RCS - Gensource Potash - Confirmation of Intention to Float on AIM
RNS Number : 1155QGensource Potash Corporation25 October 2021
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THE COMMUNICATION OF THIS ANNOUNCEMENT IS NOT BEING MADE, AND HAS NOT BEEN APPROVED, BY AN AUTHORISED PERSON FOR THE PURPOSES OF SECTION 21 OF THE UK FINANCIAL SERVICES AND MARKETS ACT 2000 AND IS NOT AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION, INCLUDING IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA.
Neither this announcement, nor anything contained herein, shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction. Prospective investors should not subscribe for or purchase any securities referred to in this announcement, except on the basis of the information in the final admission document to be published by the Company and any supplement thereto ("Admission Document"), in connection with the proposed Admission (as defined below).
A copy of the Admission Document will, following publication, be available for viewing on Gensource Potash Corporation's corporate website at https://gensourcepotash.ca/, subject to certain access restrictions.
25 October 2021
Gensource Potash Corporation
("Gensource" or the "Company")
Confirmation of Intention to Float on AIM
Following the announcement by the Company on 6 May 2021, Gensource, the fertilizer development company focused on potash development at its Tugaske Project in Saskatchewan ("Tugaske" or the "Tugaske Project"), Canada is pleased to confirm its intention to seek admission of its common shares to trading on the AIM market of the London Stock Exchange ("Admission"). The Company expects that Admission will become effective in early November 2021.
Key Strengths of the Company
· Leading with a modular approach in a transforming industry
Gensource is making what it believes will be a transformative change in the potash industry with its modular and environmentally sustainable extraction method. The Company produces potash with no salt tailings or surface brine ponds and is powered by lower-carbon energy resulting in a small environmental footprint compared to conventional existing production facilities. Gensource's mission is to create a series of independent, scalable, and environmentally sustainable potash production facilities in Saskatchewan and, in time, throughout the rest of the world. Overall, the Company's vision is to help advance global food security by supplying key macronutrients at an affordable cost with a transparent and sustainable approach.
The Company's Tugaske project utilises innovative, sustainable production methods that are environmentally sound and socially responsible. The Tugaske Project will have a decreased physical footprint relative to conventional potash mining, resulting in less impact on air, water and land. Gensource's vertical integration with the market helps ensure that all production capacity is pre-sold, which supports a significantly de-risked business model.
· Tugaske Project is "shovel ready"
The Company has already achieved key milestones at its Tugaske site in Saskatchewan, a tier 1 mining jurisdiction. The Company's development partners are ready to commence construction (subject to the completion of debt financing discussed below and other conditions), with first production targeted for early 2024. The Tugaske Project's Proven and Probable Mineral Reserve of over 14.1 million tonnes indicates a minimum expected mine life of more than 56 years (based on annual production of 250,000 tonnes of saleable muriate of potash).
It is intended that the Tugaske Project will be executed through a special purpose vehicle (the "Tugaske SPV") and KClean Potash Corporation ("KClean") has been incorporated in Saskatchewan for that purpose.
· Debt financing secured for the Tugaske Project
In September 2021, the Company received binding commitment letters from KfW IPEX-Bank and Société Générale (the "Senior Lenders"), for a debt facility (the "Debt Facility") of up to C$280 million to finance the debt component of the Tugaske Project, subject to certain financing and other conditions being satisfied. Together with the circa C$105 million cash equity commitment from Gensource and HELM AG's ("HELM") equity commitment (further detail below) into the Tugaske SPV, the Debt Facility secures the Company's construction and ramp-up of its Tugaske Project. The Company believes that the commitment from the Senior Lenders highlights a strong endorsement for Gensource's Tugaske Project and signifies an appetite for the Company's sustainable business model. Notably KfW IPEX-Bank, one of the Senior Lenders, has substantial experience financing fertilizer development projects globally.
· Off-take agreement and equity investment from HELM
HELM, one of the world's major independent chemicals and fertilizer distribution companies, is committed to purchasing 100% of Gensource's production from its Tugaske Project for an initial period of 10 years, with an option to renew thereafter (the "Offtake Agreement").
In addition to the Offtake Agreement, HELM has also agreed in a binding, conditional commitment letter to Gensource, to invest C$50 million into the Tugaske SPV and guarantee specific accounts in the Tugaske Project debt financing package in exchange for a 33 percent ownership interest in the Tugaske SPV, with the remaining 67 percent ownership interest held by Gensource, subject to Gensource making its required capital and non-cash contributions.
HELM has agreed to market the potash directly to its customer base, providing KClean with the competitive advantage of a direct and efficient delivery network from the mine site to retail. HELM's fertilizer business, which includes a wide range of products and storage facilities in close proximity to its sales outlets, is firmly established in key agricultural markets across the United States.
· Low capital expenditure & low quartile operating costs
Gensource combines tested extraction methods with patented processing techniques, resulting in expected lower overall costs relative to many conventional potash mines. The Company is projected to be on the low end of the global potash cost curve delivered to the market. The Company's Tugaske project will also benefit from logistical advantages as a result of a shorter, more direct supply chain to the large U.S. market and no additional distribution costs.
· Strong growth potential
As a result of the growing global population, increasing food demand and the Company's aforementioned logistical advantages, Gensource is well-positioned to capitalize on this growth opportunity. The global demand for potash is expected to grow at a 2% compound annual growth rate, resulting in total demand of 88.7 million tonnes by 2035.
· Experienced management team
The management team brings together significant technical expertise with proven execution capabilities. The Company's core team is the same team that led the development of Potash One's Legacy Project (now operating as the Bethune Mine) - which was the first new realized potash development in 40 years. This experience has helped the team formulate a transformational approach to extracting, producing and distributing potash in a sustainable manner. The team also has a history of delivering value to shareholders.
Gensource is focused on advancing its position as a leading global low-cost supplier of potash, with a clear focus on sustainable development. Following the construction of the Tugaske Project, the Company plans, subject to financing, to replicate its modular approach to develop new potash projects within the wider Vanguard Area (the area in which the Tugaske Project is located) and the Lazlo Area. The Company believes its modular strategy will enable the development of other known potash resources around the world where traditional large projects have proven uneconomic.
Rationale for listing on AIM
Listing on AIM will allow the Company to better access UK and European institutional investors. Gensource's relationship with HELM, headquartered in Germany, as well as its European-based Senior Lenders, in addition to the Company's business plan of building future modules around the world, lends itself to increased liquidity through the global reach of an AIM listing.
Michael Ferguson, CEO of Gensource, commented:
"We are delighted to confirm our intention to list Gensource on the London Stock Exchange's AIM market, facilitating the opportunity for stakeholders and interested parties to invest in a high margin, de-risked, long life and sustainable project that sets a new direction in a staid industry.
Our vertical integration model will enable all production capacity built to be directed and pre-sold to a specific market which will assist us in reducing market-side risk. For our Tugaske Project, we will deploy this model through our Offtake Agreement with HELM.
Technical innovation is another key component of our business model and allows for a modular and economic potash production facility that demonstrates superior environmental leadership within the potash industry. By using selective solution mining techniques, salt tailings are entirely avoided, negating the largest decommissioning risk of any potash project and corresponding brine ponds are not needed, allowing us to eliminate the single largest negative environmental aspect of potash mining.
We very much look forward to this exciting new phase, which we believe will provide us with greater visibility and opportunity for growth as we build our market share."
Gensource Potash Corporation
Mike Ferguson - Chief Executive Officer
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 / Nick Hennis / Charlotte Hollinshead
Further information on Gensource Potash Corporation can be found at www.gensourcepotash.ca
Overview of Gensource
Gensource is a fertilizer development Company based in Saskatoon, Saskatchewan. With a market-appropriate 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 modular and economic potash production facility that demonstrates environmental leadership within the industry. The approach is differentiated by using significantly less water per tonne compared to conventional solution mining operations, producing no salt tailings, therefore eliminating decommissioning risk, and requiring no surface brine ponds, thereby removing the single largest negative environmental impact of potash mining.
On October 18, 2021, the Company completed a Convertible Debenture Offering for gross proceeds of C$2 million. The Company has also recently obtained a facility from HELM in the amount of C$5 million to fund initial project activities, of which it has drawn down C$1 million to date.
The Company intends to use its existing capital resources to fund a portion of its equity commitment to the Tugaske SPV and for its ongoing general working capital requirements. The additional approximate C$105 million in equity capital that the Company will require to fund its equity commitment to the Tugaske SPV will be required to be obtained from other sources following Admission, including, potentially, offerings of equity securities by the Company. Further updates will be made as and when appropriate.
Board of Directors and Senior Management
Board of Directors
On Admission, the Board will consist of two Executive Directors, and four Independent Non-Executive Directors. Brief biographies of the Directors of the Company are set out below:
Michael Ferguson - Chairman, President and Chief Executive Officer
Michael Ferguson is a professional engineer with over 30 years' experience in potash and uranium mining projects in Saskatchewan. Mike graduated from the University of Saskatchewan with a B.Sc. in Mechanical Engineering. Following a few years spent with the Canadian Military, Mike settled back in Saskatoon and has spent his entire mining career in Saskatchewan participating in projects in potash, uranium, gold and base metals.
His experience ranges from working at the mining face behind a Marietta Miner in a potash operations, to in-plant engineering (both surface plant and underground), engineering management, project management through to general management of engineering and EPCM companies.
Most recently, before his time at Gensource, Mike successfully led the Potash One project team responsible for the development of the Legacy Project in Southern Saskatchewan from initial exploration through scoping-, pre-feasibility- and feasibility studies and an approved EIS, to the point where it was acquired by the international potash producer K+S Group of Germany.
Alton Anderson - Chief Financial Officer
Alton is an experienced finance executive with over 30 years' experience in the fertilizer industry including 22 years at PotashCorp (Nutrien). While at PotashCorp, Alton led teams responsible for global transformation initiatives. He successfully led teams that aligned and transformed 16 operating sites in Canada, US, and Trinidad on processes, people, data and technology; and changed the culture from decentralized to centre led.
He has direct experience across the entire supply chain having led teams and projects in finance, supply chain management, procurement, operations, sales & marketing, and logistics. Alton and the teams he led have won numerous awards including BTOES Award for Best Achievement of Operational Excellence in Manufacturing and the Oracle Supply Chain Excellence Award.
He is a Chartered Professional Accountant (CPA, CA) with a Bachelor of Commerce degree from the University of Saskatchewan.
Calvin Redlick - Independent Non-Executive Director
Mr. Redlick has over 30 years of experience as a global investment banker. Mr. Redlick obtained his Bachelor of Arts from the University of Saskatchewan and completed his formal education at the University of Wales, graduating with his Bachelor of Laws (Honours). Mr. Redlick was admitted to the bar while working at Parlee McLaws LLP, Calgary, Alberta. Mr. Redlick moved to London, England in 1987 to pursue a career in investment banking, where he currently resides.
Prior to forming his own company in 2013, Mr. Redlick served in various roles at Wyvern Partners (Partner, Corporate Finance - London), Mitsubishi UFJ Securities PLC (Senior Advisor, Corporate Finance - London), DTZ Corporate Finance (Senior Advisor, Corporate Finance - London), BNP Paribas (Managing Director, Head of Corporate Finance - Northern Europe), CIBC Wood Gundy Inc. (VP- Head of Structured Finance - London) and Sumitomo-Mitsui Bank (Manager, Debt Capital Markets, London).
Michael Mueller - Independent Non-Executive Director
Mr. Mueller is the former Chairman of PSP Investments (Public Sector Pension Investment Board) where he served from 2006 to 2018. From 2003 to 2005, he was President and Chief Executive Officer of MDS Capital Corporation. Prior to that, Mr. Mueller held a series of senior positions at TD Bank Financial Group, including Senior Vice President and Country Head of its USA Division, Executive Vice President of Global Credit and Vice Chairman and head of Global Investment Banking. Currently, Mr. Mueller is Chairman of the Board of Laurentian Banking Group (TSX:LBC), and Chair of the Audit Committee of Meduxus Pharmaceuticals (TSX-V:MDP).
He is also Chair of the Board of one of the world's largest private companies serving the seniors living segment, Revera Inc. He brings a wealth of knowledge and experience in public company governance and corporate finance, with a focus on start-up company strategy and finance.
Amy O'Shea - Independent Non-Executive Director
Ms O'Shea joined the Gensource board in April 2020, bringing a stellar 27-year career in the agricultural industry, starting out with an innovative non-chemical bio-pesticides company. Subsequently, she held successively more senior roles with FMC Corporation, ultimately holding the position of Vice President and Business Director, North America Agricultural Solutions. Her track record within FMC shows a leadership and management ability to take difficult situations and turn them around to create thriving and profitable business units. Amy's leadership and knowledge in this area specifically, together with her deep understanding of the agricultural marketplace makes her a perfect fit for a director role at Gensource. Her guidance will be key as Gensource begins its transition from a project development company to a sustainable producer of potash.
Amy is currently President & CEO of Certis Biologicals USA, a leading bio-pesticide manufacturer and distributor, and she is a board member of Intag Systems, a company focused on biological solutions to help reduce the environmental impacts of food production while increasing yields for farmers. She has a strong leadership history throughout her career and that experience, together with her proven senior executive management skills combine to provide Gensource with tremendous value in the agricultural industry.
Stephen Dyer - Independent Non-Executive Director
Mr. Dyer, former CFO and Senior Vice President of Agrium, brings an exceedingly rare wealth of knowledge and experience to Gensource from his 30 years of experience in the agricultural sector. Mr. Dyer is a seasoned senior executive with significant experience with public company boards and direct board-management interaction in addition to experience with direct investor and capital markets interactions. His career with Agrium and its predecessor companies spanned over 25 years where he held a broad range of positions in the areas of manufacturing, retail, logistics, business development, and Finance. In his role as CFO at Agrium, Mr. Dyer was active in corporate finance activities, completing a complex $1.8B acquisition of Viterra's Canadian retail assets and providing Agrium with attractive long-term debt through his direct interaction with the bond market over two transactions totalling $1.5B. In his role of President Agrium Retail, Mr. Dyer had full P&L responsibility for the largest global Ag retail network spanning 7 countries, 12,000 employees and generating $1.1B in EBITDA from revenue of $12B.
It is the Company's intention to appoint, in the near to medium term, a further UK / European based independent non-executive director. It is also the intention for Michael Ferguson to transition his role as Chairman of the Board to one of the current independent Non-Executive Directors. Further updates will be made as and when appropriate.
This announcement contains forward-looking statements. All statements other than statements of historical fact contained in this announcement are forward-looking statements, including, without limitation, statements regarding future financial position and financing activities, business strategy, the future development of the Tugaske Project, the successful negotiation and entering into of the Debt Facility, the proposed shareholder agreement with HELM with respect to the structure of the Tugaske SPV, financial condition, capital resources and business of the Company. Prospective investors can identify many of these statements by looking for words such as "believes", "expects", "will", "may", "intends", "projects", "anticipates", "plans", "estimates", "continues" and similar words or the negative thereof.
Forward-looking statements are necessarily based upon a number of expectations or assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Prospective Investors are cautioned to not place undue reliance on forward-looking statements which only speak as at the date of this Announcement. Although management believes the expectations and assumptions underlying such forward-looking statements are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. A number of factors could cause actual future results, performance, achievements and developments of the Company to differ materially from anticipated results, performance, achievements and developments expressed or implied by such forward-looking statements.
The Company, the Nomad and the Broker expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto, any new information or any change in events, conditions or circumstances on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.
Strand Hanson Limited which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and for no one else in connection with Admission and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to Admission or any other matter referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for giving advice in relation to Admission or any other matter referred to in this Announcement. Strand Hanson Limited's responsibilities as the Company's nominated adviser under the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any other person.
Peel Hunt LLP which is each authorised and regulated in the United Kingdom by the FCA, is acting as broker exclusively for the Company and for no one else in connection with Admission and will not regard any other person (whether or not a recipient of this Announcement) as a client in relation to Admission or any other matter referred to in this Announcement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for giving advice in relation to Admission or any other matter referred to in this Announcement.This information is provided by Reach, the non-regulatory press release distribution service of RNS, part of the London Stock Exchange. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact firstname.lastname@example.org or visit www.rns.com.
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