Potash Market Company Update & 2021 Financials Potash Market Company Update & 2021 Financials
March 28, 2022 03:00 AM Eastern Daylight Time
SASKATOON, Saskatchewan & LONDON--(BUSINESS WIRE)--Gensource Potash Corporation (“Gensource” or the “Company”) (TSXV: GSP, AIM: GSP), a fertilizer development company focused on sustainable potash production, provides the following commentary as of today’s date:
“We believe the unfolding situation is likely to create grave concerns that extend far beyond the region, including, amongst other things, in respect of growing global food insecurity.”
“The Russian invasion of Ukraine is a human tragedy, immediately impacting the lives of millions of peaceful civilians,” said Chief Executive Officer, Mike Ferguson. “We believe the unfolding situation is likely to create grave concerns that extend far beyond the region, including, amongst other things, in respect of growing global food insecurity.”
Brazil Seeking Strategic Fertilizer Solutions
In an effort to reduce its dependency on potash originating from Russia and Belarus, Brazil’s Minister of Agriculture, Livestock and Supply, met last week with representatives of Canadian fertilizer companies, including Gensource, to discuss the current situation in the sector.
Brazil is an agricultural powerhouse, responsible for 8% of global fertilizer consumption and is the world’s fourth-largest fertilizer importer, behind China (24%), India (14.6%) and the U.S. (10.3%). Brazil has recently published its long-term strategic fertilizer plan (see https://en.mercopress.com/2022/03/11/ brazil-outlines-30-year-plan-to-cut-fertilizer-overseas-dependency) and the Company believes it can be an important part of achieving the plan’s identified goals. Next steps between Gensource and the Brazilian delegation are being discussed.
Wider Industry Situation
Spot potash prices in Brazil have hit all-time highs of US $1,065 per metric tonne while average retail potash prices in the US have climbed to over US $925 per metric tonne. The current situation flows from several industry and global drivers, starting in mid-2021 with the flooding of two of Mosaic’s Saskatchewan mines, K1 and K2, removing some 5 million tonnes per year of capacity from the potash market. Later in 2021, the European Union and United States placed sanctions on Belarus, restricting its potash exports, which account for some 20% of world potash supply. Potash prices continue to soar today after economic sanctions were imposed against Russia because of its invasion of Ukraine earlier this year, restricting an additional 20% of the world’s potash supply.
With up to 40% of the world’s supply now restricted or in doubt, growers around the world are uncertain about their ability to obtain the necessary volumes of potash to support their crop production plans. Lack of balanced agricultural fertilization ultimately leads to reduced yields, putting pressure on global food supply. The general market belief has been that the potash industry is “well-supplied”, if not “over-supplied”, and that the supply chain was secure. However, recent events have proven that the potash industry is neither well-supplied nor is the supply chain sufficiently resilient. Gensource’s model has always been about creating new and independent supply chains with simplified direct delivery of the product to identified markets. The Company believes this model will lead to a more diverse and more resilient supply chain for potash in the future.
Financing Update
Company representatives are in London, UK this week as part of the financing effort for the Company’s potash development project located near Tugaske, Saskatchewan (the “Tugaske Project”). As previously disclosed (see press release dated September 23, 2021), the Company secured binding conditional commitment letters for a $280 million senior debt facility for the Tugaske Project from KfW IPEX-Bank and Societe Generale.
The debt facility is intended to fund up to 60% of the construction and ramp up of the Tugaske Project. The remaining 40% of the costs for the development of the Tugaske Project will be funded by equity investment. HELM AG, the project’s off-taker, has committed to invest $50 million in equity capital. The remaining $105 million of equity required for the Tugaske Project will be required to be raised by Gensource in the capital markets.
Saskatchewan Opens Trade Office in London
Coinciding with the Company’s visit to London, the Province of Saskatchewan is opening a new International Trade office in London. We are delighted to have been invited to the opening reception and are eager to network with export and trade experts. The event will be a great opportunity for Gensource to meet with investors and potential partners.
2021 Annual Results
Gensource also announces that it has released its audited financial statements and management’s discussion and analysis for the year ended December 31, 2021. The reports will be available under the Company’s profile on SEDAR (www.sedar.com) and on the Company’s website (https://gensourcepotash.ca/financials-and-presentations/).
Further information on Gensource Potash Corporation can be found at www.gensourcepotash.ca