If all goes well in financing discussions, construction can start in May on a new potash mine near Tugaske.
“That (May start) is still the goal,” Gensource Potash CEO/president Mike Ferguson told a shareholders’ conference call.
The financing process “is driven by the banks” which look at the loans as non-recourse, as they have no real assets to back loans during the construction stage. Most mines are financed from corporate balance sheet assets.
The potash mine talks involve several well-known European banks and North American-based private lenders.
The company is fortunate in having the partner who agreed to buy 100 per cent of production sitting in the banking negotiations, he said.
Equity investors are in talks with Gensource but are waiting for lender decisions before going further. He said Gensource needs outside equity to finance the mine.
Once financing is complete, engineering and site planning can begin.
The company still needs detailed construction permits from the government but was exempted last August from filing an environmental impact assessment since it will use no ground water and will pump all waste byproduct back into the earth.
The mine plan involves a $280 million mine using a relatively new technology producing 250,000 tonne of potash a year at $40 a tonne cost.
Financing arrangements are planned for 60 percent senior debt, 15 to 20 per cent subordinated debt and 20 to 25 per cent equity.
Meanwhile, discussions have started with two potential partners on off-takes sale of production and financing of two similar mines in the Tugaske/Eyebrow districts.
Production is tentatively planned for the first part of 2020.
Ron Walter can be reached at [email protected]
