Back to all announcements

DJ African Potash Ltd Final Results

TIDMAFPO

RNS Number : 1125T

African Potash Ltd

30 December 2016

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

30 December 2016

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

Final Results

African Potash Limited, the AIM and ISDX traded exploration company focussed on the vertical integration of fertiliser operations in Africa and sub-Saharan potash assets, is pleased to announce its final results for the year ended 30 June 2016.

Copies of the Annual Report and Accounts for the year ended 30 June 2016 will be posted to shareholders on 30 December 2016 and will also be available on the Company's website at www.africanpotash.com.

Chairman's Statement:

The year under review has seen the development of our strategy to position the Group as a significant operator in the African fertiliser industry. African Potash has a majority interest in the Lac Dinga Potash Project in the Republic of Congo ('the Project' or 'Lac Dinga') which we believe to be a potential world class potash asset in its own right and has laid the foundations to unlock the short term fundamentals of the African fertiliser market.

Fertiliser trading

In August 2015 African Potash entered into a trading agreement with the Common Market for Eastern and Southern Africa ('COMESA') with a view to creating a vertical platform for the mining, production and distribution of fertiliser, focussed on the COMESA region and beyond.

In order to capitalise upon the opportunities the relationship with COMESA brought about, the Company entered into an agreement with Beryl Holdings Pty Limited ('Beryl Holdings'), a South African investment firm in December 2015, to collaborate and strengthen its fertiliser trading and delivery capabilities.

In January 2016, the Company entered into a contract, introduced by COMESA, to supply 20,000Mt Urea to a Zambian distributer of fertiliser, Rockwell Fertilisers Limited ('Rockwell'). In April 2016, the Company signed a participation agreement with Safyr Commodities Limited (formally Beryl Holdings) which in turn has secured conditional sales agreements with one of Zambia's leading fertiliser distributors, Nyiombo Investments Ltd ("Nyiombo"), for 50,000Mt NPK. The end user of both of these distributors is the Zambian government. Neither Rockwell nor Nyiombo have been able to secure these trades in a trading season where market demand patterns were significantly influenced by the most severe drought to affect the region in 35 years, as a result of El Nino, and uncertainties surrounding Zambian elections and government procurement programs.

Considerable resource and expenditure were incurred in pursuing these contracts together with opportunities under other MOUs previously announced, although the revenue generated has been minimal. The board is now confident of the strategy of moving into fertiliser distribution and has identified a number of revenue generating opportunities.

In June 2016, the Company announced that it had it has signed a non-binding Memorandum of Understanding ('MoU') with the Government of Uganda to support the development of a fertiliser industry in Uganda, which will seek to help ensure the availability and effective distribution of fertilisers to Ugandan farmers.

Since the year end we have commenced deliveries direct to agri-dealers under agreements with Nutri-Aid Trust ('Nutri-Aid') and Zambia Co-Operative Federation ('ZCF').

We commenced pilots with Nutri-Aid, which includes over 2,500 agro-outlets certified by COMESA, with a credit based model whereby the agri-dealers within the Nutri-Aid network could pay 50% upon collection and the balance within 45 days. The credit, on roll out, is financed under an agreement with Rockwell. The pilot revealed that the credit risks were not viable and the credit model has been stopped. The Company has since recovered the credit advanced to a material extent.

Sales under the agreement with ZCF are under the umbrella of the Zambian government e-voucher scheme, whereby subsidies are given direct to the individual farmer by means of an electronic-voucher on a pre-paid card.

Lac Dinga

African Potash retains its interest in the exploration side of the fertiliser industry through its 70% interest in La Société des Potasses et des Mines S.A. ('SPM'), which holds the exclusive right to conduct exploration activities for potash salts over the Lac Dinga Project in the highly prospective Kouilou region in the Republic of Congo. The licence was renewed for two years on 25 April 2016 and under the mining code may be renewed for a further two years thereafter.

Whilst the Project is still at an early stage of exploration, a drilling campaign undertaken in Q3 2014 confirmed the presence of multiple potash seams at depths of about 300m to 420m below the surface, and the results generated suggested the potash mineralisation to be characteristic of similar commercial deposits in the Congolese coastal basin.

During the course of the year, global potash prices have continued to falll, an indication of impairment. Although the Board believe that the Project, like others in the basin, will have lower production costs than other global producers, some of whom may be marginal at these levels, it has conducted an impairment review and has decided to retain its valuation at last year's level of $10m. Consequently exploration expenditure in the year of $0.8m has been impaired.

The Company is currently seeking partners to farm in to the next phase of exploration in order to meet its obligations to conduct further exploration activity prior to the next renewal date in April 2018 and to realise value from Lac Dinga as part of its integrated fertiliser model. The success of the initial program has significantly de-risked the project and underlined the potential for the establishment of an economic resource in the project area.

Board Appointments

In order to execute this strategy, it is important to have a team in place with the knowledge and influence to help develop our growth objectives. With this in mind, we have built a Board with exemplary commodities and African business experience, and perhaps more importantly, a deep and intimate knowledge of doing business in Africa. In October 2015, the Company announced the appointment of Mr Elias Pungong, in November 2015 the Rt Hon Mark Simmonds and Mr Declan O'Brien were appointed and in December 2015 the Rt Hon Lord Peter Hain joined the Board; providing us with a Board comprising pre-eminent figures in the worlds of politics, finance, and business.

As part of this restructured Board, Ed Marlow and Jean-Pierre Conrad, both of whom played a significant role in developing the Lac Dinga project, left the Company to concentrate on their other business interests in October 2015. We would like to extend our thanks again for their commitment shown and wish them the very best in their future endeavours.

Financial Results

The Company is reporting a loss for the year of $6.1m compared with a loss of $8.8m in the prior year. Following the impairment charge in respect of Lac Dinga of $0.8m, (2015: $7.5m), and share based payment charges of $2.8m, (2015: $0.4m) the underlying loss before tax is $2.5m, (2015: $0.9m). The increase may be attributed to the expenditure and losses incurred of $1.4m in establishing the fertiliser trading business, additional central costs of $0.1m and additional finance costs of $0.1m. Net Assets have fallen to $7.9m (2015: $9.5m) and at 30 June 2016, cash balances were $0.3m (2015: $0.6m).

Outlook

The agreement with COMESA marked a milestone development in the establishment of the Company's fertiliser operations, giving the Company an entry into the trading sectors of the fertiliser industry to complement its established exploration interests thereby implementing part of its strategy to create a vertical platform for the production and distribution of fertiliser.

The Nutri-Aid program is being relaunched with local community warehouses providing the distribution platform and the e-voucher scheme has moved from the pilot stage with the program now being rolled out by the Zambian government. We expect to see the volumes traded through these programs to grow significantly in 2017.

The movement of government subsidy programs from government purchases and distribution to a technology based e-voucher farmer centric model is gaining traction, with Uganda recently announcing that they will be introducing such a scheme supported by the World Bank. With our MOU with the Ugandan Government and experience in Zambia, once appropriately funded, we are well placed to take advantage of the growth opportunity these programs present as they are rolled out.

Africa has 20% of the world's population, 65% of its uncultivated arable land, 40% of its surface water yet consumes only 2% of world fertiliser usage. Shortages of fertiliser, and pricing which make fertiliser prohibitively expensive, mean that land is not being effectively utilised; accordingly much of Africa remains reliant on external sources of food, when this great continent could become the world's breadbasket. African Potash has the potential to be an important player in Africa's fertiliser market - benefitting the continent and in the process, the Company's shareholders.

Finally, I would like to thank my team both in London and in Africa for their work and commitment. I would also like to thank shareholders for their on-going support and look forward to keeping the market updated with our progress in the New Year.

Chris Cleverly

Executive Chairman

28 December 2016

CONSOLIDATED INCOME STATEMENT

(MORE TO FOLLOW) Dow Jones Newswires

December 30, 2016 11:18 ET (16:18 GMT)

DJ African Potash Ltd Final Results -2-

For the year ended 30 June 2016

 
                                                 Year       Year 
                                                ended      ended 
                                              30 June    30 June 
                                                 2016       2015 
                                      Note      $'000      $'000 
                                     -----  ---------  --------- 
 
 Revenue                                           59          - 
 Cost of sales                                   (44)          - 
                                            ---------  --------- 
 Gross profit                                      15          - 
 
 Operating expenses                           (5,078)    (1,238) 
 Impairment of evaluation 
  and exploration costs                2        (758)    (7,464) 
 Other losses                                    (47)          - 
                                       3 
                                            ---------  --------- 
 Operating loss                               (5,868)    (8,702) 
 
 Finance expense                                (202)      (134) 
 
 Loss before taxation                         (6,070)    (8,836) 
 
 Income tax expense                                 -          - 
 
 Loss for the year                            (6,070)    (8,836) 
                                            =========  ========= 
 
 Attributable to : 
 Owners of the parent company                 (6,070)    (7,219) 
 Non-controlling interests                          -    (1,617) 
                                              (6,070)    (8,836) 
                                            =========  --------- 
 
 Loss per share - basic 
  and diluted (cents) 
 - attributable to owners 
  of the parent company                4      (0.76c)    (1.97c) 
 - attributable to non-controlling 
  interests                            4            -    (0.44c) 
                                            =========  ========= 
 

All results relate to continuing activities.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2016

 
                                         Year       Year 
                                        ended      ended 
                                      30 June    30 June 
                                         2016       2015 
                                        $'000      $'000 
                                    ---------  --------- 
 Loss for the year                    (6,070)    (8,836) 
 Items that may be reclassified 
  subsequently to the income 
  statement: 
 - Foreign exchange translation 
  differences                            (27)      (574) 
 Other comprehensive (loss) 
  / income for the year                  (27)      (574) 
 Total comprehensive loss for 
  the year                            (6,097)    (9,410) 
                                    =========  ========= 
 
 Attributable to owners of 
  the parent company                  (6,097)    (7,793) 
 Attributable to non-controlling 
  interests                                 -    (1,617) 
                                      (6,097)    (9,410) 
                                    =========  ========= 
 

There is no taxation arising on other comprehensive income

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2016

 
                                              2016       2015 
                                   Note      $'000      $'000 
                                  -----  ---------  --------- 
 
 ASSETS 
 Non-current assets 
 Intangible assets: exploration 
  activities                        5       10,000     10,000 
 Investment in quoted                           47          - 
  companies 
 Property plant and equipment                  111        131 
 
 Total non-current assets                   10,158     10,131 
                                         ---------  --------- 
 
 Current assets 
 Trade and other receivables                    76         99 
 Cash and cash equivalents                     298        571 
                                         --------- 
 Total current assets                          374        670 
                                         ---------  --------- 
 
 TOTAL ASSETS                               10,532     10,801 
                                         ---------  --------- 
 
 LIABILITIES 
 Current liabilities 
 Trade and other payables                    (829)      (530) 
 Loan note                                 (1,004)          - 
 Deferred consideration                      (800)      (800) 
                                         ---------  --------- 
 Total current liabilities                 (2,633)    (1,330) 
                                         ---------  --------- 
 
 
 NET ASSETS                                  7,899      9,471 
                                         =========  ========= 
 
 EQUITY 
 Issued capital                     6       17,531     15,864 
 Shares to be issued                         2,800      2,800 
 Share based payment reserve                 2,637      1,141 
 Foreign exchange translation 
  reserve                                    (623)      (596) 
 Retained earnings                        (15,976)   (11,268) 
 
 Total equity attributable 
  to the owners of the parent 
  company                                    6,369      7,941 
 Non controlling interests                   1,530      1,530 
 
 TOTAL EQUITY                                7,899      9,471 
                                         =========  ========= 
 
 
 
                                     Attributable to owners of the parent 
                                                    company 
                    ---------------------------------------------------------------------- 
 CONSOLIDATED                                                Foreign 
 STATEMENT                       Shares   Share-based       exchange 
 OF CHANGES IN       Share        to be       payment    translation    Retained             Non-controlling 
 EQUITY               capital    issued       reserve        reserve    earnings     Total          interest     Total 
                        $'000     $'000         $'000          $'000       $'000     $'000             $'000     $'000 
                    ---------  --------  ------------  -------------  ----------  --------  ----------------  -------- 
 
   Balances at 1 
   July 
   2014                13,897     2,800           356           (22)     (4,049)    12,982             3,147    16,129 
 Loss for the year          -         -             -              -     (7,219)   (7,219)           (1,617)   (8,836) 
 Other 
 comprehensive 
 income 
 Exchange 
  translation 
  differences on 
  foreign 
  operations                -         -             -          (574)           -     (574)                 -     (574) 
                    ---------  --------  ------------  -------------  ----------  --------  ----------------  -------- 
 Total 
  comprehensive 
  income for the 
  year                      -         -             -          (574)     (7,219)   (7,793)           (1,617)   (9,410) 
 
 Transactions with 
  owners 
 Issue of shares        1,967         -             -              -           -     1,967                 -     1,967 
 Share based 
  payment 
  charge                    -         -           785              -           -       785                 -       785 
 Total 
  transactions 
  with owners           1,967         -           785              -           -     2,752                 -     2,752 
 
 Balance at 30 
  June 
  2015                 15,864     2,800         1,141          (596)    (11,268)     7,941             1,530     9,471 
 
 Loss for the year          -         -             -              -     (6,070)   (6,070)                 -   (6,070) 
 Other 
 comprehensive 
 income 
 Exchange 
  translation 
  differences on 
  foreign 
  operations                -         -             -           (27)           -      (27)                 -      (27) 
                    ---------  --------  ------------  -------------  ----------  --------  ----------------  -------- 
 Total 
  comprehensive 
  income for the 
  year                      -         -             -           (27)     (6,070)   (6,097)                 -   (6,097) 
 
 Transactions with 
  owners 
 Issue of shares        1,667         -             -              -           -     1,667                 -     1,667 
 Lapse/exercise of 
  share based 
  payments                  -         -       (1,362)              -       1,362         -                 -         - 
 Share based 
  payment 
  charge                    -         -         2,858              -           -     2,858                 -     2,858 
                    ---------  --------  ------------  -------------  ----------  --------  ----------------  -------- 
 Total 
  transactions 
  with owners           1,667         -         1,496              -       1,362     4,525                 -     4,525 
 
 Balance at 30 
  June 
  2016                 17,531     2,800         2,637          (623)    (15,976)     6,369             1,530     7,899 
                    =========  ========  ============  =============  ==========  ========  ================  ======== 
 

CONSOLIDATED CASH FLOW STATEMENT

(MORE TO FOLLOW) Dow Jones Newswires

December 30, 2016 11:18 ET (16:18 GMT)

DJ African Potash Ltd Final Results -3-

For the year ended 30 June 2016

 
 
                                               Year ended        Year 
                                                  30 June       ended 
                                                              30 June 
                                                     2016        2015 
                  Note                              $'000       $'000 
 -------------------------------------      -------------  ---------- 
 
 Operating activities 
 Loss before tax                                  (6,070)     (8,836) 
 Adjustments for: 
 - Impairment of evaluation 
  and exploration assets                 4            758       7,464 
 - Impairment of investments                           47           - 
 - Foreign exchange                                 (113)       (192) 
 - Share based payment                              3,010         391 
 - Finance expense                                    202         134 
                                            ------------- 
 Operating cash flow before movements 
  in working capital                              (2,166)     (1,039) 
 Working capital adjustments: 
 - Decrease / (increase) 
  in receivables                                       23         (9) 
 - Increase / (decrease) 
  in payables                                         302         155 
 
 Cash used in operations                          (1,841)       (893) 
 Finance expense                                    (202)       (134) 
 
 Net cash used in operating 
  activities                                      (2,043)     (1,027) 
                                            -------------  ---------- 
 
 
 Investing activities 
 Purchase of evaluation and 
  exploration assets                                (756)     (2,689) 
 Purchase of investments                            (106)           - 
 Purchase of property, plant 
  and equipment                                      (11)       (121) 
 
 Net cash used in investing 
  activities                                        (873)     (2,810) 
                                            ------------- 
 
 Financing activities 
 Proceeds from issue of share 
  capital                                           1,515       1,758 
 Drawdown of convertible 
  loan                                                  -       1,250 
 Repayment of convertible 
  loan                                                  -       (760) 
 Drawdown of loan note                              1,127           - 
 
 Net cash from financing 
  activities                                        2,642       2,248 
                                            -------------  ---------- 
 
 Net decrease in cash and cash 
  equivalents                                       (274)     (1,589) 
 
 Cash and cash equivalents 
  at start of the year                                571       2,170 
 Effect of exchange rates 
 on cash and cash equivalents                           1        (10) 
 
 Cash and cash equivalents 
  at end of the year                                  298         571 
                                            =============  ========== 
 
 

Non cash transactions

The principal non cash transactions relate to:

 
                                                               2016    2015 
 Shares issued in settlement                                  $'000   $'000 
  of : 
 
        *    Advisory and consultancy and directors fees        152      84 
 
        *    Bergen facility fees and collateral shares           -     372 
 Share based payments                                         3,010     391 
                                                             ------  ------ 
                                                              3,162     847 
                                                             ======  ====== 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 30 June 2016

1. General Information

African Potash Limited is incorporated and domiciled in Guernsey. The nature of the Company's operations and its principal activities are set out in the Chairman's Statement.

The presentational currency of the Group is US Dollars as this reflects the Group's business activities in the fertilizer trading and resource exploration sectors in sub-Saharan Africa and therefore the Group's financial position and financial performance.

Whilst the information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRSs") as adopted by the European Union and as issued by the International Accounting Standards Board, this announcement does not itself contain sufficient information to comply with IFRSs nor constitute statutory financial statements.

The financial information is based on the statutory accounts for the financial year ended 30 June 2016. The auditors reported on those accounts: their report was (i) disclaimed on the basis of the valuation of exploration and evaluation assets (ii) included an emphasis of matter in relation to going concern, and (iii) did not contain statements where the auditor is required to report by exception.

The Company's Annual Report will be available on the Company's website by 31 December 2016.

2. Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS as adopted in the EU requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period are discussed below.

Intangible exploration and evaluation assets

In February 2013, the group purchased a 70% interest in the Lake Dinga licence which the board believes is highly prospective for commercial deposits of potash. The initial three year licence period expired on 3 December 2015 and was renewed for a further 2 years on 25 April 2016. In renewing the licence, in line with custom and practice, the Company gave up 20% of the licence area. This area was, in the main, outside the margins of the salt basin and of little prospective value. Upon expiry, the license is renewable for a further two years if the Company can demonstrate that it has continued to meet its obligations under the mining code which require it to continue exploration activity.

In December 2014, the Group announced the results of a successful proof of concept drilling campaign confirming laterally extensive potash mineralisation which is characteristic of the Congolese coastal basin and further underpins the project's potential to host significant potash deposits. In order to develop the asset and issue a maiden resource statement, the Group will need to raise additional capital to fund a comprehensive drilling programme to support a resource estimate. Under the terms of its licence, the Group is required to undertake some exploration activity in any nine month period and during the year work has commenced on planning the next phase of drilling. The planned work program which will involve drilling a further 4,000m to 5,000m is estimated to cost $8m. The board remains confident that the highly prospective nature of the asset will enable them to either bring in a strategic partner or raise the additional capital to fund these programmes.

The valuation of intangible exploration and evaluation assets is dependent upon the discovery of economically recoverable deposits which in turn is dependent upon the future potash prices, capital expenditures and environmental and regulatory restrictions. In August 2015, an independent valuation of the Group's interest in the Lake Dinga licence indicated that market conditions had resulted in a fall in value compared to that at the time of the original acquisition. Consequently in the year ended 30 June 2015 the board decided to write down the value of the asset to $10m to reflect the results of that valuation.

During the course of the year, global potash prices have continued to fall, an indication of impairment. Although the Board believe that the project, like others in the basin, will have lower production costs than other global producers, some of whom may be marginal at these levels, it has conducted an impairment review. The review also focused on the implied values of comparable early stage projects in the republic of Congo which are attracting new investment. The board has decided to retain its valuation at last year's level of $10m. Consequently exploration expenditure and the associated administrative costs in the year of $0.8m has been impaired.

Management's critical judgements in determining the value of assets, liabilities and equity within the financial statements relate to the valuation of intangible exploration and evaluation assets of $10m (post impairment) (2015: $10m post impairment), the timing volume and margins of anticipated trading contracts and the going concern assumptions.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the period in which the estimates are revised or in future periods if applicable.

Share based payment

The fair value of options and warrants granted is determined using the Black-Scholes option pricing model. Input assumptions, are by their nature judgemental and small variations in input assumptions can lead to different valuations.

Going concern

As indicated above, current cash resources and anticipated cash flows from trading activities are not sufficient to enable the Group to complete a full evaluation of the Lac Dinga project or to continue to invest in exploration activities in order to meet its obligations under the licence.

(MORE TO FOLLOW) Dow Jones Newswires

December 30, 2016 11:18 ET (16:18 GMT)

DJ African Potash Ltd Final Results -4-

During the year the Group commenced fertiliser trading operations. These are subject to commodity price and foreign exchange fluctuations, credit risk, together with the practical and logistical challenges of operating in sub-Saharan Africa. Policies are in place to address these risks.

The board has prepared forecasts for the Group covering the period to 31 December 2017. The principal assumption is that fertiliser trading will pick up during 2017, with the Group scaling up deliveries direct to local Agro dealers in Zambia as well as working with the government of Uganda to develop its fertiliser industry.

The start-up of trading operations has incurred significant losses to date. However the group has developed a pipeline of opportunities and the board is confident that it will be able to conclude new contracts which will be cash generative. Without these improvements to trading cash-flows the group will need to raise additional finance either through borrowing or the issue of new equity.

The Company is in meaningful discussions with a new Nominated Adviser. Should the Company not be able to appoint a new Nominated Advisor, then its shares will cease to be traded on AIM. Although its shares will continue to be traded on ISDX, it is possible that the Company will find it more difficult to raise additional equity finance.

Notwithstanding the above uncertainty, the directors are confident that with the additional loan capital announced at the date of this report, together with an anticipated equity raise of up to $0.6m, current cash and forecasted cash flows from the trading operations, there will be sufficient cash resources to enable the Group to pay debts as they fall due and to continue its operations for the foreseeable future and thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements. The board will not commit to a major exploration programme without raising sufficient finance to fund the planned expenditure.

3. Segment reporting

As set out in the chairman's statement, the directors consider that the Group's activities comprise the segments of fertiliser trading and potash exploration and other unallocated expenditure in one geographical segment, Africa.

Revenue represents sales to external customers. Unallocated expenditure relates to central costs and any items of expenditure that can not be directly attributed to an individual segment.

 
 Year ending                 Trading   Exploration   Unallocated     Total 
  30 June 2016 
                               $'000         $'000         $'000     $'000 
                            --------  ------------  ------------  -------- 
 
 Revenue                          59             -             -        59 
                            --------  ------------  ------------  -------- 
 Segment results 
 - Operating 
  loss                       (1,385)             -       (3,678)   (5,063) 
 - Impairment                      -         (758)          (47)     (805) 
 - Interest expense                -             -         (202)     (202) 
                            --------  ------------  ------------  -------- 
 Loss before 
  tax                        (1,385)         (758)       (3,927)   (6,070) 
                            --------  ------------  ------------  -------- 
 
 Income tax                        -             -             -         - 
                            --------  ------------  ------------  -------- 
 Loss after tax              (1,385)         (758)       (3,927)   (6,070) 
                            ========  ============  ============  ======== 
 
 
 Year ending                 Trading   Exploration   Unallocated     Total 
  30 June 2015 
                               $'000         $'000         $'000     $'000 
                            --------  ------------  ------------  -------- 
 
 Revenue                           -             -             -         - 
                            --------  ------------  ------------  -------- 
 Segment results 
 - Operating 
  loss                             -             -       (1,238)   (1,238) 
 - Impairment                      -       (7,464)             -   (7,464) 
 - Interest expense                -             -         (134)     (134) 
                            --------  ------------  ------------  -------- 
 Loss before 
  tax                              -       (7,464)       (1,372)   (8,836) 
 
 Income tax                        -             -             -         - 
                            --------  ------------  ------------  -------- 
 Loss after tax                    -       (7,464)       (1,372)   (8,836) 
                            --------  ------------  ------------  -------- 
 
 
 

4. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

 
                                             2016          2015 
                                            $'000         $'000 
                                     ------------  ------------ 
 Loss for the purposes of 
  basic earnings per share 
 - attributable to owners 
  of the parent company                   (6,070)       (7,219) 
 - attributable to non-controlling 
  interests                                     -       (1,617) 
                                     ------------  ------------ 
 
 Number of shares 
 
 Weighted average number 
  of ordinary shares for the 
  purposes of basic and diluted 
  loss per share                      794,037,824   366,026,873 
                                     ------------  ------------ 
 
 Loss per share 
 - attributable to owners 
  of the parent company                   (0.76c)       (1.97c) 
 - attributable to non-controlling 
  interests                                     -       (0.44c) 
                                     ------------  ------------ 
 

Due to the loss incurred during the year, there is no dilutive effect of share options.

 
 5. Intangible assets                     Evaluation 
                                     and exploration 
                                               costs 
                                               $'000 
 At 1 July 2014                               14,523 
 Additions                                     3,248 
 Impairment provision                        (7,464) 
 Exchange rate adjustment                      (307) 
 At 1 July 2015                               10,000 
 Additions                                       785 
 Impairment provision                          (758) 
 Exchange rate adjustment                       (27) 
 At 30 June 2016                              10,000 
                                   ================= 
 
 

Evaluation and exploration costs are capitalised in accordance with IFRS6

The asset comprises the Lac Dinga exploration licence in the Republic of Congo held by La Societé des Potasses et des Mines SA ("SPM") in which the Group has a 70% interest. The initial three year licence period expired on 3 December 2015 and was renewed for a further 2 years on 25 April 2016. In renewing the licence, in line with custom and practice, the Company gave up 20% of the licence area. This area was, in the main, outside the margins of the salt basin and of little prospective value. Upon expiry, the license is renewable for a further two years if the Company can demonstrate that it has continued to meet its obligations under the mining code which require it to continue exploration activity. Planning for the next phase of exploration is underway and the board continues to seek partners to enable it to develop the project.

In August 2015, an independent valuation of the Group's interest in the Lake Dinga licence indicated that market conditions had resulted in a fall in value compared to that at the time of the original acquisition. Consequently in the year ended 30 June 2015 the board decided to write down the value of the asset to $10m to reflect the results of that valuation. During the course of the year, global potash prices have continued to fall, an indication of impairment Although the Board believe that the project, like others in the basin, will have lower production costs than other global producers, some of whom may be marginal at these levels, it has conducted an impairment review and has decided to retain its valuation at last year's level of $10m. Consequently exploration expenditure and the associated administrative costs in the year of $0.8m has been impaired.

6. Share capital

 
                               Authorised. 
                                 allotted 
                              and fully paid 
 Ordinary shares of no       Number 
  par value                               $'000 
 
 At 1 July 2014            284,993,582   13,897 
 Issue of shares           458,849,061    1,967 
 At 30 June 2015           743,842,643   15,864 
 Issue of shares           145,120,715    1,667 
                          ------------  ------- 
 At 30 June 2016           888,963,358   17,531 
                          ============  ======= 
 

The Company has one class of ordinary share which carries no right to fixed income.

On 8 August 2014 6,330,613 shares were issued at 3.5p in connection with the Bergen facility. A further 1,417,686 shares were issued at 3.5p in settlement of advisory fees.

The following shares were issued upon the conversion of Bergen Convertible Securities during the prior year ending 30 June 2015:

 
 Date            Number of Shares   Issue price 
 12 September 
  2014                  4,889,914          2.5p 
 20 November 
  2014                  3,709,138          1.7p 
 20 January 
  2015                  8,099,512          0.8p 
 12 March 
  2015                  9,402,198          0.6p 
 
 

On 21 April 2015 and 22 May 2015 425,000,000 shares were issued for cash at 0.3p to redeem the outstanding loan notes under the Bergen facility and to fund the working capital requirements of the group.

(MORE TO FOLLOW) Dow Jones Newswires

December 30, 2016 11:18 ET (16:18 GMT)

DJ African Potash Ltd Final Results -5-

On 11 August 2015 11,641,303 shares were issued in settlement of non-executive directors' fees at a price of 0.55p.

On 8 September 2015 10,000,000 shares and 25 September 10,000,000 shares were issued following the exercise of warrants at 0.3p.

On 8 September 2015 1,250,000 shares were issued at 3.15p in settlement of advisory fees.

On 12 January 2016 48,529,412 shares were issued at 1.7p to fund the working capital requirements of the group.

On 27 June 2016 63,700,000 shares were issued at 0.3p following the exercise of warrants by Bergen

7. Post balance sheet events

On 1 September, the Company raised GBP500,000 by way of a placing to fund its on-going working capital requirements. In addition it agreed to extend the term of its GBP750,000 loan note for a further 12 months to 1 September 2017.

On 28 December 2016, the Company agreed to draw down an additional $185,000 on similar terms to the existing loan note.

* * ENDS * *

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

 
                                          +44 (0) 20 7408 
Chris Cleverly   African Potash Limited    9200 
                 Peterhouse Corporate     +44 (0) 20 7469 
Guy Miller        Finance Limited          0930 
 

Market Abuse Regulations (EU) No. 596/2014

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR MMMFZVGDGVZM

(END) Dow Jones Newswires

December 30, 2016 11:18 ET (16:18 GMT)