Aim-listed exploration company African Potash has reached an agreement to establish a sale price of $500/t for 50 000 t of fertiliser product.

African Potash executive chairperson Chris Cleverly said the deal would see NPK and urea fertilisers delivered in Zambia at a price that “supported the growth and development of the African farmer”.

The price agreement, announced on Friday, followed the conclusion of recent meetings in Lusaka, Zambia, between representatives of African Potash, the Common Market for Eastern and Southern Africa (Comesa), fertiliser suppliers and a Zambian distributor.

Cleverly noted that African Potash was confident that it remained on track to meet the 500 000 t delivery target within a year of agreeing its memorandum of understanding (MoU) with Comesa, which was signed in August.

African Potash added that the MoU with a Zambia-based fertiliser supplier remained subject to a legally binding agreement and updates would be provided “in due course”.

Having set this sale price, the company’s pre-tax profit margin on this transaction was expected to be 6%. Initial NPK and urea fertiliser deliveries had arrived in Africa and were awaiting customer approval, advised African Potash.

The adviser to this transaction was Butterfly Corporate Finance.

Additionally, a trade finance facility of up to $50-million was currently being arranged through African Potash’s exclusive banking adviser Loita Capital Partners International.

The facility would remain in place until the company’s fertiliser trading operations become self-funding. Further details on the facility would be announced once finalised.