A recent article by Palisade Research highlighted Gensource Potash (TSXV:GSP).
Gensource’s Vanguard project will cost US$190 million, a far cry from the $2-3 billion price tag potash mines are known for. More importantly, the mining method does not leave piles of salt tailings on the surface or require large containment structures. The salt is left underground, making the method the safest the safest for the environment.
Since we last wrote on Gensource, the company has maintained its torrid pace. First, it appointed Dwayne Dahl to the board of directors. Mr. Dahl is the former CFO of Canpotex, the potash marketing and logistics export company formed by the Saskatchewan potash producers. This is significant news because it puts Gensource in the spotlight for all the major players, while giving the company an incredible endorsement by one of the most powerful men in the potash sector. Please listen to our interview with him here.
Second, Gensource has firmed up its offtake agreement with Yancoal Canada, a wholly-owned subsidiary of Yanzhou Coal, to pre-sell 100% of the initial scoped potash production. The take-or-pay C$500 million agreement is for 250,000 t/a from GSP’s first production facility and is for 5 years with options to extend. Yanzhou Coal is a US$6.8 billion company, giving Gensource a credit-worthy partner and an offtake to bank come time for construction financing.
Third, Gensource has begun its feasibility study to confirm both the technical aspects of the project and the financial performance of the project as defined in the PEA, including an after-tax NPV8 of C$213 million and an IRR of 16.9%. Gensource trades at a market cap of C$15.7 million and is the only potash company in our portfolio. In even the worst of potash markets, the management team has performed and will continue to do until production. The feasibility is slated to be completed in Q1 2017, and the company is concurrently working on the EA and the capex financing plan. Gensouce Potash should be the one and only potash name in any resource speculator’s portfolio.