Canada’s Gensource grows support for Vanguard potash fertilizer project

LONDON (ICIS)–Canada-based fertilizer developer Gensource Potash remains committed to its mine project in Saskatchewan, six months after its original JV collapsed – fulfilling a promise to investors at the time that the company is “poised and ready to advance the Vanguard One project”.

The developer announced the signing of two off-take agreements in rapid succession this week – first with “a North American agriculture industry leader”, and then a second, with a “North American agriculture player”.

Both MoUs call for the unnamed entities to potentially acquire 100% of a “small-scale facility’s” output – 250,000 tonnes/year of muriate of potash (MOP) – suggesting Gensource intends to build more than one facility across its Saskatchewan prospect.

The producer adds that the intent is for the parties to complete a definitive off-take agreement by the end of April.

Gensource is also currently pursuing the required project finance package, which will support the present schedule for construction to begin later this year, with the first product expected in early 2020.

Although the producer remains mute on the identities of both MoU partners, investors appear pleased at the news, and the start-up’s stock has been steadily climbing since the off-take announcements.

Indeed, Gensource seems to have reversed its prospects over the last six months – notably after securing an agreement with financing partners Industrial Alliance Securities, and Heritage Capital Group in early February.

The joint effort aims to locate and secure finance for a facility estimated to cost $220m.

Previously, in November, Gensource issued a private share placement, with the aim of raising up to $1.5m.

In fact, observers could conclude that the collapse of Gensource’s original alliance with Dubai-based conglomerate Essel Group Middle East (EGME) gave impetus to the project, after the first JV struggled to get off the ground.

In early October last year, both Gensource and EGME pointed to a failure to meet contractual obligations on the part of the other as being responsible for the dissolution.

“Despite an extension of the deadline for the initial contribution and recent planning meetings for the JV, as of October 2, 2017, Vanguard has not received the initial contribution and, in fact, has received no funding whatsoever,” Gensource said in a statement on 2 October.

EGME responded: “EGME confirms that due to the incurrence of expenses before the agreement in question was finalised, contractual obligations relating to Vanguard have not been met by Gensource within the agreed timeframes. The arrangement has been terminated by mutual consent and with immediate effect.”

Now, however – as news of the off-take agreements continues to spread – Gensource seems to have shaken off the bad memories, and appears ready to ride on a wave of interest in the nascent project.

Focus article by Andy Hemphill

Additional reporting by Mark Milam