08 September 2016
MUSCAT - Australian-based mineral exploration and development company Elemental Minerals Ltd has announced that it has signed a strategic investment agreement with the State General Reserve Fund (SGRF), the Sultanate's sovereign wealth fund, that will help finance the development of a major potash project in the Republic of Congo.

The Perth-headquartered firm announced in a statement that the SGRF is one of three globally significant strategic investors that have made a cumulative $50 million equity injection against the allocation of shares in the company.

SGRF has agreed to subscribe for shares with a total subscription value of $20 million at an issue price of AU$0.20, or approximately 133 million shares, representing approximately 17.4 per cent of the total issued share capital of Elemental Minerals, it said.

The other strategic investors are: Sociedad Quimica y Minera de Chile SA (SQM), a prominent Chilean producer of fertilisers and industrial chemicals, with a $20 million contribution; and Summit, a private equity fund group operating in Africa, with an investment of $10 million.

Elemental said the funding would enable the appointment of a world class Engineering and Construction Consortium to complete a Definitive Feasibility Study (DFS) for its flagship potash project, the Kola Sylvinite Project in the Republic of Congo.

Billed as one of the most attractive potash opportunities globally, Kola is estimated to hold proven and probable reserves of 152 million tonnes of Sylvinite ore (potash ore). With an operating cost of less than $100 per tonne of muriate of potash (MOP), it would be one of the lowest cost potash mines in the world, according to Elemental.

Potassium chloride (widely known as Muriate of Potash) is the most common potassium source used in agriculture, accounting for about 95 per cent of all potash fertilisers used worldwide. MOP has a high nutrient concentration and is therefore relatively price competitive. Importantly, the deal grants preliminary conditional offtake rights to the SGRF (as well as SQM) for minimum of 40 per cent of annual production from the project. This equates to a 20 per cent share for the Oman wealth fund.

Additionally, the strategic investment allows Elemental to carry out additional drilling at the Dougou Extension Sylvinite Prospect, deemed as a candidate for the world's highest grading potash seam. Located 15km southwest of Kola, the Dougou Extension lies immediately west of the Dougou Deposit, a very large deposit with an indicated potash mineral resource of 1.1 billion tonnes.

Welcoming the investment agreement as a landmark transaction, Sean Bennett, Elemental CEO, said the pact would allow the company to accelerate its strategy to becoming one of world's leading potash producers.

"The new strategic investors and the construction consortium bring expertise in many different areas such as potash experience, construction experience, financing skills, off-take requirements to name but a few. This is in addition, to the significant financial strength they bring to the business at a time when junior mining companies are struggling to attract investment. For the first time, Elemental can give shareholders confidence that it will become one of the lowest cost potash producers in the world. The Board is looking forward to working with SQM, SGRF and Summit and the Construction Consortium on what we have no doubt will be an exciting future."

For the SGRF, the investment is in line with its long-standing strategy of investing Omani government reserves to provide a long-term return for future generations, while also diversifying away from oil and gas. The Fund seeks to achieve this by investing internationally across a range of asset classes, including mining and resources.

The latest deal comes just two months after Irish mining company Kenmare Resources announced that the SGRF signed an agreement to invest $100 million in the company.

© Oman Daily Observer 2016