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Gensource announces engagement agreement for project finance

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World Fertilizer,

Gensource Potash Corp. has announced that it has entered into an engagement agreement with Industrial Alliance Securities Inc. (IA) and its syndication partner, Heritage Capital Group.

Heritage is based in the US, and is the Agriculture Practice Leader within the Oaklins Group – a close association of industry professionals spanning North America and the globe.

This agreement is a follow-on engagement derived from the successful work undertaken by the IA/Heritage team announced on 6 September 2017. At that time, the team acted as the Gensource’s agent to lead an initiative to engage a US-based market partner for one of Gensource’s small scale potash facilities and, subsequently, to assemble the full financing package for the project.

The initial scope of work, market assessment and engagement with potential US-based market partners is mostly complete. Heritage’s direct knowledge of the US agricultural market provided direct connections with large and highly qualified and creditworthy market partners operating in the US agriculture industry. As a result, Gensource is now talking with credible groups who recognise the value of the company’s direct-supply model from a Saskatchewan potash production facility that will also be environmentally responsible.

Gensource’s business model is based on small size, minimal environmental footprint and vertical integration with a specific market for its fertilizer product. The new engagement focuses on project finance for one facility. As announced on 31 May 2017, the capital cost to build a small, scalable and efficient production module is estimated to be CAN$279 million (approximately US$220 million) at the current nominal exchange rate. That cost will be financed at the project joint venture level – a joint venture between Gensource and its offtake and capital partner(s).

The original engagement of IA/Heritage in September last year was a strategic move into the US market with Gensource’s business model and that effort is now beginning to bear fruit. This latest announcement focuses on the next stage of project financing, with the goal being to enable Gensource to start building the first module this spring or summer. Currently, Gensource claims that no agreements have yet been entered into with offtake and joint venture partners or project finance lenders, and there is no assurance that such agreements can be entered into on terms which are economic or at all.

Mike Ferguson, the President and CEO of Gensource, said, “We are excited to begin the next steps in our targeted move into the US agriculture market with our vertical integration business plan. Concurrently with offtake and joint venture negotiations, the IA/Heritage team will begin to assemble the project finance package that will allow us to move as planned with construction activities beginning this spring or summer. We are excited to see the interest, from significant industry players, generated by the new entry point to becoming a new potash producer that Gensource has defined. We are also excited at the prospect of having IA and Heritage help assemble the required project finance package that will allow the first project to move forward.”

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