TORONTO, ONTARIO -- (Marketwired) -- 07/04/13 -- Ethiopian Potash Corp. (the "Company" or "EPC") (TSX VENTURE: FED) is pleased to announce that the Company has received final approval from the TSX Venture Exchange ("TSXV") in respect of (1) the early exercise of the option (the "Option") to acquire G and B Central African Resources Ltd. ("G&B") which owns the Danakil Property and the forming of a joint venture (the "JV") between EPC and Danakil Potash Corporation ("Danakil Corp."); (2) EPC's acquisition from Premier African Minerals Limited ("PREM") of all the issued and outstanding shares of G and B African Resources SARL (the "Togo Acquisition"); (3) EPC's acquisition from PREM of all the issued and outstanding shares of G and B African Resources Mali SARL (the "Mali Acquisition"); and (4) all other transactions contemplated by the amended and restated master agreement dated June 3, 2013 between EPC, Danakil Holdings Limited ("JVCo") Danakil Corp., PREM, G&B and ZRH Nominees (0105) Ltd. and related matters.
The Joint Venture
Pursuant to the definitive agreements, (1) prior to early exercise of the Option, EPC transferred its rights and obligations (other than certain payment obligations) under the Option to a wholly owned subsidiary, JVCo and (2) on early exercise of the Option by JVCo, Danakil Corp. acquired a 70% interest in JVCo and EPC has retained a 30% interest in JVCo. Under the terms of the JV, Danakil Corp. will solely fund all expenditures of G&B (and any other group company of JVCo) until both (i) a scoping study is completed and (ii) it has funded project expenditures of US$7 million. After Danakil Corp. has funded such expenditures, EPC and Danakil Corp. will contribute to expenditures of G&B on a pro rata basis, subject to customary dilutive provisions in the event of any failure of a party to fund its pro rata contribution from time to time. Once a party's interest has been diluted to less than 10% (which can only occur following completion of a definitive "feasibility study" (within the meaning of Canadian National Instrument 43-101 ("NI 43-101"))), the interest shall be converted into a 1% royalty over sales revenue from potash received from JVCo (and any other group company of JVCo).
Pursuant to the definitive agreements, EPC has also satisfied an aggregate of approximately $2,873,577 of debt by the issuance of 28,735,778 common shares in the capital of EPC.
As a result of the Togo Acquisition, PREM has become a "control person" of EPC holding approximately 42% of the issued and outstanding common shares of the Company. PREM received 100,000,000 common shares of EPC in consideration for the Togo Acquisition.
Pursuant to the definitive agreements, PREM is entitled to nominate 2 directors to the board of EPC whilst PREM's shareholding remains above 30% of the issued share capital of EPC. At the meeting of shareholders held on June 30, 2013 (the "Meeting") shareholders elected, John (Ian) Stalker and David De Jong Weill (each a nominee of PREM) to hold the office of director. At the Meeting, the shareholders of EPC also elected Michael Galloro, Pam Hueston, George Roach and Anthony Vella to hold the office of director.
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