IC Potash Corp. (TSX:ICP; OTCQX:ICPTF) (“ICP” or the “Company”)
announced today that it has closed the initial draw down of US$2.5
million under the strategic investment commitment by Cartesian Capital
Group, LLC (“Cartesian”) of up to US$45 million, as previously
announced on December 17, 2015. Cartesian agreed to make strategic
investments of up to US$45 million in ICP’s subsidiary, Intercontinental
Potash Corp. (USA) (“ICPUSA”), funded in two tranches. The
strategic investment commitment represents Cartesian’s second investment
in ICPUSA. The first tranche consists of an investment of up to US$10
million to fund completing pre-DBOM (Design, Build, Operate and
Maintain) phase 1 work for a technical update program on the Company’s
sulfate of potash mining and processing project (the “Ochoa Project”)
located in Lea County, New Mexico. The second tranche consists of an
investment of up to US$35 million that would close upon certain
conditions and fund completion of the engineering and design work for a
DBOM plan to construct the Ochoa Project Mine.
Mr. Randy Foote, President and Chief Executive Officer of ICP, stated,
“We are extremely pleased that the Cartesian Capital Group has given IC
Potash and the Ochoa Project a second vote of confidence with this
significant funding commitment, which should allow us to move forward to
find a strategic partner to assist in funding the construction of the
project. We are excited to continue the development of the Ochoa
Project, which is expected to create new American jobs, contribute to
the economic growth and create value for our shareholders.”
Mr. Peter Yu, Founder and Managing Partner of Cartesian, commented, “The
Ochoa Project presents a unique and valuable opportunity to develop a
leading producer of a preferred fertilizer in the United States, and we
are proud to contribute to its development.”
The first investment tranche will consist of up to US$5 million in new
convertible Series B Preferred Stock of ICPUSA (“Series B Shares”)
and up to US$5 million in senior secured notes (“Secured Notes”)
issued by ICPUSA. The parties entered into definitive agreements and
closed the initial draw of US$2.5 million by issuing Secured Notes. The
second draw down will consist of US$2.5 million in Series B Shares, and
ICPUSA may issue up to two subsequent draw down notices, each to draw
down up to US$2.5 million by issuing Series B Shares and/or Secured
Notes, in allocations determined by Cartesian, subject to satisfaction
of closing conditions.
ICPUSA Board Changes
Following the first tranche and new appointments to ICPUSA’s board of
directors, it will be comprised of Peter Yu, Paul Hong, Ernest Angelo
and John Stubbs, with a fifth to be appointed by these four directors.
Operational Updates
In an effort to improve efficiency and reduce costs in the challenging
economic environment for resource companies, ICP has reduced its overall
general and administrative cash expenses by nearly 45% through a number
of cost reduction initiatives, including suspension of all cash based
compensation for directors, significant compensation reductions or
expanded responsibilities for executive officers, renegotiated or
terminated contracts with service providers, terminated certain
non-essential contracts and significantly reduced budgets for general
and administrative expenses. Randy Foote is stepping down from his
positions in ICPUSA, but will remain as ICP’s Chief Executive Officer
and President on a reduced salary, and Kenneth Kramer will be appointed
as President of ICPUSA.
As previously disclosed, Paradigm Capital Inc. provided an opinion that
the terms and conditions of the Transaction are within what would be
considered acceptable market terms in the context of the current market
environment, and is therefore fair to ICP from a financial point of view.
About IC Potash Corp. ICP has demonstrated a low-cost method to
produce sulfate of potash (“SOP”) from its Ochoa polyhalite
deposit in southeast New Mexico and seeks to become a primary, long-term
producer of SOP. SOP is a non-chloride potash fertilizer widely used in
the horticultural industry and for high value crops, such as fruits,
vegetables, tobacco and potatoes. It is applicable for soils where there
is substantial agricultural activity, high soil salinity, and in arid
regions. The Ochoa Project has access to excellent local labor
resources, low-cost electricity and natural gas, an approved non-potable
water source, rail lines, and the Port of Galveston, Texas. ICP’s land
holdings consist of approximately 98,500 acres of federal preference
right potassium leases, federal subsurface potassium prospecting permits
and State of New Mexico potassium mining leases. For more information,
please visit www.icpotash.com.
About Cartesian Capital Group Cartesian Capital Group, LLC is a
global private equity firm with proven expertise in assisting
closely-held companies to expand. Cartesian manages more than US$2
billion in capital and has offices in New York, Sao Paulo, Shanghai,
Warsaw, and Bermuda.
Note to Investors: The information in this news release is
qualified in its entirety to the material change report and agreements
filed on SEDAR. All statements in this news release, other than
statements of historical fact, may be "forward-looking statements",
including, without limitation, the estimated proceeds from the
financings and the projections for use of proceeds; the expectation that
ICP will successfully fund the required contribution to the financings;
expectations for the result of the pre-DBOM and DBOM reports; plans for
and intentions with respect to capital requirements, construction and
other development activities on the Ochoa Project; expectations related
to project financing; expectations related to management and operation
of ICP and ICPUSA and future contemplated mining operations on the Ochoa
Project. There can be no assurance that such statements will prove to be
accurate, and actual results and future events could differ materially
from those anticipated in such statements. Important factors that could
cause actual results to differ materially from statements in this news
release regarding our intentions include, without limitation, risks and
uncertainties regarding: failure to meet all the conditions for funding;
failure to fund ICP’s pro rata portion of the financings; extreme
resulting dilution in ICPUSA; high additional capital requirements;
development and operation risks at the Ochoa Project, including
accidents, equipment breakdowns and non-compliance with environmental
and permit requirements; and other risks and uncertainties disclosed in
the section entitled "Risk Factors" contained in our Annual Information
Form for the year ended December 31, 2014 and our Quarterly Reports.
Investors are cautioned that forward-looking statements are not
guarantees of future performance and, accordingly, investors should not
put undue reliance on forward-looking statements. Any forward-looking
statement made by us in this news release is based only on information
currently available to us and speaks only as of the date on which it is
made.
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