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African Potash still confident on fertiliser market despite deal delay

Published: 08:37 22 Apr 2016 BST

ugandafarming
The drought in southern Africa has understandably affected fertiliser demand...

Fertiliser trader African Potash Limited (LON:AFPO) shares slumped in early deals as it revealed a lack of rain in southern Africa had affected certain deals.

But the firm said it was confident the fundamentals of the business remained attractive.

Indeed yesterday, it signed a participation agreement with Safyr Commodities, which has secured conditional sales agreements with one of Zambia's leading distributors, Nyiombo for 50,000 metric tonnes of of urea and fertiliser called NPK.

African Potash will be paid 25% of the net income received by Safyr, up to a maximum of US$4 million and delivery is contracted to take place by July 31 this year.

But  a previously announced Zambia deal to supply 20,000 metric tonnes of urea to a customer, under the COMESA deal, has been delayed and the firm said it understand this is due to the customer still awaiting confirmation of order from its customers.

The drought  has particularly affected the demand for urea in Zimbabwe and the agreement with private fertiliser producer Windmill announced in December has been terminated, the firm also revealed.

No further sales or liabilities are expected to arise following the termination of the agreement, AFPO said.

Chris Cleverly, executive chairman, said: "....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."

Shares fell around 36% to 0.93p in early deals.

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