Junior potash miner Gensource Potash Corp., Saskatoon, this week said the company and Helm AG and Helm’s subsidiary, Helm Fertilizers, plan to double the overall potash production capacity of the Tugaske Project, located 170 km south of Saskatoon, from 250,000 mt/y to 500,000 mt/y, under a second phase of the project by adding a second module.
Gensource expects that phase 2 will be implemented immediately following the completion of the first phase of the project.
Helm is a strategic investor and offtake partner in the Tugaske Project. Through its U.S. subsidiary, Helm Fertilizer Co., Tampa, Helm in January 2021 inked a ten-year renewal offtake deal for 100 percent of the project’s originally planned output (250,000 mt/y), a deal solidified in May 2021 (GM May 14, 2021).
Helm in September last year committed to invest C$50 million into the potash project (GM Sept. 3, 2021).
The Canadian potash junior said at a time of soaring fertilizer prices and constrained supply, particularly with respect to potash, the company is pleased to have a partner that has the strategic vision to see the value proposition in Gensource’s business model.
“Helm sees significant opportunity for the sale of additional potash production through its existing market channels, including demand for organic potash,” Gensource said.
The Canadian potash junior revealed that Helm has committed to guarantee a C$12.5 million (approximately US$9.65 million at current exchange rates) contingency account for the Tugaske Project, as is required by the bank syndicate of KfW IPEX-Bank GmbH and Société Générale SA, which are acting as joint lead arrangers in connection with Gensource’s anticipated debt financing for the project. The financing package is expected to be up to C$280 million.
The Canadian potash junior also reported Gensource discussions with third-party strategic equity investors are yielding positive results towards proposed refinements to the final capital structure for the project and for KClean Potash Corp.
Gensource reported in late May that it had completed the geotechnical field program at the potash project (GM June 3, p. 31). The bridge engineering phase for the project is currently underway. Announced in late May, the bridge engineering phase is part of the overall detailed project engineering and is a key deliverable for confirming capital costs and operational costs of the Tugaske Project.
KClean Potash Corp. is the joint venture company that will own and deliver the Tugaske Project. It is a Special Purpose Vehicle (SPV) formed as part of Helm’s strategic investment in the project, with Helm owning 33% and Gensource 57% (GM Sept. 3, 2021).