Pricing Structure reply from Mike Ferguson
Hi Thanks for connecting. The offtake agreement we have with Helm is an open book structure, where the price of the product is the actual price that Helm receives from the sale to its final customer (either a retailer or a large grower) in their US customer base. That price is not, underscore not, directly connected to the fuzzy industry benchmarks such as Midwest warehouse or FOB Vancouver. (Those benchmark prices are set at the convenience of the existing potash producers and dont really represent any actual price those benchmarks are used by the exiting potash producers to send messages into the market.) Our (our meaning Gensources and Helms) price will be based on the actual retail price of potash fertilizer in the market area. Then, a retailer margin is deducted and rail transportation costs from Tugaske to the customers site is deducted to arrive at the netback price to the Tugaske operation. The result is the most efficient supply chain you can have: direct from the producing facility to the customer. No wholesalers, resellers or distributors involved. So, when the retail price goes up, the netback price also goes up (and vice versa). Current retail prices in the US are north of $800/short ton. Our economics are based on retail prices in the $330 - $350 range, so the economics are looking very good right now with the price of all fertilizers going up. Hope that helps. Mike Mike Ferguson, P.Eng. President & CEO Gensource Potash Corporation M: +1-306-291-8221 I am a long time investor in GSP, and I was wondering if it was possible for you to elaborate how a substantial increase in potash prices would be passed on to the off taker from GSP after the agreement was signed. Any info you could provide would be greatly appreciated Thanks