REG - Gensource Potash - Final Results

Gensource PotashAnnouncement

28/03/2022 07:15

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RNS Number : 1501G  Gensource Potash Corporation  28 March 2022

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DISSEMINATION IN THE UNITED STATES

 

28 March
2022

 

 

Audited financial statements for the year ended December 31, 2021

 

SASKATOON, Saskatchewan and London, U.K., March 28, 2021 - Gensource Potash
Corporation ("Gensource" or the "Company") (TSXV: GSP, AIM: GSP) announces
that it has released its audited financial statements and management's
discussion and analysis for the year ended December 31, 2021. The reports will
be 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/) ). An extract of
the key information from both documents is set out below, however Shareholders
are encouraged to read the full documents:

 

Summary of Key Activities During the Year
 

The main focus of the Company continues to be the advancement of its first
project, the Tugaske Project ("Tugaske" or the "Project") through the final
financing stages into construction. That process continues with negotiations
underway with several "keystone" investment groups, who, when negotiations and
definitive agreements are complete, will set the structure for the remainder
of the financing required for Tugaske.

 

However, the Company's larger business plan involves several growth pathways.
One pathway is the expansion of its first project with its partner, HELM AG,
as agreed between the parties and as the market is prepared. Secondly,
Gensource is laying plans for replicating its business model with other
partners serving other non-competing markets. The third pathway to growth for
the Company is to take its technology "on the road": to deploy its
specialized, efficient and environmentally sustainable techniques and
technology in other known potash deposits around the world, closer to
consuming markets.

 

To prepare the path to growth, in December 2021, Gensource acquired an
additional potash exploration permit immediately adjacent to its Vanguard
area.  Adding Saskatchewan Permit to Explore for Subsurface Minerals, SMP200
("SMP200"), to the Vanguard Area, provides an additional 7,244 hectares
(almost 18,000 acres) of prospective minerals. What Gensource calls the
Vanguard Area now comprises leases KL244, KL245 and SMP200. The area is so
named because Gensource believes its approach to potash production and
marketing of the product to be at the forefront of a change sweeping the
industry - in fact, Gensource is a driver of that change. SMP200 is so close
to existing Gensource-drilled wells, that a significant portion of the data
from those existing wells will be applicable to the minerals contained within
SMP200, making resource confirmation

in SMP200 much more cost- and time-efficient. Further development work for
SMP200 will be announced as it is defined and approved. Gensource continues
discussions towards agreements to advance additional projects with several
parties interested in Gensource's vertically integrated business plan and
direct marketing structure.

 

Other highlights of Q4 2021 and the year ending December 31, 2021 are (some
repeating from previous MD&A filings in 2021):

·      The Company acquired SMP200 from the Saskatchewan Government on
December 21, 2021.

·      The Company continued negotiations with cornerstone investors
towards completing the final equity financing for the Tugaske Project.

·      The Company announced that admission to trading (the "Admission")
on the AIM Market of the London Stock Exchange ("AIM") commenced, at 08:00 GMT
November 5, 2021. Trading continues under the symbol (formally the TIDM code)
GSP, the same as its TSX Venture Exchange ("TSXV") symbol. With respect to the
AIM listing, Strand Hanson is acting as Nominated Adviser to the Company and
Peel Hunt is acting as Broker to the Company. (See news release dated November
5, 2021).

·      The Company's Tugaske Project entered into mine development
effective October 14, 2021 when the technical and commercial feasibility of
the mine was met.  As a result, all costs that were capitalized to the
Tugaske Project have been transferred to property, plant and equipment under
construction.

·      The Company completed a non-brokered private placement offering
of $2,000,000 principal amount of 5% convertible redeemable unsecured
debentures of the Company at a price of $1,000 per debenture. All directors
and officers of the Company participated in the Offering, purchasing a total
of $1,985,000 principal amount of Debentures (the remaining amounts were
purchased by other employees of the Company). (See news release dated October
19, 2021).

·      The Company announced the filing of an updated National
Instrument 43-101 Technical Report, summarizing the Tugaske Project. (See news
release dated October 19, 2021).

·      The Company received conditional binding commitment letters from
its two mandated joint lead debt arrangers, KfW IPEX-Bank and Société
Générale, following successful risk approvals and credit approvals within
each organization. The commitment letters provide for a senior secured debt
facility in the amount of up to $280 million. The Debt Facility is intended to
fund, in part, the construction and ramp up of the Company's Tugaske potash
development project. The senior debt commitment is based on an agreed to, and
binding, term sheet for the Debt Facility. (See news release dated September
23, 2021).

·      The Company incorporated a subsidiary company, KClean Potash
Corporation ("KClean"). KClean will be the special purpose vehicle that will
receive project assets from Gensource, equity investments from Gensource and
HELM AG and receive senior debt financing from the senior lenders.

·      The Company's subsidiary company, KClean, entered into an
unsecured $5,000,000 loan agreement with HELM (the "HELM credit facility")
August 27, 2021 for expenses in connection with the Tugaske Project
development.  The HELM credit facility bears interest at a rate of 2.5% per
annum, payable in arrears on the maturity date, which will be August 31, 2024.

·      Additional work was completed on the project to support the AIM
listing process, specifically the creation of a Competent Person Report
(similar in content and structure to an NI 43-101 Technical Report), which was
published along with the AIM listing document.

·      The Company announced the appointment of Alton Anderson and
Stephen Dyer to its Board of Directors, effective April 21, 2021. (See news
release dated April 21, 2021).

·      The definitive off-take agreement between Gensource and HELM
Fertilizer USA was completed and executed. (See news release dated May 12,
2021).

·      The Company announced the completion of a National Instrument
(NI) 43-101 Technical Report. (See news release dated March 22,2021).

·      The terms of the shareholder agreement between HELM Fertilizers
and Gensource have been agreed upon and will be executed as the project
advances. Current project company setup work is focused on several
sub-agreements to the shareholder agreement.

·      The Company completed a non-brokered private placement financing
for gross proceeds of $5,225,782.14. (See news release dated February 12,
2021).

 

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

 

·      On January 31, 2022, KClean Potash received a $1M draw against
the unsecured HELM $5M credit facility.

 

·      In February, 2022, 500,000 stock options with an exercise price
of $0.18 and an expiry date of April 23, 2022, were exercised and 100,000
stock options with an exercise price of $0.17 and an expiry date of February
20, 2022, were exercised.

 

·      On February 14, 2022, the Company announced that the Company,
HELM and Michael Ferguson (collectively, the "Defendants") entered into a
mutual release and settlement agreement dated February 11, 2022 (the
"Settlement Agreement") with Frank Eberhardt, Carl F Peters GmbH & Co. and
11664735 Canada Ltd. (collectively, the "Plaintiffs") with regards to the
statement of claim filed by the Plaintiffs against the Defendants (the
"Action").

 Consolidated Statements of Financial Position (Expressed in Canadian Dollars)
                                                                                As at December 31, 2021     As at December 31, 2020
 ASSETS
 Current assets

 Cash                                                                           $      1,712,079            $         748,946
 Prepaid expenses and deposits                                                  304,628                     11,185
 GST/HST and other receivables                                                  143,433                     37,189
 Investments                                                                    11,273                      6,305
 Total current assets                                                           2,171,413                   803,625
 Non-current assets

 Deferred financing costs                                                       935,120                     366,658
 Exploration and evaluation assets                                              3,680,903                   13,289,180
 Property, plant and equipment                                                  12,825,445                  14,550
 Right-of-use assets                                                            127,960                     44,289
 Total non-current assets                                                       17,569,428                  13,714,677
 Total assets                                                                   $    19,740,841             $     14,518,302
 SHAREHOLDERS' EQUITY AND LIABILITIES
 Current liabilities

 Amounts payable and other liabilities                                          $         278,590           $         480,848
 Short-term portion of lease liability                                          40,181                      49,777
 Total current liabilities                                                      318,771                     530,625
 Non-current liabilities

 Lease liability                                                                95,080                      6,851
 Convertible debt                                                               1,937,036                   -
 Helm credit facility                                                           1,005,000                   -
 Total liabilities                                                              3,355,887                   537,476

 Shareholders' equity
 Share capital                                                                  40,993,968                  34,707,530
 Contributed surplus                                                            6,387,449                   5,464,065
 Equity portion of convertible debt                                             72,526                      -
 Deficit                                                                        (31,068,989)                (26,190,769)

 Total shareholders' equity                                                     16,384,954                  13,980,826

 Total shareholders' equity and liabilities                                     $    19,740,841             $    14,518,302

 
Consolidated Statements of Operations and Comprehensive Loss (Expressed in Canadian Dollars)

 

 

Years Ended December 31,

                                                                            2021                          2020

 Expenses
 General and administrative                                                 $    3,212,604                $       961,098
 Share-based payments                                                       1,593,400                     132,900
 Depreciation                                                               55,141                        59,316
 Other exploration and evaluation                                           1,422                         -

                                                                            4,862,567                     1,153,314

 Income (loss) before under noted items                                     (4,862,567)                   (1,153,314)
 Interest income                                                            5,530                         9,912
 Unrealized gain on FVTPL investments                                       4,968                         4,012
 Gain on modification of lease liability                                    5,211                         -
 Accretion expense                                                          (52,327)                      (20,061)
 Foreign exchange gain                                                      25,965                        157,090
 Interest on credit facility                                                (5,000)                       -

 Loss and comprehensive loss                                                $ (4,878,220)                 $ (1,002,361)
 Basic and diluted loss per share                                           $           (0.01)            $           (0.00)

 Weighted average number of common shares outstanding - basic and diluted   412,512,577                   383,114,356

 

 

Consolidated Statements of Cash Flows (Expressed in Canadian Dollars)

 

 

Years Ended December 31,

2021                              2020

 

 

Operating activities

 Net loss                                                               $ (4,878,220)       $ (1,002,361)

 Adjustments for:
 Depreciation                                                           55,141              59,316
 Share-based payments                                                   1,593,400           132,900
 Accretion expense                                                      52,327              20,061
 Unrealized gain on FVTPL investments                                   (4,968)             (4,012)
 Interest on credit facility                                            5,000               -
 Gain on modification                                                   (5,211)             -
                                                                        (3,182,531)         (794,096)
 Changes in non-cash working capital                                    (601,946)           (1,384,168)

 Net cash used in operating activities                                  (3,784,477)         (2,178,264)

 Investing activities

 Purchase of property, plant and equipment                              (7,378)             (7,776)
 Acquisition and expenditures on exploration and evaluation assets and
 exploration assets in development stage

                                                                        (3,199,583)         (4,218,905)

 Net cash used in investing activities                                  (3,206,961)         (4,226,681)

 Financing activities

 Cash proceeds from issuance of convertible debt (net)                  1,980,413           -
 Cash proceeds from Helm credit facility                                1,000,000           -
 Cash proceeds from issuance of shares                                  5,225,782           -
 Cash proceeds from exercise of warrants                                4,309               -
 Cost of issuance                                                       (289,668)           -
 Cash proceeds from exercise of stock options                           675,999             107,000
 Deferred financing costs                                               (568,462)           (366,658)
 Repayment of lease on right-of-use asset                               (73,802)            (76,939)

 Net cash provided by financing activities                              7,954,571           (336,597)
 Net change in cash                                                     963,133             (6,741,542)
 Cash, beginning of year                                                748,946             7,490,488

 Cash, end of year                                                      $    1,712,079      $       748,946

 

 

For further information on Gensource, 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 small scale 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 small 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 complete an offering of securities; failure to
finance the Company's Tugaske potash 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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