RE: Off take (someone clarify)
It is 350,000 tons in phase 1, and it rises to 600,000 tons at full production. It is by no means small.
not only is it a large off take, but krn have ensured that the Indian company has skin in the game themselves.
it is now even more important from the Indians point of view that krn succeeds. They own 20%.
it is my belief that they will secure an of take for the remaining 275,000 tons of phase 1 production.
karnalytes goal is to just get the equity and debt sorted out for phase 1. After that they can probably ramp up to 2.125 million tons through internally generated cash flow.
It means that for a relatively small dilution on krn's part of say 200 million(they already have about 70 million in the bank after the Indian share purchase, with another 15 mill promised by Indian company in future equity raise) and then debt financing on the rest(which I think will be shortly announced along with a 2nd strategic partner) you will have a company that can ramp up to 2.2 million tons without much need for further equity raising or taking on much debt. The free cash flow from the 625,000 ton operation will finance the subsequent stages.
another point worth mentioning.
Krn will be bringing to the market a premium granular pellet(preffered by farmers and fertilizer companies for easy handling and blending with other ferfilizers) potash that exceeds the industry standards of 3.5%-4.5% sodium(which is not good for plants, especially rice plants) by containing less than 1% sodium. This premium product can sell for as much as $70 per ton extra if my memory serves me right.
the other benefit to pellets is in the transportation and application. The pellets do not degrade like the standard product and can be more uniformly applied to crops/land.
if krn can achieve an extra $50- $70 dollars for thier product they will have a considerable advantage in a falli g potash enviornment.