Junior company Gensource Potash Corp., Saskatoon, on Jan. 19 reported that Helm AG has confirmed that it will withdraw its proposed 33% ownership offer in KClean Corp., the entity created to own and operate the Tugaske Potash Project in Saskatchewan. Helm had offered C$50 million for its stake in 2021 (GM Sept. 3, 2021). Gensource said that currently KClean and the Tugaske Project are, and continue to be, 100% owned by Gensource.
Gensource explained that the Helm investment 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. Gensource thanked Helm for its action, which now provides the opportunity for Gensource and potential investors to work with an open capital structure to complete the financing of the project.
“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 Corp., which will allow Gensource to proceed with the required financing for the Tugaske Project,” said Stephen Dyer, Gensource Chairman.
Gensource said Helm remains supportive of the project and is committed as an offtaker of 100% of all granular fertilizer (250,000 mt/y) to be produced at the project pursuant to a binding 2021 offtake agreement (GM May 14, 2021). In addition, Gensource said 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 said it continues to progress its short-term financing, which it anticipates will advance the near-complete bridge engineering work for the project. Looking forward into 2023, Gensource expects to complete financing with private equity and strategic investors to move the project into construction.
“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, Gensource CEO. “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.”