Gensource inks second offtake accord with potash major

VANCOUVER (miningweekly.com) – Potash project developer Gensource Potash has secured a second potash offtake deal in a week with a second hitherto unnamed senior North American agriculture industry player.

Saskatoon, Saskatchewan-based Gensource said on Tuesday that the nonbinding memorandum of understanding (MoU) contemplates the offtaker buying all output of one module of 250 000 t/y from Gensource’s Vanguard project area for a period of ten years, including take-or-pay provisions.

The MoU, which envisions a formal agreement being finalised by the end of April, makes provision for the offtaker to provide certain financial guarantees acceptable to a financing institution to aid in the current project finance process, Gensource advised. The offtaker will also have the right of first refusal to marketing product from any future production expansions at the project.

With the construction time pegged at between 18 and 22 months, first production should occur in early 2020, the company noted.

"It has been Gensource’s corporate goal to create a direct link between a producing facility in Saskatchewan and the actual end-user of potash. Our connection with the offtaker helps Gensource reach that goal. By combining a modern production facility, with its efficiency and significantly reduced environmental footprint, with direct-to-farmer sales and logistics capabilities, we believe the two groups together represent the new face of the potash supply chain in the agriculture industry,” president and CEO Mike Ferguson stated in a news release.

Gensource announced last week that it had signed an MoU with a senior offtaker to potentially buy the planned 250 000 t/y production from one of Gensource’s small-scale potash facilities to be located in its Vanguard project area.

Gensource proposes solution mining using a proprietary selective mining technique, allowing the selective dissolution with enhanced crystallisation recovery of potash from its Vanguard project. The company believes the environmental impact will be minimal compared with typical potash mines, owing to the lack of brine ponds and no salt tailings on surface.

A 2017 feasibility study on the Vanguard One project had calculated an initial capital requirement of C$279-million, including contingency.

At a base case potash price of $300/t and a 45-year economic project life, the study had calculated an after-tax net present value, at an 8% discount, of C$235.82-million, with an internal rate of return of 16.31%.

The Vanguard area has compliant proven and probable reserves of 9.79-million tonnes of final muriate of potash product; 157-million tonnes of final potash product in the indicated and measured resource category; and more than 313-million tonnes of potash product in the inferred category.