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Gensource Potash finalises shareholdings agreement on Tugaske project SPV

Published by , Editorial Assistant
World Fertilizer,

Gensource Potash Corp. (Gensource), a fertilizer development company focused on sustainable potash production, has announced that it has completed negotiations of the fundamental shareholding structure with the project off-taker and equity investor, Helm AG, and another financial investor for the Tugaske project special purpose vehicle (SPV).

The SPV will be the legal entity engaged in the production of potash near the village of Tugaske, Saskatchewan, Canada, situated 175 km south of Saskatoon. Utilising both technical and business model developments, Gensource has demonstrated the project’s capacity to become a low cost potash producer with significantly less impact on air, water, and land than conventional potash mining.

“We are thrilled to make this announcement,” commented Mike Ferguson, President and CEO of Gensource. “The finalisation of the shareholding structure for the SPV represents one of the last items required for a decision to advance the senior debt approval. This gets the company one step closer to full construction in 2021. We see the partnerships with HELM and our other business partner as invaluable – we are like-minded in our view of taking a multi-generational investment approach. As Gensource’s shareholders know, the company’s vision is to create a number of potash production modules to help achieve global food security by helping to create a new supply chain that is open, transparent and sustainable.”

Under the shareholding structure, Gensource will own 49.98% of the SPV while HELM and the other investor will each own 25.01%. The company’s ownership interest comprises two components: a US$30 million paid-in capital amount (representing the value of the project that will be vended into the SPV plus the project financing costs expended) and a cash investment. In addition to being a shareholder of the SPV, HELM is also the offtake partner of the Tugaske project and is committed to purchasing 100% of the production.

Helm will market the potash directly to its customers using its existing infrastructure, providing the SPV with a competitive advantage of a direct and efficient delivery from mine site to retail in key agricultural markets in the US.

The agreement on shareholdings has been forwarded to the KfW IPEX-Bank and Société Générale, the mandated joint lead arrangers for senior debt financing. It is anticipated that Euler Hermes, the German federal government credit insurance agency that offers bonding, guarantees and services for the management of business-to-business trade receivables, will have all the necessary documents to present to its Inter-ministerial Committee (IMC). The IMC is the central decision-making body for the provision of export credit guarantees by the German federal government. It is expected that a final decision by the IMC regarding coverage on the Tugaske Project senior debt will be made at one of its next regular meetings. All three partners in the SPV have agreed to move the process ahead as one team in order to meet the requirements for the IMC approval.

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