East Coast Minerals NL(ECM)(East Coast) is pleased to announce that it has entered into a conditional head of agreement (“HoA”) for acquisition from Exchange Minerals Limited (“Exchange”) 70% shareholding in a company known as Potash Holdings Pty Limited (“Potash”).
In turn, Potash is the owner of 70% of the shares in a company known as West Coast Potash Pty Limited (“WCP”) which is the owner of 13 contiguous tenements in the Southern Carnarvon Basin of Western Australia. Below is a map of the location of the tenements. Potash has the right to increase its shareholding in WCP to 100%.
Potash is important for agriculture because it improves water retention, yield, nutrient value, taste, colour, texture and disease resistance of food crops. It has wide application to fruit and vegetables, rice, wheat and other grains, sugar, corn, soybeans, palm oil and cotton, all of which benefit from the nutrient’s quality enhancing properties. There are no substitutes for potash as a key ingredient in fertiliser.
Demand for food and animal feed has been on the rise since 2000. The U.S. Department of Agriculture’s Economic Research Service (ERS) attributes the trend to average annual population increases of 75 million people around the world. Potash prices have soared in recent years. What was once a commodity worth about $200 a tonne, peaked at US$872.50 per tonne in 2009, which is a record high. Potash prices are expected to increase significantly by 2020.
The proposed acquisition has been entered into with Exchange, which has been a major supporting shareholder of ECM since late 2008. In addition, Exchange and a number of its contacts have also decided to provide ECM with a $2 million Convertible Loan facility which is secured by a charge. The proposed acquisition is subject to contract and satisfactory legal documentation and shareholder approval.
