Gensource Executes Definitive Binding off -Take Agreement with Strategic North American Agriculture Company
Gensource Executes Definitive Binding off -Take Agreement with Strategic North American
Agriculture Company
SASKATOON, Saskatchewan--(BUSINESS WIRE)--May 18, 2018-- 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:
/g122Purchase of 100% of the production from one “module” of 250,000 tonne/year capacity,
/g122A preliminary marketing plan that facilitates Gensource’s goal of creating a direct link between a potash producing facility in Saskatchewan and the
end user,
/g12210-year term with an option to renew for the life of the project,
/g122Right 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,
/g122Right 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.”
About Gensource
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.
CONTACT:
Gensource Potash Corporation:
Mike Ferguson, (306) 974-6414
President & CEO