Gensource Potash Announce Signing of Asset Purchase Agreement and Off Take Term Sheet

Gensource Potash (TSXV:GSP) announce that it has entered into a definitive Asset Purchase Agreement which includes an off-take term sheet for the sale of potash dated effective today. Collectively, these transactions offer Gensource the opportunity to advance its business plan of becoming a future potash producer in Saskatchewan. The agreement is between Gensource and Yancoal Canada Resources Co. Ltd.
As quoted in the press release:

The APA defines the terms for the purchase by Gensource of two potash exploration permits (“Permit” or “Permits”) conditional upon their conversion into mineral production leases (“Lease” or “Leases”) and also contains a Term Sheet that defines key terms for the future sale of potash product from the proposed facility. Key terms of the transaction include a purchase price of $2,480,000, payable as two installments: (i) $1,240,000 in cash at closing within 30 days of the effective date of the APA; and, (ii) a convertible debenture to YCR in the principal amount of $1,240,000 that is due on the later of 90 days of the effective date of the APA and the close of the transaction, payable in cash or convertible to shares in Gensource if sufficient funds are not raised. The shares will be issued at an exercise price equal to the 20 day VWAP prior to the maturity date. Gensource will require a financing to close, which will be completed as a private placement on terms to be announced. Gensource has agreed to pay approximately $300,000 for the Lease conversion costs, which it understands may be refunded if the permits are not converted to leases. The transaction is subject to regulatory approval.
Gensource has been clear in previous news releases that its business plan is focussed on ensuring that the product is “pre-sold” before it develops the project to any great extent. This approach is due to Gensource’s understanding of the potash industry, wherein it can be easier to make the product than to sell it.

Gensource President & CEO, Mike Ferguson, stated:

The APA and Term Sheet announced today fit Gensource’s business plan perfectly. The assets being purchased, if the conditions are satisfied, are two Leases where significant geological data has already been collected by YCR through recent and professionally executed drilling and seismic programs. The geological data collected may be the foundation for a future formal resource definition on the Lease(s). Additionally, the Term Sheet represents a key aspect to the transaction, providing for 100% of the planned future production to be purchased by YCR over a set period of time – one of our key foundational business concepts. In fact, Gensource is not just purchasing assets, it is entering into a business relationship with a solid, reliable company which is, itself, in the potash development business, and the value of the business relationship is far greater than the value of the actual assets. We look forward to advancing our business plan and working with YCR to add value for both parties.

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