Potash Market Company Update and 2021 Financial Statements
SASKATOON, Saskatchewan and LONDON–(BUSINESS WIRE)–Gensource Potash Corporation (“Gensource” or the “Company”) (TSXV: GSP, AIM: GSP), a fertilizer development company focused on the sustainable production of potash, provides the following commentary as of today :
“The Russian invasion of Ukraine is a human tragedy, having an immediate impact on the lives of millions of peaceful civilians,” Chief Executive Mike Ferguson said. “We believe that the unfolding situation is likely to create serious concerns that extend well beyond the region, including, among others, in relation to growing global food insecurity.”
Brazil in search of strategic fertilizer solutions
To reduce its dependence on potash from Russia and Belarus, the Brazilian Minister of Agriculture, Livestock and Supply met last week with representatives of Canadian fertilizer companies, including Gensource, to discuss the current state of the sector.
Brazil is an agricultural powerhouse, responsible for 8% of global fertilizer consumption and is the world’s fourth largest fertilizer importer, behind China (24%), India (14.6%) and the United States (10.3%). Brazil recently published its long-term strategic plan for fertilizers (see https://en.mercopress.com/2022/03/11/brazil-outlines-30-year-plan-to-cut-fertilizer-overseas-dependency) and the Company believes that this can be an important element in achieving the plan’s identified objectives. The next steps between Gensource and the Brazilian delegation are being discussed.
Wider industry situation
Spot potash prices in Brazil hit all-time highs of US$1,065 per metric ton, while average retail potash prices in the United States climbed to over US$925 per metric ton. The current situation stems from several industry and global factors, beginning in mid-2021 with the flooding of two of Mosaic’s mines in Saskatchewan, K1 and K2, removing some 5 million tonnes per year of capacity from the potash market. Later in 2021, the European Union and the United States imposed sanctions on Belarus, limiting its potash exports, which account for around 20% of the world’s potash supply. Potash prices continue to soar today after economic sanctions were imposed on Russia over its invasion of Ukraine earlier this year, restricting a further 20% of the world’s potash supply.
With up to 40% of global supply currently tight or uncertain, growers around the world are unsure of their ability to secure the volumes of potash needed to support their agricultural production plans. Lack of balanced agricultural fertilization ultimately leads to reduced yields, which puts pressure on the global food supply. The general market belief was that the potash industry was “well-supplied”, if not “over-supplied”, and that the supply chain was secure. However, recent events have proven that the potash industry is not well supplied and the supply chain is not resilient enough. Gensource’s model has always been to create new independent supply chains with streamlined direct product delivery to identified markets. The Company believes this model will lead to a more diverse and resilient supply chain for potash in the future.
Representatives of the Company are in London, UK this week as part of the effort to fund the Company’s potash development project located near Tugaske, Saskatchewan (the “Tugaske Project”). As previously stated (see press release of September 23, 2021)the Company has obtained binding conditional commitment letters for a $280 million senior credit facility for the Tugaske project from KfW IPEX-Bank and Société Générale.
The credit facility is intended to finance up to 60% of the construction and ramp-up of the Tugaske project. The remaining 40% of the development costs of the Tugaske project will be financed by capital investments. HELM AG, the buyer of the project, has committed to invest $50 million in equity. The remaining $105 million of equity capital required for the Tugaske project will have to be raised by Gensource on the capital markets.
Saskatchewan opens trade office in London
Coinciding with the Society’s visit to London, the Province of Saskatchewan is opening a new international trade office in London. We are delighted to have been invited to the opening reception and look forward to networking with export and trade experts. The event will be an excellent opportunity for Gensource to meet potential investors and partners.
2021 annual results
Gensource also announces that it has released its audited financial statements and MD&A for the year ended December 31, 2021. The reports will be available under the Company’s profile on SEDAR (www.sedar.com) and on the Company’s website (https://gensourcepotash.ca/financials-and-presentations/).
More information about Gensource Potash Corporation is available at www.gensourcepotash.ca
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Gensource is a fertilizer development company based in Saskatoon, Saskatchewan and is poised to become the next fertilizer production company in this province. With a small-scale and environmentally friendly approach to potash production, Gensource believes its technical and business model will be the future of the industry. Gensource operates under a business plan that has two key elements: (1) vertical integration with the market to ensure that all built production capacity is directed and pre-sold to a specific market, thereby eliminating market-side risk; and (2) technical innovation that will enable a small, cost-effective potash production facility that demonstrates environmental leadership within the industry, producing no salt residues, eliminating the risk of decommissioning, and requiring no surface brine pond, thus eliminating the single largest and negative environmental aspect of potash mining.
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.
Caution Regarding Forward-Looking Statements
This press release may contain forward-looking information and Gensource cautions readers that forward-looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from Gensource’s expectations included in this press release. This press release contains certain “forward-looking statements”, which often, but not always, can be identified by the use of words such as “believes”, “anticipates”, “expects”, “estimates”, “may “, “could”, “would”, “will” or “plan”.These statements are based on information currently available to Gensource and Gensource does not guarantee that actual results will meet management’s expectations.
Forward-looking statements include estimates and statements regarding Gensource’s future plans, objectives or goals, that Gensource or management expects a stated condition or result to occur, including any offer of titles by Gensource. Because forward-looking statements are based on assumptions and address future events and conditions, they, by their very nature, involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated in these statements for a number of reasons, including: the inability to complete a securities offering; failure to finance the Company’s Tugaske potash project or other projects on economic terms or at all; failure to enter into a definitive joint venture agreement with any party and to advance and finance the Tugaske Project; changes in general economic and financial market conditions; the ability to source and find off-take agreements; changes in potash demand and prices; litigation, legislative, environmental and other legal, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with Gensource’s activities; an inability to predict and thwart the effects of COVID-19 on Gensource’s business, including, but not limited to, the effects of COVID-19 on commodity prices, capital market conditions, restrictions on labor and international travel and supply chains; failure to obtain required regulatory approvals; and other matters discussed in this press release and in filings with securities regulators. This list is not exhaustive of factors that could affect Gensource’s forward-looking statements. These and other factors should be carefully considered, and readers should not place undue reliance on Gensource’s forward-looking statements. Gensource does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of Gensource, except in accordance with applicable securities laws.