Gensource and Essel Group Middle East Announce Partnership

Gensource Potash and Essel Group Middle East have entered into a joint venture where Essel Group will hold a 70 percent interest.

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Gensource Potash (TSXV:GSP) is about to put its name on the map in a big way. 

On Tuesday (November 29), it was announced that Gensource and Essel Group Middle East (an extension of Essel Group)–a company involved in mineral mining, oil explorations and acquiring natural resource assets all around the world–had entered into a Memorandum of Understanding.

In Gensource’s press release, Essel Group and Gensource will be forming a joint company that will advance one of Gensource’s  projects to production with an objective to create and deliver a new supply of potash to the market.

According to the agreement, Essel Group will hold a 70 percent interest in the venture, with the purpose of providing business and financing the project. Essel Group’s first step will be to bring the feasibility study to completion by spring 2017. Its second task will be the financing of the project’s construction, located in Saskatchewan. Following that, Gensource will then hold a 30 percent interest in the venture.

Research from Palaside Research indicates the feasibility study is $5 million, while the cost of constructing the project is $250 million.

The publication also notes that in April of 2016, Gensource acquired a land package for $2.5 million that pushed them towards a prefeasibility study, signing a $500 million off-take agreement for the Vanguard 1 project.

In particular, the Vanguard area has the potential to produce somewhere between 6 and 8 more projects, worth at least $285.5 million, according to Palaside Research.

Mike Ferguson, president and CEO of Gensource expressed his excitement over the joint venture in the company’s press release.

“Our fundamental business plan has been to create a joint venture with a strategic partner who wants the potash product for its own use and is capable of bringing the required financing to the project,” he said. “We are so pleased to be working with a strategic and forward thinking group like Essel Group Middle East.”

In a separate press release, Essel Group noted it is the second investment they’ve made in the potash industry, the first one being in August 2015 when it acquired an exploration license for the Bada potash mine.

Punkaj Gupta, Essel Group’s chief executive, echoed Ferguson’s statement regarding the joint venture.

“We are pleased to have reached this agreement with Gensource and look forward to working with them to bring this asset through to production,” he said in the press release.  “Today’s investment demonstrates our continued commitment to building our portfolio of high-quality natural resources assets.”

Certainly, there’s an exciting future ahead for Gensource, as Palisade Research suggests the company is the “next potash producer in Saskatchewan.”

Don’t forget to follow us @INN_Resource for real-time news updates.

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Gensource Potash is a client of the Investing News Network. This article is not paid for content.

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