Ethiopian Potash Enters Into Memorandum of Understanding Regarding Early Exercise of Option, A US$10 Million Investment and A Joint Venture on Danakil Property

TORONTO, ONTARIO--(Marketwire - Jan. 30, 2013) - Ethiopian Potash Corp. (the "Company" or "EPC") (TSX VENTURE:FED) is pleased to announce that it has entered into a memorandum of understanding (the "MOU") which contemplates the early exercise of its option (the "Option") to acquire G and B Central African Resources Ltd. ("G&B"), which owns the Dankil Property, and the forming of a joint venture between EPC and Danakil Potash Corporation ("Danakil Corp.") regarding the Danakil Property ("Danakil Joint Venture").

The MOU contemplates G&B and its sole shareholder ZRH Nominees (0105) Ltd. ("ZRH") waiving the requirement for a feasibility study (the "Waiver") under the option agreement among EPC, G&B and ZRH (the "Option Agreement") in order to enable early exercise of the option and Danakil Corp. acquiring a 70% interest in the Danakil Property pursuant to the Danakil Joint Venture. The Waiver will be subject to satisfaction of all applicable conditions precedent, the restructuring of all outstanding debt of G&B incurred on behalf of EPC in connection with the Option and the commitment to a US$10 million investment by Danakil Corp. in the Danakil Joint Venture having closed in escrow.

Conditions precedent will include, among other things, due diligence, the execution of mutually satisfactory definitive agreements among the parties and obtaining all required approvals, including but not limited to TSXV and shareholder approvals.

Danakil Joint Venture

Danakil Corp. will acquire an interest in the Danakil Property through an ownership interest in a BVI joint venture company ("JVCo"), which EPC will establish to hold the shares of G&B acquired under the Option. Danakil Corp. will pay US$3 million (and commit to additional future expenditures of no less than US$7 million, as described below) for 70% of the shares of JVCo (US$1.5 million to be paid into JVCo and US$1.5 million to be paid to EPC). EPC will own the remaining 30% of the shares of JVCo. The initial proceeds paid to JVCo are expected to be used to satisfy any outstanding liabilities and for working capital purposes for the development of the Danakil Property.

The Danakil Joint Venture will be governed by a shareholders / joint venture agreement between EPC and Danakil Corp. ("JV Agreement"), which will provide (among other things) for customary drag & tag and pre-emptive provisions. Danakil Corp. will have nominees appointed to the boards of directors of JVCo and G&B (and any other group company of JVCo), in each case, that together represent a majority of the respective board of directors. EPC will be entitled to have its nominees appointed to fill the remaining positions on each respective board of directors as long as it retains not less than 10% of the issued share capital of JVCo.

The JV Agreement will also provide for Danakil Corp. to solely fund all expenditures of G&B (and any other group company of JVCo) until both (i) a National Instrument 43-101 compliant scoping study on a pre-determined section of the Danakil Property has been completed and (ii) it has funded expenditures totalling 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.

The funding of expenditures by Danakil Corp. (as well as any subsequent pro rata funding by Danakil Corp. and EPC) will be by way of intra-group loans, on terms to be agreed between the parties. Such terms are expected to include, without limitation, a substantial threshold amount which must be met in order for any sale of EPC's interest in JVCo pursuant to drag rights of Danakil Corp. in the JV Agreement without EPC's prior approval (in its absolution discretion). In the event of a sale of Danakil Corp.'s 70% interest only, it will be a condition of such sale that any intra-group loans outstanding at such time not become payable as a result of such sale. In addition, any failure by Danakil Corp. (in breach of its obligations) to fund any expenditures will result in a claw-back of Danakil Corp.'s ownership interest in JVCo, on a pro rata basis (i.e. in order for Danakil Corp. to have maintained a 70% ownership interest in JVCo at the time of the first pro rata funding by the parties, it must have funded aggregate expenditures of at least US$10 million).

The establishment and funding of the Danakil Joint Venture will be subject to the satisfaction of all related conditions precedent and will thereafter close in escrow, pending the completion of the restructuring of G&B debt described below and the Waiver having been unconditionally granted on or before June 30, 2013.

Danakil Corp. is a wholly owned BVI subsidiary of Circum Minerals Ltd., incorporated to pursue mineral opportunities in Eastern Africa. As at the date of the MOU, each of Circum and Dankil Corp. is at arm's length to EPC.

Restructuring of Outstanding Debt

EPC will assume all outstanding debt of G&B incurred on behalf of EPC, or otherwise incurred by G&B, in connection with the Option (being approximately CAD$1.665 million) and will arrange with substantially all creditors to have all outstanding debt of EPC (being approximately CAD$3.365 million including all G&B debt to be assumed) satisfied by the issuance of 33,650,000 common shares in capital of EPC at a deemed price of CAD$0.10 per share (subject to TSXV approval). Any debt not satisfied with shares will be satisfied with part of the US$1.5 million received from Danakil Corp. under the terms of the Danakil Joint Venture or in due course, as may be agreed between EPC and any creditor.

EPC to Acquire New Potash Permits

The MOU also contemplates the acquisition by EPC, for a total purchase price of CAD$2 million (which will be satisfied by the issuance of shares of EPC at a price of $0.10 per share), of certain rights to acquire potash exploration permits for a group of mineral substances in Mali. The area is known to have produced table salt (NaCI), other salts and Sylvite (KCI).

EPC's acquisition of such permits will be subject to the satisfaction of all related conditions precedent and will thereafter close in escrow, pending the completion of the restructuring of G&B debt described above and the Waiver having been unconditionally granted on or before June 30, 2013.

The potash permits are held by a subsidiary of Premier African Minerals Limited ("PREM"), a mineral exploration and development company of which ZRH is a principal shareholder, and George Roach and Pamela Hueston are directors. As a result, minority shareholder approval of the acquisition may be required under the applicable securities laws and the rules of the TSXV. As PREM is admitted to trading on AIM, the disposal will need to comply with the AIM Rules and other regulatory requirements in the United Kingdom.

Proposed Name Change

It is proposed that EPC will (subject to shareholder approval) change its name to "AgriMinco Corp." or such other name as may be approved by the board of directors and/or the TSXV connection with EPC's acquisition of such properties as noted above.

Exercise or Termination of Option

Immediately following the satisfaction of all applicable conditions precedent, the restructuring of outstanding G&B debt and all other transactions contemplated by the MOU have closed in escrow, G&B and ZRH will provide the Waiver unconditionally and for no additional consideration, and the Option will be exercised immediately thereafter. EPC will be obligated to issue common shares of EPC in accordance with the Option Agreement in connection with the exercise of the Option.

The parties to the MOU have agreed to proceed in good faith and expeditiously to negotiate, settle and execute the other agreements contemplated therein by March 1, 2013, and to obtain all third-party and regulatory approvals as may be required by no later than June 30, 2013. However, no party to the MOU has any obligation with respect to the transactions contemplated therein (other than as described below) unless and until definitive agreements have been entered into. There can be no assurance that the definitive agreements will be entered into within the time required and/or that the transactions contemplated in the MOU will be consummated.

EPC, G&B and ZRH have also agreed to the termination of the Option Agreement on the earlier of (i) March 1, 2013, unless the parties to the MOU have settled and executed all the agreements contemplated therein (the "Contemplated Agreements") and (ii) the termination or expiration of any of the Contemplated Agreements by any of the parties thereto in accordance with the terms thereof, unless any such termination or expiration occurs as a consequence of the completion of a transaction contemplated by the MOU. Each of G&B and ZRH are considered related parties to EPC. George Roach, EPC's Chairman and CEO, is also a director and a principal of G&B and his family trust will receive the shares to be issued to ZRH under the Option Agreement.

The Board of EPC formed special committees to consider the transactions contemplated by the MOU, other than the Danakil Joint Venture (which was negotiated at arm's length). The Special Committee formed to consider the acquisition of certain potash permits from PREM is comprised of Michael Galloro and Anthony Vella. The Special Committee formed to consider the potential early termination of the Option Agreement is comprised of Michael Galloro, Anthony Vella and Pamela Hueston. George Roach, EPC's Chairman and CEO abstained on all matters related to the Company's proposed acquisition of potash permits from PREM as well as the potential early termination of the Option Agreement, as he is interested in both G&B and ZRH and is a director of PREM. Pamela Hueston also abstained from all matters related to the Company's proposed acquisition of potash permits from PREM due to her position as a director of PREM.

The Board of EPC has determined that, in the event that the transactions contemplated by the MOU are not completed, it would be in the best interest of the Company to terminate its Option and delist and wind-up the Company, and to return any residual capital to shareholders. This determination has been made after giving consideration to the available resources of EPC, EPC having been unable to pay the outstanding debt of G&B (which debt was incurred on behalf of EPC) as required by the Option Agreement, the likelihood of being able to arrange for an alternative transaction or financing and/or satisfy outstanding obligations in the immediate future and the extent of financial and other resources that will be required in order to fund future operations and maintain the Danakil Property under the terms of the Option Agreement.

Shareholders Meeting

The Company will be calling a special meeting of its shareholders to consider and approve the transactions described herein following the execution of all relevant definitive agreements, or if the Contemplated Agreements are not entered into on or before March 1, 2013 the Company will be calling a special meeting of its shareholders to consider and approve the wind-up the Company.

About Ethiopian Potash Corp.

Ethiopian Potash Corp. (TSX VENTURE:FED) is a Canadian company based in Toronto, Ontario and Addis Ababa, Ethiopia.

On behalf of the Board of Directors

George Roach, CEO & Director

Forward-Looking Information

This press release may contain forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. All statements that address future activities, events or developments that the Company believes, expects or anticipates will or may occur (including, but not limited to, the potential for and timing of the early exercise of the Option, acquisition of the new potash permits, the Danakil Joint Venture and the restructuring of outstanding debt, as well as the expected terms and conditions of each such transaction) are forward-looking information. Forward-looking information is based upon assumptions by management that are subject to known and unknown risks and uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by the forward-looking information. Factors that may cause actual results to vary materially include, but are not limited to, the failure to satisfy all conditions precedent within the requisite time, including (without limitation) the entering into of all necessary definitive agreements, obtaining the requisite third-party consents and regulatory and shareholder approvals, and changes in general economic conditions or conditions in the financial markets. Such forward-looking information is based on a number of assumptions, including but not limited to, the ability of the parties to negotiate and enter into definitive agreements, the parties being satisfied with their respective due diligence investigations, there are no material changes to the terms of any proposed transaction, and no significant decline in existing general business and economic conditions. There can be no assurance that the Company will be successful in negotiating and entering into all definitive agreements or that the Option will be exercised, the Danakil Joint Venture will be formed, the Company's outstanding debt will be restructured and/or the Company will acquire the new potash permits. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligations to update publicly or otherwise revise any forward-looking information, except as may be required by law. For a more detailed discussion of such risks and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements, refer to the Company's filings with the Canadian securities regulators available on www.sedar.com.