Gensource Potash Corporation
TSX VENTURE : GSP

Gensource Potash Corporation

September 08, 2015 20:00 ET

Gensource Announces Confirmation of End-User Interest to Place Orders for Future Potash Production

SASKATOON, SASKATCHEWAN--(Marketwired - Sept. 8, 2015) - Gensource Potash Corporation ("Gensource" or the "Company") (TSX VENTURE:GSP) is pleased to provide an important update on its overall business plan to implement the potash industry's first vertically integrated production facility - namely, the receipt of the first formal confirmation of end-user interest to place orders for future potash production.

Gensource is pleased to announce that, to-date; it has received signed Term Sheets with 12 end-user customers in Brazil through its Brazilian market partner. These specific orders represent an aggregate of close to 150,000 tonnes/year (t/y). Additional discussions are underway for the remaining 100,000 t/y of the initial plant's planned 250,000 t/y production rate. These orders are in the form of non-binding Terms Sheets and Letters of Intent. The Term Sheets define product details, tonnages, timing and pricing. The Term Sheets will form the basis to negotiate full and binding off-take agreements with the end-user customers.

Gensource has been working with its Brazilian market partner, Arizona Agropuecaria, to bring together a group of forward-looking potash end-users. These customers clearly understand the advantages of controlling future crop fertilizer input costs, by contracting the direct manufacture and shipment of potash fertilizer from a scalable, dedicated mine in Saskatchewan to those forward-looking customers in Brazil.

Gensource's CEO, Mike Ferguson, stated, "We are very pleased to be able to make this announcement today. The receipt of these initial non-binding Term Sheets for future product validates the potential of Gensource's business model. These particular customers, and the anticipated additional customers who, together, will represent the full allotment of the production from the initial plant, are pioneers in the potash industry. To date, agricultural producers have typically sourced potash fertilizer on a retail basis, without long term supply arrangements and at the prevailing retail price. The Gensource model allows agricultural producers to control potash fertilizer input costs in their operations. These first bold steps, Gensource believes, represent the beginnings of a changed potash industry, a first glimpse of potash industry of the future."

The Company's business plan is to create a vertically integrated business structure that will lock together a group of potash customers with a scalable potash fertilizer production plant in Saskatchewan. For customers who consume known quantities of potash fertilizer on an annual basis, the opportunity is to obtain surety of supply of this vital crop input at a competitive and, most importantly, predictable, price into the future.

The objective of Gensource is to complete a state of the art production facility that will be easily scalable and use selective mining and enhanced processing techniques. See Gensource's News Release of April 13th, 2015, for more details of the planned project.

Next Steps:

1. Financing and Project Development:

Gensource will begin a new financing effort in September, both in Canada and Brazil. In order to advance the development of the Lazlo Project, it is estimated that Gensource will require two further tranches of development financing: 1) Resource Confirmation and Preliminary Economic Assessment: approximately $3M of Canadian Exploration Expenses ("CEE") flow through financing will be required to fund drilling and 3D seismic work, as well as approximately $1M in additional financing to fund activities not classified as CEE; and, subject to a satisfactory preliminary economic assessment, 2) Feasibility Study: approximately $5-7M to complete the environmental and regulatory process, complete a detailed feasibility study and complete the required land control and leasing work. Gensource estimates that this work can be completed within a 6-8 month time span and, when complete, will allow for a construction decision to be made.

There are no commercial operations at the Lazlo Project at this time. The determination of the prospects for commercial operations at the Lazlo Project is dependent upon a feasibility study demonstrating economic and technical viability.

2. Formal Off-Take Agreements:

Gensource will begin negotiations with the identified end-users to convert the Term Sheets into formal off-take agreements.

There can be no assurance that the formal off-take agreements with the identified end-users can be completed on mutually satisfactory terms or at all. None of the Term Sheets are binding and definitive terms have not been settled.

About Gensource

Gensource is based in Saskatoon, Saskatchewan and is focused on developing the next potash production facility in that province. Gensource's President and CEO, Mike Ferguson, P.Eng., has assembled a management and technical team with direct and specific expertise and experience in potash development in Saskatchewan.

Gensource operates under a business plan that has two key components - vertical integration with the market to ensure that all production capacity built is directed to a specific market, eliminating market-side risk; and, technical innovation which will allow for a small and economic potash production facility, the output of which can then be directed to a single, specific market.

The scientific and technical information contained in this news release was prepared by or under the supervision of Mike Ferguson, P.Eng., who is the President and Chief Executive Officer of Gensource and a "qualified person" under National Instrument 43-101.

Neither 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 news 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 the expectations of Gensource included in this news release. This news release includes 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 provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements with respect to Gensource's future plans, objectives or goals, to the effect that Gensource or management expects a stated condition or result to occur, including the expected timing for release of a resource estimate and a preliminary economic assessment, as well as a feasibility study, and the establishment of vertical integration partnerships and the sourcing of end use potash purchasers. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, the economics of processing methods, project development, reclamation and capital costs of Gensource's mineral properties, Gensource's financial condition and prospects, the ability to establish viable vertical integration partnerships and the sourcing of end use potash purchasers, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; the ability to find distributors and source off-take agreements; changes in demand and prices for potash; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with Gensource's activities; and other matters discussed in this news release and in filings made with securities regulators. This list is not exhaustive of the factors that may affect any of Gensource's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on Gensource's forward-looking statements. Gensource does not undertake to update any forward-looking statement that may be made from time to time by Gensource or on its behalf, except in accordance with applicable securities laws.

Contact Information

  • Gensource Potash Corporation
    Mike Ferguson
    President & CEO
    Telephone: (306) 974-6414
    Email: mike@gensource.ca