Junior potash mine developer Gensource Potash Corp., Saskatoon, said on Nov. 5 it has negotiated the fundamental shareholding structure with the project offtaker 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, situated 175 km south of Saskatoon. The initial plans were announced in January (GM Jan. 31, p. 27).
“We are thrilled to make this announcement,” said Mike Ferguson, President & CEO of Gensource. “The finalization 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,” Ferguson added.
Under the shareholding structure, Gensource will own 49.98 percent of the SPV, while Helm and the other investor will each own 25.01 percent. 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 committed to purchasing 100 percent of the production, which is expected to be 250.000 mt/y. Helm will market the potash directly to its customers using its existing infrastructure, taking the product directly from the mine site to retail in key agricultural markets in the U.S.
The agreement on shareholdings has been forwarded to 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 a wide range of 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.