JOHANNESBURG (miningweekly.com) – Although it has, over the past year, worked to become a vertically integrated fertiliser business with an initial focus on trading and distribution, Aim-listed 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, it held the right to conduct exploration activities for potash salts over the 702.5 km2 Lac Dinga project area in the highly prospective Kouilou region of the Republic of Congo.
Although the initial three-year licence period had expired in December 2015 a renewal application had been filed and approval was expected to be granted in the coming months.
While the project was still at an early stage of exploration, work conducted to date had returned encouraging results regarding the potential of the project area hosting significant potash deposits, with mineralisation characteristic of similar commercial deposits in the Congolese coastal basin.
African Potash, meanwhile, said its transition into a revenue generative business with a captive, domestic and growing market for its product had been implemented after taking heed of investors' attitudes towards the traditional, and often time-consuming model of resource companies, with initial exploration followed by lengthy development phases, construction and eventually production, with numerous equity raisings and dilution underpinning these growth and development stages.
“To mitigate the downside risk associated with resource development and to provide our shareholders with near-term value in the form of revenue, African Potash adopted a new approach to building a vertically integrated fertiliser business, focussing initially on trading and distribution,” said executive chairperson Chris Cleverly said on Tuesday.
African Potash had signed a landmark trading agreement with the Common Market for Eastern and Southern Africa (Comesa) to supply and deliver fertilisers to offtakers identified and introduced by Comesa.
African Potash added that it continued to implement its strategy to deliver near-term value through development of a vertical platform for the mining, production and distribution of fertiliser.
"The size and scope of the developing agricultural sector in Africa is an area of overwhelming potential – forecasts suggest that the population of Africa will double to 2.4-billion between now and 2050,” said Cleverly.
He added that fertiliser contributed to 40% to 60% of global food supply.