TORONTO, ONTARIO--(Marketwired - July 4, 2013) - Ethiopian Potash Corp. (the "Company" or "EPC") (TSX VENTURE:FED) is pleased to announce that the Company has received final approval from the TSX Venture Exchange ("TSXV") in respect of (1) the early exercise of the option (the "Option") to acquire G and B Central African Resources Ltd. ("G&B") which owns the Danakil Property and the forming of a joint venture (the "JV") between EPC and Danakil Potash Corporation ("Danakil Corp."); (2) EPC's acquisition from Premier African Minerals Limited ("PREM") of all the issued and outstanding shares of G and B African Resources SARL (the "Togo Acquisition"); (3) EPC's acquisition from PREM of all the issued and outstanding shares of G and B African Resources Mali SARL (the "Mali Acquisition"); and (4) all other transactions contemplated by the amended and restated master agreement dated June 3, 2013 between EPC, Danakil Holdings Limited ("JVCo") Danakil Corp., PREM, G&B and ZRH Nominees (0105) Ltd. and related matters.
The Joint Venture
Pursuant to the definitive agreements, (1) prior to early exercise of the Option, EPC transferred its rights and obligations (other than certain payment obligations) under the Option to a wholly owned subsidiary, JVCo and (2) on early exercise of the Option by JVCo, Danakil Corp. acquired a 70% interest in JVCo and EPC has retained a 30% interest in JVCo. Under the terms of the JV, Danakil Corp. will solely fund all expenditures of G&B (and any other group company of JVCo) until both (i) a scoping study is completed and (ii) it has funded project expenditures of US$7 million. After Danakil Corp. has funded such expenditures, EPC and Danakil Corp. will contribute to expenditures of G&B on a pro rata basis, subject to customary dilutive provisions in the event of any failure of a party to fund its pro rata contribution from time to time. Once a party's interest has been diluted to less than 10% (which can only occur following completion of a definitive "feasibility study" (within the meaning of Canadian National Instrument 43-101 ("NI 43-101"))), the interest shall be converted into a 1% royalty over sales revenue from potash received from JVCo (and any other group company of JVCo).
Pursuant to the definitive agreements, EPC has also satisfied an aggregate of approximately $2,873,577 of debt by the issuance of 28,735,778 common shares in the capital of EPC.
As a result of the Togo Acquisition, PREM has become a "control person" of EPC holding approximately 42% of the issued and outstanding common shares of the Company. PREM received 100,000,000 common shares of EPC in consideration for the Togo Acquisition.
Pursuant to the definitive agreements, PREM is entitled to nominate 2 directors to the board of EPC whilst PREM's shareholding remains above 30% of the issued share capital of EPC. At the meeting of shareholders held on June 30, 2013 (the "Meeting") shareholders elected, John (Ian) Stalker and David De Jong Weill (each a nominee of PREM) to hold the office of director. At the Meeting, the shareholders of EPC also elected Michael Galloro, Pam Hueston, George Roach and Anthony Vella to hold the office of director.
Pursuant to its terms, EPC and PREM have closed the Mali Acquisition in escrow. The escrow terms include a mechanism for unwinding the Mali Acquisition in the event the escrow release conditions are not satisfied. In order to satisfy the escrow release conditions, EPC must deliver to the TSXV an NI 43-101 compliant "Technical Report" and title opinions, each in a form and substance satisfactory to the TSXV. In the event that these release conditions are not satisfied by June 30, 2014, the escrow arrangements will thereafter terminate and each of EPC and PREM will re-convey or return to the other the securities and/or ownership interests that were subject to escrow, thereby effectively unwinding the Mali Acquisition. 20,000,000 common shares of EPC were issued in consideration for the Mali Acquisition.
The Company will now proceed with a name change to "AgriMinco Corp." and a change of its ticker symbol, and will update shareholders when such changes take effect.
EPC's CEO, George Roach commented "Our Company interests in potash and phosphates puts us in a leading position to favourably exploit the expanding needs for agro-minerals. Our retained interest in the Danakil Property has real value and significantly greater potential, in our opinion, than our immediate neighbours. An update on the exploration program was discussed in our Press Release of June 26th, 2013.
At the same time, our phosphate tenements in Togo immediately adjoin the State owned operating mine that currently exports some 1,4mt of phosphate annually. This is well below design capacity and the Company has initiated discussions that may lead to negotiations to share existing facilities which if successful, could result in near term production at significantly reduced capital outlay."
ABOUT ETHIOPIAN POTASH CORP.
Ethiopian Potash Corp. (TSX VENTURE:FED) is a Canadian company based in Toronto, Ontario and Addis Ababa, Ethiopia.
On behalf of the Board of Directors
George Roach, CEO & Director
This press release may contain forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. All statements that address future activities, events or developments that the Company believes, expects or anticipates will or may occur (including, but not limited to, matters relating to the Danakil Property) are forward-looking information. Forward-looking information is based upon assumptions by management that are subject to known and unknown risks and uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information. Factors that may cause actual results to vary materially include, but are not limited to changes in general economic conditions or conditions in the financial markets. Such forward-looking information is based on a number of assumptions, including but not limited to, there being no significant decline in existing general business and economic conditions. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligations to update publicly or otherwise revise any forward-looking information, except as may be required by law. For a more detailed discussion of such risks and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, refer to the Company's filings with the Canadian securities regulators available on www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Ethiopian Potash Corp.
Chief Executive Officer and Director
+44 779 626 3999
Ethiopian Potash Corp.
Chief Financial Officer and Director
416 907 5644