Ethiopian Potash adopts poison pill, shares rise

Mining weekly, By: Matthew Hill, March 29, 2011
TORONTO (miningweekly.com) – TSX V-listed Ethiopian Potash Corp has implemented a shareholder rights plan, it said on Tuesday.

The company’s shares rose 13% in Toronto, despite Ethiopian Potash’s assurances that its board is not aware of any company planning to buy it out.

The shareholder rights plan, or poison pill, forces any potential acquirer to make its bid open for sixty days, and allows Ethiopian Potash’s board to issue new shares at a deep discount to existing owners, making an unfavourable buyout prohibitively dear.

The plan was effective immediately, and would last for three years, the company said in a statement.

Shares in Ethiopian Potash had climbed by 13% to trade at C$1,11 by 12:24.

The company, which has nearly doubled in value since it listed on the TSX-V this earlier this month, is exploring for the crop fertiliser ingredient in Ethiopia, and aims to start drilling its properties on the Eritrean border next month.

Last week, another company searching for potash in Ethiopia, Allana Potash said it raised C$10-million from selling shares and warrants to the World Bank’s International Finance Corporation.