REG - Gensource Potash - 2nd Quarter Results
30/08/2022 07:16
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RNS Number : 4721X Gensource Potash Corporation 30 August 2022
30 August 2022
Gensource Potash Releases Financial Statements and Management's Discussion and
Analysis for the Period Ending June 30, 2022
SASKATOON, Saskatchewan and London, U.K., August 30, 2022 - Gensource Potash
Corporation ("Gensource" or the "Company") (AIM/TSXV: GSP), a fertilizer
development company focused on sustainable potash production, announces that
it has released its Financial Statements and Management's Discussion and
Analysis for the period ending June 30, 2022. The reports are available under
the Company's profile on SEDAR (www.sedar.com (http://www.sedar.com) ) and on
the Company's website
(https://gensourcepotash.ca/financials-and-presentations/
(https://gensourcepotash.ca/financials-and-presentations/) ).
Gensource is hosting a shareholder update call on Wednesday August 31, 2022 at
4:00 PM Eastern time / 9.00 PM UK time, during which the Company will provide
an update on the development of its potash project near Tugaske, SK (the
"Tugaske Project"), discuss next steps, current fertilizer market industry
dynamics and respond to shareholder questions. Participants can join the call
by dialing: 1- 844-534-3191. If shareholders would like any specific items
addressed during the call, they should email questions in advance to:
info@gensource.ca (mailto:info@gensource.ca) .
Related party transaction
On May 31, 2022, the Company received a promissory note from Michael Ferguson,
President and CEO of the Company, in the amount of C$250,000 for project
related and general working capital purposes. The promissory note bears
interest at a rate of 0% per annum and matures on July 1, 2023. The Company is
entitled to prepay the whole or any part of the indebtedness evidenced by this
note at any time and from time to time without notice, bonus or penalty of any
kind whatsoever.
Summary of Key Activities
The Company has continued to be laser focused on reaching a conclusion to the
equity financing for the Tugaske Project ("Tugaske" or the "Project").
Gensource was active in the public markets through to early May 2022; however,
the process was deferred to the fall due to the general collapse of the public
markets worldwide which was driven largely by the war in Ukraine. The
Company continues discussions with private equity capital providers - many of
which have enhanced interest in the potash and general fertilizer space due to
the current global fertilizer and agriculture situation. Helm, the Company's
equity partner and Project off-taker, has steadfastly maintained its efforts
to support the financing process and continues discussions with all equity
investors. The Company will provide news to shareholders as it becomes
available. In the meantime, The Bridge Engineering study currently underway
will address inflationary pressures and will detail updated capex and opex
estimates for the Tugaske Project. Although the first module at Tugaske, and
the financing of it, is clearly the priority focus for management, initial
planning continues with respect to adding the second module to the Tugaske
Project as previously announced.
As of the date of the MD&A, the following significant events have occurred
in 2022:
· The Company announced that its strategic investor and offtake
partner, HELM AG and its subsidiary HELM Fertilizers, furthered its commitment
to the Company's potash project located near Tugaske, Saskatchewan. HELM and
Gensource plan to double the overall potash production capacity of the Tugaske
Project, from 250,000 tonnes per year to 500,000 tonnes per year, under a
second phase of the Tugaske Project ("Phase 2") by adding a second module to
the Tugaske Project. It is expected that Phase 2 will be implemented
immediately following the completion of the first phase of the Tugaske Project
("Phase 1"). In addition, HELM has committed to guarantee a CAD $12,500,000
contingency account for the Tugaske Project, as is required by the bank
syndicate of KfW IPEX-Bank and Société Générale in connection with the
Company's anticipated and previously announced debt financing. The two senior
lending banks, KfW IPEX-Bank and Société Générale, remain fully supportive
of the Project. (See news release dated June 21, 2022).
· The Company announced that on June 13, 2022, Michael Ferguson
(CEO) exercised, for cash, 1,000,000 stock options at C$0.13 per common share,
Deborah Morsky (PDMR) exercised for cash, 1,000,000 Options at C$0.13 per
Common Share and Robert Theoret (PDMR) exercised, for cash, 807,000 Options at
C$0.13 per Common Share in return for the issue of 1,000,000, 1,000,000 and
807,000 new Common Shares to Michael Ferguson, Deborah Morsky and Robert
Theoret, respectively. A non-PDMR exercised 500,000 Options in return for
500,000 Common Shares at a price of C$0.13 on June 13, 2022. (See news release
dated June 14, 2022)
· The Company announced that Stephen Dyer, Non-Executive Director,
acquired 375,000 Common Shares on June 9th, 2022 at C$0.27 per Common Share.
(See news release dated June 13, 2022).
· The Company announced the results of its annual general and
special meeting ("AGSM") of shareholders held on May 27, 2022, the Q1 2022
financial results and the appointment of Stephen Dyer as Non-Executive Board
Chair. (See news release dated May 31, 2022).
· The Company announced the first on-site activities, the
completion of a geotechnical field program for its potash project located near
Tugaske, Saskatchewan (the "Tugaske Project"). Completion of this fieldwork
represents an important pre-development Project milestone in this increasingly
relevant potash project that will support the agriculture sector. (See news
release dated May 26, 2022).
· The Company announced that has reached a binding agreement to
acquire 100% of the issued and outstanding shares of Innovare Technologies
Ltd., a privately held developer of patented selective solution mining and
brine processing technology for the recovery of potash and other soluble
minerals. Gensource's acquisition of Innovare's shares will occur by way of a
reorganization whereby Innovare's existing shareholders will transfer the
shares they hold in Innovare to Gensource in exchange for new common shares of
Gensource. Following completion of the reorganization, which is still subject
to a number of conditions precedent, Innovare will exist as a wholly owned
subsidiary of Gensource and Innovare's business will be integrated with and
controlled by Gensource. (See news release dated April 13, 2022).
· The Company announced the continued appointment of thinkHERO
Incorporated to provide external investor relations services to the Company.
(See news release dated April 1, 2022).
· The Company announced the mutual release and settlement agreement
dated February 11, 2022 with Frank Eberhardt, Carl F Peters GmbH & Co. and
11664735 Canada Ltd. with regards to the statement of claim filed by the
Plaintiffs against the Defendants, as described in the Company's news release
dated June 17, 2021. (See news release dated February 14, 2022).
Outlook
For the immediate future, the Company intends to raise additional financing
for the following purposes:
· complete the financing of the Tugaske Project,
· working capital purposes, and
· to begin to develop a second project.
The Company continues to monitor its spending and will amend its plans based
on business opportunities that may arise in the future.
Subsequent Events
· Subsequent to June 30, 2022, the Company completed the
Continuance of the Company out of the Province of Ontario under the provisions
of the Business Corporations Act (Ontario) and into the Province of
Saskatchewan under the provisions of The Business Corporations Act
(Saskatchewan) (the "Continuance"). As a result of the Continuance, the
Company has changed its registered office from 18 King St. E., Suite 902,
Toronto, Ontario, Canada M5C 1C4 to Suite 1100-201-1st Avenue South,
Saskatoon, Saskatchewan, Canada S7K 1J5, effective immediately.
· Michael Ferguson, Executive-Director, acquired 40,000 Common
Shares on July 22nd, 2022 at $0.19 per Common Share; Alton Anderson, Executive
-Director, acquired 40,000 Common Shares on July 22, 2022, at $0.185 per
Common Share and Michael Mueller, Non-Executive Director, acquired, in
aggregate, 50,000 Common Shares on July 22nd, 2022, at a weighted average
price of $0.1868 per Common Share. (See news release dated July 25, 2022)
· Amy O'Shea, Non-Executive Director, acquired 10,000 Common Shares
on July 25th, 2022 at C$0.19 per Common Share. (See news release dated July
28, 2022)
· KClean Potash received, in aggregate, $1,000,000 in draws against
the unsecured HELM $5,000,000 credit facility (August 10, 2022 and August 23,
2022).
Consolidated Statements of Financial Position (Expressed in Canadian Dollars)
As at December 31, 2021 As at December 31, 2020
ASSETS
Current assets
Cash $ 493,438 $ 748,946
Prepaid expenses and deposits 990,692 11,185
GST/HST and other receivables 439,520 37,189
Investments 12,037 6,305
Total current assets 1,935,687 803,625
Non-current assets
Deferred financing costs 1,244,865 366,658
Exploration and evaluation assets 3,940,941 13,289,180
Property, plant and equipment 16,877,019 14,550
Right-of-use assets 104,191 44,289
Total non-current assets 22,167,016 13,714,677
Total assets $ 24,102,703 $ 14,518,302
SHAREHOLDERS' EQUITY AND LIABILITIES
Current liabilities
Amounts payable and other liabilities $ 4,208,725 $ 480,848
Short-term portion of lease liability 45,372 49,777
Total current liabilities 4,254,097 530,625
Non-current liabilities
Lease liability 71,209 6,851
250,000 -
Convertible debt 2,011,250 -
Helm credit facility 2,027,671 -
Total liabilities 8,614,227 537,476
Shareholders' equity
Share capital 42,120,370 34,707,530
Contributed surplus 5,817,990 5,464,065
Equity portion of convertible debt 72,526 -
Deficit (32,522,410) (26,190,769)
Total shareholders' equity 15,488,476 13,980,826
Total shareholders' equity and liabilities $ 24,102,703 $ 14,518,302
Consolidated Statements of Operations and Comprehensive Loss (Expressed in Canadian Dollars)
Three Months Ended Six Months Ended
June 30, June
30,
2021 2022 2021
2022
Expenses
General and administrative (notes 13 and 14) $ 964,468 $ 1,364,891 $ 1,356,961
$ 639,610
Share-based payments (note 11) 20,033 154,137 20,033 526,500
Depreciation (notes 4 and 5) 13,196 14,256 26,393 29,165
Other exploration and evaluation - 6,836 - 6,836
672,839 1,139,697 1,411,317 1,919,462
Income (loss) before under noted items (672,839) (1,139,697) (1,411,317) (1,919,462)
Interest income 86 2,481 527 3,291
Unrealized (loss) gain on FVTPL investments 2,483 1,147 764 4,395
Gain on modification of lease liability (note 6) - 5,211 - 5,211
Accretion expense (notes 6 and 8) (44,192) (4,342) (87,730) (7,334)
Foreign exchange gain (1,414) 7,740 67,006 22,980
Interest on credit facility (12,466) - (22,671) -
Loss and comprehensive loss $ (728,342) $ (1,127,460) $ (1,453,421) $ (1,890,919)
Basic and diluted loss per share (note 12) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Weighted average number of common shares outstanding - basic and diluted (note 421,706,786 414,311,797 421,263,686 406,899,968
12)
Consolidated Statements of Cash Flows (Expressed in Canadian Dollars)
Six Months Ended June 30,
2022 2021
Operating activities
Net loss $ (1,453,421) $ (1,890,919)
Adjustments for:
Depreciation 26,393 29,165
Share-based payments 20,033 526,500
Accretion expense 87,730 7,334
Unrealized gain on FVTPL investments (764) (4,395)
Interest on credit facility 22,671 (5,211)
(1,297,358) (1,337,526)
Changes in non-cash working capital 2,947,984 113,183
Net cash used in operating activities 1,650,626 (1,224,343)
Investing activities
Expenditure on property in development stage (4,052,428) -
Purchase of property, plant and equipment (1,770) (1,810)
Acquisition and expenditures on exploration and evaluation assets (260,038) (1,610,915)
Net cash used in investing activities (4,314,236) (1,612,725)
Financing activities
Cash proceeds from promissory note 250,000 -
Cash proceeds from Helm credit facility 1,000,000 -
Cash proceeds from issuance of shares - 5,225,782
Cost of issuance - (289,393)
Cash proceeds from exercise of stock options 536,910 116,000
Deferred financing costs (309,745) (231,877)
Repayment of lease on right-of-use asset (32,196) (38,470)
Net cash provided by financing activities 1,444,969 4,782,042
Net change in cash (1,218,641) 1,944,974
Cash, beginning of period 1,712,079 748,946
Cash, end of period $ 493,438 $ 2,693,920
For further information on Gensource Potash, please contact:
Gensource Potash Corporation
Mike Ferguson - President & CEO +1-306-974-6414
Strand Hanson Limited (Nominated & Financial Adviser) +44 (0) 20 7409 3494
Ritchie Balmer / Rory Murphy / Charles Hammond
Peel Hunt LLP (Broker) +44 (0) 20 7418 8900
Ross Allister / David McKeown / Georgia Langoulant
Camarco (Financial PR) +44 (0) 20 3757 4997
Gordon Poole / Charlotte Hollinshead / Lily Pettifar
For any press enquiries please contact us on gensource@camarco.co.uk
Further information on Gensource Potash Corporation can be found at
www.gensourcepotash.ca (http://www.gensourcepotash.ca)
Follow us on twitter @GensourcePotash
About Gensource
Gensource is a fertilizer development company based in Saskatoon, Saskatchewan
and is on track to become the next fertilizer production company in that
province. With a modular and environmentally leading 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 components: (1) vertical integration with the market to ensure that all
production capacity built is directed, and pre-sold, to a specific market,
eliminating market-side risk; and (2) technical innovation which will allow
for a modular and economic potash production facility, that demonstrates
environmental leadership within the industry, producing no salt tailings,
therefore eliminating decommissioning risk, and requiring no surface brine
ponds, thereby removing 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 Statement
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 any
offering of securities by Gensource. 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 could
differ materially from those currently anticipated in such statements for many
reasons such as: failure to finance the Tugaske Project or other projects on
terms which are economic or at all; failure to settle a definitive joint
venture agreement with a party and advance and finance the Tugaske Project;
changes in general economic conditions and conditions in the financial
markets; the ability to find 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; an inability to predict and counteract the effects of COVID-19 on
the business of Gensource, including but not limited to the effects of
COVID-19 on the price of commodities, capital market conditions, restriction
on labour and international travel and supply chains, failure to obtain
required regulatory approvals; 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.
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