Western Potash Corp. Announces Closing of Strategic Investment
VANCOUVER, British Columbia--(BUSINESS WIRE)--Western Potash Corp. (“Western” or the “Company”) is pleased to confirm that the previously announced strategic investment by China BlueChemical Ltd., (“China Blue”) and Benewood Holdings Corporation (“Benewood”), through a joint venture company, CBC (Canada) Holding Corp. (“CBCHC”), has been completed (the “Transaction”). Western has issued to CBCHC approximately 45 million common shares at a price of $0.71 for proceeds of C$ 31,979,022, which represents a 19.9% ownership stake in the Company on a non-diluted basis. China Blue is a majority owned subsidiary of China National Offshore Oil Corporation (“CNOOC”) and Benewood is a wholly owned subsidiary of GUOXIN International Investment Corporation Limited (“GUOXIN”), a financial investment company registered in Hong Kong.
Pursuant to the subscription agreement for the Transaction dated June 1, 2013, as amended June 20, 2013 (together, the “Subscription Agreement”), CBCHC received a right to appoint one Board of Directors nominee and consequently, Mr. Yang Yexin is welcomed to Western’s Board of Directors (the “Board”). Mr. Yang has been an Executive Director & Chief Executive Officer & President of China Blue since 2006. He joined the CNOOC group in 1978 and served as a mechanical engineer and as the deputy head of the mechanics division of China Offshore Oil Southern Drilling Company, the deputy general manager of CNOOC Nanhai West CPEC (Shekou) Company; the general manager of CNOOC Shipping Company and other various positions in the CNOOC Group. Mr. Yang graduated from Wuhan Communication Technology University in 1978 with a major in Vessel Engineering and obtained a Master’s degree in Business Management from China University of Petroleum (Beijing) in 2004.
As previously announced, Western and CBCHC have signed an off-take term sheet whereby CBCHC or a purchaser designated by it will enter into an off-take agreement for the purchase of the lesser of 30% or 1 million tonnes of potash annually from Western’s Milestone potash project for a term of 20 years. Pricing of product sold under the agreement will be based on market terms.
Upon completion today of CBCHC’s strategic investment and pursuant to the Subscription Agreement, the parties will form and jointly staff three working committees within 30 days. A Technical Committee and a Finance Committee will be formed, both of which will be made up of three members from Western and three members from CBCHC. In addition, the Chief Executive Officer and an individual holding a senior management position in each of the Parties will form a Supervisory Committee.
The mandate of the Technical Committee will involve providing recommendations for technical, construction and procurement inputs for the Milestone potash project. The Finance Committee is to be responsible for developing, evaluating and recommending potential project financing strategies, communicating with potential project finance providers and evaluating the terms of proposals received from such providers. The Supervisory Committee will oversee both of these committees.
In addition, Mr. Zhimao Ma, Senior Engineer and General Manager of Legal and Assets Management Department of China Blue has been appointed a non-voting observer status to the Board. Mr. Ma brings deep potash and fertilizer commercial experience from the sector as well as a sound M&A and analytical background in the potash space.
Pursuant to the Subscription Agreement, two senior staff members will be seconded to Western by CBCHC; the Western team will welcome one technical engineering staff member and one finance specialist staff member.
Mr. Patricio Varas, President and CEO of Western commented: “After two years of working together with China Blue we have reached what we believe is a comprehensive strategic investment as it strengthens our financial position and provides a vision for the path forward. The Transaction has involved a significant amount of due diligence and long hours of work from both our teams. We are very happy to welcome Mr. Yang to the Board and we will definitely benefit from his extensive plant building and operating experience both at China Blue and CNOOC. In addition, Mr. Varas stated, “With the Subscription Agreement, I believe CBCHC and Western have created a formidable alliance and we can now look to completing the work already underway in arranging and putting together the financial pieces that will make the building of the Milestone Project a reality."
Western Potash Corp. is a development stage potash company focused on building Canada's most efficient potash solution mine. The Company intends to develop a world-class potash deposit in an ecologically sustainable, economically efficient and socially responsible manner. A positive Feasibility Study for the Milestone potash project was completed in December 2012, demonstrating robust project metrics.
ON BEHALF OF THE BOARD OF DIRECTORS
“J. Patricio Varas”
J. Patricio Varas
President and CEO
Cautions Regarding Forward-Looking Statements
Except for statements of historical fact relating to Western, certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to: plans for formation of the Technical, Financing and Supervisory Committees, secondment of CBCHC staff members and entering into an off-take agreement with CBCHC or its designated purchaser; and the ability of Western to finance and develop the Milestone project. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Western to be materially different from those expressed or implied by such forward-looking statements or forward-looking information, including: uncertainty of future production, capital expenditures and other costs; financing and additional capital requirements for development and construction of the Milestone project; the receipt in a timely fashion of further permitting for the Milestone project; legislative, political, social or economic developments in the jurisdictions in which Western carries on business; operating or technical difficulties in connection with mining or development activities; and the risks normally involved in the exploration, development and mining business. Although management of Western has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Western does not undertake to update any forward-looking information that is set out herein, except in accordance with applicable securities laws.