Sage Potash Announces Equipment Purchase and Financing Transaction to Accelerate Project Timeline and Reduce Start-Up Costs
Sage Potash Announces Equipment Purchase and
Financing
Transaction to Accelerate Project Timeline and Reduce Start-Up Costs
VANCOUVER, BC
,
Sept. 9, 2024
/CNW/ -
Sage Potash Corp.
,
(
TSXV: SAGE) (OTC: SGPTF) ("Sage" or the
"Company") is pleased to announce that it has entered into an agreement (the "Purchase Agreement") with a subsidiary of
International Process Plants ("IPP") for the purchase of processing equipment for
$12.6 million
. (Unless otherwise stated, all
currency references are in Canadian dollars.) This equipment is capable of processing up to 300,000 tonnes per year of
potash. The majority of the equipment being purchased, which had never been assembled or used and currently is in storage
in
Europe
, was fabricated in 2012 at a cost of approximately €36 million (
US$54 million
) at the time. The balance of the
equipment to be acquired by the Company will come from IPP's inventory of second-hand machinery.
Shilo Sazwan and engineering team inspecting plant. (CNW Group/Sage Potash Corp.)
Under the Purchase Agreement, the Company will satisfy the purchase price by paying
$6,300,000
in cash, issuing
12,600,000 common shares to IPP at a deemed price of
$0.20
per share, and issuing IPP a secured convertible debenture
with a principal amount of
$3,780,000
. The secured convertible debenture will mature in five years while accruing interest at
12% per annum, and in addition, the holder may convert any or all of the outstanding indebtedness into shares of the
Company at
$0.40
per share at any time. The Purchase Agreement and the transactions contemplated therein are subject
to acceptance by the TSX Venture Exchange ("TSXV").
In addition, the Company is announcing a non-brokered private placement (the "Private Placement") of 37,600,000 common
shares at
$0.20
each for gross proceeds of
$7,520,000
and convertible debentures with an aggregate principal amount of
$3,780,000
. The convertible debentures offered under the Private Placement will not be secured, but will otherwise have the
same terms and conditions as the IPP secured convertible debenture.
The gross proceeds of the Private Placement of
$11,300,000
will be used to satisfy the obligations under the Purchase
Agreement and for general working capital, with
$5,000,000
being allocated to working capital and the remaining
$2,520,000
, together with the
$3,780,000
aggregate principal amount of the convertible debentures, being applied to the
$6,300,000
cash closing requirements under the Purchase Agreement. The cash requirements under the Purchase
Agreement will therefore mirror the value of the equity and convertible debentures being issued to IPP. The Private
Placement is integral to the proposed transactions under the Purchase Agreement, and therefore, the Company expects to
rely on the "part and parcel pricing exception" provided for in the policies of the TSXV.
Moneta Securities (
monetasecurities.com
) is acting as financial advisor for Sage in connection with the aforementioned
transactions.
Sage's CEO,
Peter Hogendoorn
says, "We are excited about what is essentially
$17.6M
in combined support we are
receiving from both IPP and Moneta in assisting us to advance our project into pilot production, from which we can grow the
project both in terms of ongoing geological data and cash flow to service both resource and incremental production
expansion
.
Today's stainless steel and titanium fabrication lead-times for equipment add significant uncertainty to project
financing, both in terms of cost and time. By buying this existing equipment now, Sage is mitigating project risk and cost, as
well as providing added clarity to the project's timeline, which is what project funders require. We believe this ultimately
enhances shareholder value as we seek to reduce
the United States'
nearly 100% reliance on imports for potash supply."
This seminal acquisition was led by
Shilo Sazwan
, who recently joined Sage along with his engineering team. Mr. Sazwan
states, "Considering stainless steel and titanium costs have more than doubled since these components were produced in
2012, we estimate that we are saving in the order of
US$75
to
US$100 million
in project costs, not to mention the 4–5-year
fabrication lead-time before we could even begin assembly." Mr. Sazwan and his engineering team have over twenty-five
years' experience in procuring high quality processing plants and equipment on the secondary market. This plant will be Mr.
Sazwan's ninth plant to be built at significant cost savings.
"
Sage Potash's
commitment to quickly and cost-efficiently execute this project aligns perfectly with our 46-year mission of
providing high-quality, existing unused and used equipment for fast-tracked projects," said
Ron Gale
, President of IPP.
"More and more companies are realizing the benefits of unused or quality second-hand equipment and plants. They're doing
this at a fraction of the cost and time as competitors."
The Private Placement and transactions contemplated under the Purchase Agreement are subject to acceptance by the
TSXV. All securities issued under the Private Placement and the Purchase Agreement will be subject to a hold period of four
months.
To view images of the acquired fertilizer plant please visit
sagepotash.com/300000-tpy-fertilizer-plant/
About Sage Potash Corp.
Sage Potash
is a Canadian company vested solely in the Sage Plain Property and intends through sustainable solution mining
techniques to become a prominent domestic potash producer within the Paradox Basin situated in
Utah
. For further
information, please refer to the Company's disclosure record on SEDAR+ (
www.sedarplus.ca
) or contact the Company by
email at
.
About International Process Plants
International Process Plants (IPP) is a global solutions provider for process plants and equipment. IPP buys and sells
existing plant sites, used process systems and individual equipment. Part of the IPP Group, Universal Glasteel Equipment
(UGE)offers new and re-glassed glass-lined equipment and parts, as well as re-glassing services. Gale Process Solutions
(GPS) designs and builds new alloy process equipment and pressure vessels, including its proprietary Porcupine Processor
mixer/reactor/dryer, with many of these items in stock for quick delivery. IPP has offices in 15 countries, helping
manufacturers save time and money with immediately available assets to grow their capabilities. Its holdings include 18
complete plant sites, 110 plants for relocation and 15,000 process systems and major pieces of equipment. For more
information, visit
internationalprocessplants.com
On Behalf of the Board of Directors,
Peter Hogendoorn
CEO & Executive Chairman
(604) 764-2158
Website:
www.sagepotash.com
Neither the 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. This news release may contain
"forward-looking statements", which are statements about the future based on current expectations or beliefs. For this
purpose, statements of historical fact may be deemed to be forward-looking statements. Forward–looking statements by
their nature involve risks and uncertainties, and there can be no assurance that such statements will prove to be accurate or
true. Investors should not place undue reliance on forward-looking statements. The Company does not undertake any
obligation to update forward-looking statements except as required by law.
Shilo Sazwan and engineering team inspected 300,000 TPY Crystallizers. (CNW Group/Sage Potash Corp.)
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CNW 08:00e 09-SEP-24