SASKATOON, Saskatchewan--(BUSINESS WIRE)--Gensource Potash Corporation (“Gensource” or the “Company”) (TSX.V: GSP). Subsequent to its news release dated March 27, 2018, the Company is delighted to announce that it has entered into a definitive, binding off-take agreement (“Agreement” or “Off-take”) with a senior North American agriculture industry leader. (the “Off-taker”). The Agreement incorporates the essential elements identified in the Non-binding MOU March 27 news release, highlights of which are:
- Purchase of 100% of the production from one “module” of 250,000 tonne/year capacity,
- A preliminary marketing plan that facilitates Gensource’s goal of creating a direct link between a potash producing facility in Saskatchewan and the end user,
- 10-year term with an option to renew for the life of the project,
- Right of first refusal for the Off-taker to purchase any additional product that may be produced at the project either through de-bottlenecking or expansion of the productive capacity of the facility,
- Right of first refusal to purchase the project should Gensource elect to sell any portion of it.
With the formal definitive off-take agreement now completed, Gensource is moving to complete its project financing plans which will allow for the construction of the first of a new breed of potash production plants. Certain financing institutions have already reviewed the Agreement and have provided input to it in its draft form; comments from that review have been incorporated into the final Agreement with a goal to create a stronger, more financeable Agreement.
As previously disclosed in a NI 43-101 Technical Report Feasibility Study, the Vanguard One project (the “Project”) is estimated to cost CAD 279M (USD 220M at a nominal 1.27 exchange rate) to construct over an 18-22 month period. The facility is designed for low cash operating costs at less than $CAD 53/tonne (USD 40/tonne), even at its small production capacity of 250,000 tonne/year. Further, it is designed to be more efficient in its use of water, energy and personnel as well as to have a low environmental impact due to its lack of salt tailings and brine ponds on surface. The facility is also “right-sized” for a small Saskatchewan setting, employing 46 full time staff, adding significant economic activity without being overwhelming to the local community.
Gensource’s President & CEO, Mike Ferguson, said, "This Agreement represents a true milestone in the development of Gensource’s potash business strategy. We are so pleased that our Off-take partner shares our confidence in striving towards this new approach to potash production – a confidence that is on display through the completion and execution of this definitive agreement. We are also pleased to bring our unique business model to the North American agriculture industry and specifically to the markets served by our Off-take partner. As I indicated when announcing the MOU with the Off-taker, by combining a modern production facility, with its efficiency and significantly reduced environmental footprint, with the vast resources of the Off-taker, we believe the two groups together represent the new face of the potash supply chain in the ag industry.”
Gensource is based in Saskatoon, Saskatchewan and is focused on developing the next potash production facility in that province. Gensource’s President and CEO, Mike Ferguson, P.Eng., has assembled a management and technical team with direct and specific expertise and experience in potash development in Saskatchewan.
Gensource operates under a business plan that has two key components - vertical integration with the market to ensure that all production capacity built is directed to a specific market, eliminating market-side risk; and, technical innovation which will allow for a small and economic potash production facility, the output of which can then be directed to a single, specific market.
Mike Ferguson, P.Eng., President & CEO of Gensource and a Qualified Person (“QP”) as defined in NI 43-101, has reviewed and approved the contents of this news release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward-Looking Statements
This news release may contain forward looking information and Gensource cautions readers that forward- looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of Gensource included in this news release. This news release includes certain "forward-looking statements”, which often, but not always, can be identified by the use of words such as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". These statements are based on information currently available to Gensource and Gensource provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements with respect to Gensource’s future plans, objectives or goals, to the effect that Gensource or management expects a stated condition or result to occur, including completion of the definitive offtake agreement on terms as announced or at all, securing project financing on terms which are economic or at all, the establishment of vertical integration partnerships and the sourcing of end use potash purchasers. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to Gensource’s financial condition and prospects, completion of the definitive offtake agreement on terms as announced or at all, securing project financing on terms which are economic or at all, the ability to establish viable vertical integration partnerships and the sourcing of end use potash purchasers could differ materially from those currently anticipated in such statements for many reasons such as: failure to settle a definitive joint venture agreement with a party and advance and finance the project; changes in general economic conditions and conditions in the financial markets; the ability to complete the offtake agreement on terms as announced or at all or to find and source other off-take agreements; the ability to secure project financing on terms which are economic or at all; changes in demand and prices for potash; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with Gensource’s activities; and other matters discussed in this news release and in filings made with securities regulators. This list is not exhaustive of the factors that may affect any of Gensource’s forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on Gensource’s forward-looking statements. Gensource does not undertake to update any forward-looking statement that may be made from time to time by Gensource or on its behalf, except in accordance with applicable securities laws.