This agreement incorporates the essential elements that were identified in the non-binding memorandum of understanding (MoU) that was announced on 27 March 2018. The key highlights are as follows:
- Purchase of 100% of the production from one 250 000 tpy capacity module.
- A preliminary marketing plan that facilitates Gensource’s goal of creating a direct link between a potash production facility in Saskatchewan, Canada, and the end-user.
- Right of first refusal for the offtaker to purchase any additional product that may be produced at the project either through debottlenecking or expansion of the facility’s production capacity.
- Right of first refusal to purchase the project should Gensource elect to sell any portion of it.
With the formal definitive offtake agreement now having been completed, Gensource claims that it is moving to complete its project financing plans, which will enable the construction of the first of a new breed of potash production plants. In the statement, Gensource claims that particular financing institutions have already reviewed the agreement and have provided input to it in its draft form. Comments from this review have been incorporated into the final agreement, with the aim of creating an even strong, more financeable agreement.
As was disclosed earlier in the NI 43-101 Technical Report Feasibility Study, it is estimated that constructing the Vanguard One project over an 18 – 22 month period will cost CAN$279 million. The facility is designed for low cash operating costs at less than CAN$53/t, even at its small production capacity of 250 000 tpy. Furthermore, the project has been designed to be more efficient in terms of water use, as well as energy use, and in terms of personnel. It has also been designed to have a low environmental impact due to its lack of salt tailings and brine ponds on surface. It is also ‘right sized’ for a small Saskatchewan location, employing 46 full time staff, adding significant economic activity without being overwhelming to the local community.
Mike Ferguson, the President and CEO of Gensource, said: “This agreement represents a true milestone in the development of Gensource’s potash business strategy. We are so pleased that our offtake 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 offtake partner. As I indicated when announcing the MOU with the offtaker, by combining a modern production facility, with its efficiency and significantly reduced environmental footprint, with the vast resources of the offtaker, we believe the two groups together represent the new face of the potash supply chain in the ag industry.”
Read the article online at: https://www.worldfertilizer.com/potash/21052018/gensource-enters-offtake-agreement-with-north-american-agriculture-company/