New sale and purchase agreement for Satimola Limited signed

The Board of Kazakhstan Potash Corporation Limited (“KPC”) (ASX:KPC) is pleased to announce that it has signed a new Sale and Purchase Agreement, to acquire 100% shareholding in Satimola Limited, which holds via its wholly owned subsidiary Satbor LLP the Satimola potash deposit in the Republic of Kazakhstan. For the new agreement to take effect, over 90% of Staimola Limited shareholder need to sign the new agreement, KPC has been advised by Satimola Limited that this is expected to be completed shortly.

The purchase price of US$70 million consists of a first payment of US$55 million in cash and two promissory notes payments of US$7.5 million each. The two promissory notes payments shall be paid upon the first utilisation of construction finance for the mining project at Satimola, and the second after the date of first shipment of an order for potash from Satimola. In addition, KPC will repay US$10 million on Satimola Limited’s behalf to Satimola creditors.

Completion of the transaction is subject to obtaining approval from all relevant Government and regulatory authorities together with fulfilling all the necessary financing facility requirements.

As part of the agreement, KPC has extended the existing loan facility to Satimola Limited of which US$2.7 million has already been advanced, for an additional US$1.3 million for working capital and satisfaction of creditor liabilities. To date the total loan funds already advanced by KPC to Satimola Limited amount to US$18.7 million.

The Satimola deposit is located within the geological formation known as the Satimola Dome in West Kazakhstan and a JORC compliant report that indicates a significant resource of potash has been obtained. The Satimola acquisition together with the Zhilyanskoye and Chelkar potash projects already owned by KPC, further strengthens KPC’s goal to be one of the larger potash producers internationally.

KPC is pleased to report that together with China Asia Resources Co. Ltd (CAR Ltd) as borrower, a company associated with Madam Cheung, the Managing Director and Chairperson of the Company, it has secured a facility from China Minsheng Banking Corp., Ltd – Hong Kong Branch (CMBC) to finance the acquisition of the Satimola potash deposit in Kazakhstan and to provide additional working capital in connection with that potential acquisition.

Draw-downs under the facility are subject to the satisfaction of a number of conditions precedent including the provision by Madam Cheung and KPC of a guarantee and other security. KPC is confident that all conditions precedent can be satisfied to permit draw-downs under the facility.