Gensource Provides Financing Update for Vanguard One Project

Gensource Potash Corporation (TSXV:GSP) has released an update on the project finance process for its Vanguard One project located in Saskatchewan.

As quoted from the press release:

Gensource has been focused on creating a project finance package for its Vanguard One project since receiving its determination of  from the Saskatchewan Ministry of Environment in August 2018. The environmental approval was the final milestone required to move the Project into the detailed financing and construction phase.

An exhaustive approach to reviewing all available capital structures has been taken, focusing on capital efficiency, cost, and uptake by the financial market. The sources reviewed included senior secured debt, equity, streams, royalties, subordinated debt, mezzanine debt and other forms of debt with equity conversion options attached. A capital structure has been selected that most likely provides the best solution for Vanguard One, consisting of senior secured debt (“Senior Debt”, provided by “Senior Lender(s)”) + subordinated debt (“Sub-Debt” provided by “Sub-Debt Provider(s)”) + equity (“Equity”, provided by “Equity Investor(s)”). In general, the target for Senior Debt component is 55 – 60 percent of the capital structure, Sub-Debt is targeted at 15 – 20 percent and equity makes up the remaining 25 – 30 percent. The final breakdown of the capital structure will be a function of negotiations with the various entities and completion of the detailed due diligence process.

While progress has been made on all fronts, Gensource has communicated previously that the Senior Debt component of the capital structure was pivotal to the financing. With Senior Debt confirmed, the financing becomes much more certain and the other components of the structure can fall in place. Senior debt will rely on the economic strength of the project itself as well as the strength of the off-take agreement in place between Gensource and its off-take partner. The Company will not rely on government loan guarantees or government cash injections to support the project as is occurring for other potash projects in other regions around the world (notably the UK and Australia).

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