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Ethiopia: Circum Minerals Seeks Partner For Potash Project

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Circum Minerals, which is partly owned by a private equity fund invested in South Africa, is on the cusp of raising $2.6bn towards a potash project in Ethiopia, promising a mine that delivers some of the lowest-cost fertilizer ingredients in the world.

Circum, headed by Brad Mills, former CEO of the world’s third-largest platinum miner, Lonmin, plans to secure a mining and environmental permit before the end of this year, allowing it to seek out the funding, which could come from a strategic partnership.

The traditional way to finance these kinds of projects was to raise up to $1bn through equity and the balance through debt financing, Mr Mills said.

“The effort at this point is to find a strategic partner who would come in and write the equity check,” he said.

This partnership could be in the form of a large cash injection into the project in exchange for a stake in the business, or the project could be started with finance cobbled together, followed by further large investments.

“There is no immediate plan to list Circum. It would only occur after we raised most of the equity and debt for the project such that if we came to market it was with a fully funded project,” Mr Mills said. Circum has outlined a large potash deposit in the Danakil Basin, close to the Eritrean border.

The entire potash resource is 4.9-billion tonnes as well as a reserve of 108-million tonnes.

Potash is a potassium-rich salt from ancient seabeds and used to make fertilizer. Canada and Russia are the world’s largest sources of potash, with most of their mining done underground.

Circum plans to mine near the surface, using fluids to dissolve the salts so they can be cheaply extracted and processed.

African Minerals Exploration and Development Fund, a private equity group, holds nearly 36% of Circum. It has stakes in a number of African mineral deposits, including Sepfluor, a South African fluorspar company.

The fund includes founding partners Rudolph de Bruin and David Twist.