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Gensource provides 2022 year-end update and 2023 outlook

Published by , Deputy Editor
World Fertilizer,

Gensource Potash Corporation has provided a 2022 year-end summary and update on its plans for 2023.

Looking forward into 2023, Gensource is thankful for its strong and focused shareholder base as the company completes the process of financing its first potash project. Gensource’s commitment to social and community values reflects its purpose and role in supplying a hungry world with a sustainably produced macro nutrient, potash, essential for the transition of society towards a more food-secure future.

World events of 2022 made for a very challenging year for investors, businesses and communities alike with rapidly changing global economics negatively impacting global capital markets and Gensource’s plan to complete full project financing for the Tugaske Project.

In light of these events, combined with recent discussions on investor risk-return expectations, Gensource is revising the previously proposed ownership structure of KClean Potash Corporation (the entity created to own and operate the Tugaske Project). Currently, KClean and the Tugaske Project are, and continue to be, 100% owned by Gensource. The proposed 33% equity ownership offer by Helm AG and Helm Fertilizers in KClean resulted in an unappealing risk-return ratio for new investors, since the investment for all parties only occurs at financial close of the full project financing. This structure had the effect of creating an unequal ownership structure for incoming investors in KClean. In this regard, Helm has confirmed it will withdraw its proposed 33% ownership offer in KClean. The company thanks Helm for this action, which now provides the opportunity for Gensource and potential investors to work with an open capital structure to complete the financing of the Tugaske Project. Of course, Helm remains supportive of the Project and committed as off-taker for 100% of all granular fertilizer product produced at the Tugaske Project pursuant to the binding off-take agreement dated 07 May 2021. Further, KfW IPEX-Bank and Société Générale, the Project’s Mandated Lead Arrangers for the senior debt financing, remain engaged and fully supportive of the project.

Gensource continues to progress its short-term financing, which the company anticipates will advance the near-complete bridge engineering work for the Tugaske Project. Key deliverables for the bridge engineering, anticipated to be completed in early 2023 include:

  • Confirm and update the AACE Level 3 capital cost estimate (first completed in October 2021).
  • Confirm and update operating cost estimates.
  • Pursue exciting new CAPEX and OPEX reduction opportunities.
  • Bring key procurement contracts for the Tugaske Project to a ready-to-sign status.

Stephen Dyer, Chairman of Gensource Potash, says “Although 2022 was one of the most challenging years in recent memory, we see a great opportunity with an appropriately balanced capital structure for KClean Potash Corporation which will allow Gensource to proceed with the required financing for the Tugaske Project.”

Looking forward into 2023, Gensource anticipates positive developments, including:

  • Completing financing with private equity and strategic investors to move the Tugaske Project into construction.
  • A revised and updated ownership structure for the Tugaske Project.
  • Robust demand for reliable and sustainable potash supply, particularly from a tier-one jurisdiction like Saskatchewan.
  • Enhanced focus on global food security, and Canada’s role in providing critical minerals.

Gensource anticipates 2023 will usher in a more stable backdrop which will begin to normalise global business. “The potash industry remains strong and Gensource is determined to bring the Tugaske Project into production, bringing the efficiencies of its modular approach to market.” said Mike Ferguson, Chief Executive Officer of Gensource. “In addition, the moderation of fertilizer prices to more sustainable levels is a positive sign for the agricultural producers, who drive the need for new and sustainable fertilizer production.”

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