Agreement to Assign Oil Concession to Africa Oil
June 17 2010 - 12:25PM
UK Regulatory
TIDMAGTA
RNS Number : 8315N
Agriterra Ltd
17 June 2010
Agriterra Ltd / Ticker: AGTA / Index: AIM / Sector: Agriculture
17 June 2010
Agriterra Ltd ('Agriterra' or 'the Company')
Agreement to Assign Oil Concession to Africa Oil Ethiopia B.V.
Agriterra Ltd, the AIM listed company focussed on the agricultural sector in
central and southern Africa, announces that it has entered into a farmout
agreement with Africa Oil Ethiopia B.V., a subsidiary of Africa Oil Corp, the
Canadian oil and gas company listed on the TSX Venture Exchange ('Africa Oil')
relating to the Company's legacy interest in the South Omo Block oil concession
in the Federal Democratic Republic of Ethiopia. The transaction will allow the
Company to participate in any future value uplift realised from the exploration
work being carried out by Africa Oil, whilst maintaining its focus on its
agricultural activities in southern Africa.
Under the terms of the farmout agreement, which are subject to the approval of
the Government of Ethiopia, Agriterra has agreed to assign 80% of its interest
in the concession to Africa Oil. In return, Africa Oil will fund 100% of the
costs of carrying out 500 kilometres of 2D seismic acquisition and processing, a
field geology programme and a surface geochemistry programme ('the Work
Programme'). Africa Oil estimates that its total cost exposure for the Work
Programme is approximately US$6.5 million with the majority of the expenditure
to be incurred in the first half of 2011. As part of the farmout agreement,
Agriterra will also receive a credit of up to US$2.517 million from Africa Oil,
to be set against future costs relating to the concession (other than in respect
of the Work Programme) in recognition of the past costs incurred by Agriterra,
prior to its strategy change to focus on agricultural development. In addition,
the current guarantee given by Agriterra in favour of the Government of Ethiopia
will be replaced by a guarantee from Africa Oil. Accordingly, US$784,000 in
cash will be released to the Company.
Agriterra Chairman Phil Edmonds said, "This transaction with Africa Oil allows
us to participate in any potential uplift in value related to the development of
the South Omo Block, while remaining focussed on our grain processing and cattle
ranching operations in Mozambique. In addition, the replacement of the
guarantee given by Agriterra will also strengthen our cash position, increasing
our flexibility to invest and expand our current operations in Mozambique. This
cash injection will also facilitate the identification of complementary
investment opportunities in the sub-Saharan agricultural industry, without the
need to raise finance on the equity markets."
** ENDS **
For further information please visit www.agriterra-ltd.com or contact:
+----------------+--------------------------+---------------------+
| Andrew Groves | Agriterra Ltd | Tel: +44 (0) 20 |
| | | 7408 9200 |
+----------------+--------------------------+---------------------+
| Jonathan | Seymour Pierce Ltd | Tel: +44 (0) 20 |
| Wright | | 7107 8000 |
+----------------+--------------------------+---------------------+
| Richard | Ambrian Partners Ltd | Tel: +44 (0) 20 |
| Swindells | | 7634 4700 |
+----------------+--------------------------+---------------------+
| Hugo de Salis | St Brides Media & | Tel: +44 (0) 20 |
| | Finance Ltd | 7236 1177 |
+----------------+--------------------------+---------------------+
| Susie Callear | St Brides Media & | Tel: +44 (0) 20 |
| | Finance Ltd | 7236 1177 |
+----------------+--------------------------+---------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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