licence renewal.