Gensource Potash Corporation has signed a non-binding memorandum of understanding (MoU) with Essel Group Middle East Limited (EGME) to form a joint venture (JV) company and develop a small-scale project.
This company will develop and advance one of Gensource’s small-scale potash projects to production.
With this agreement, both companies aim to create and deliver an independent supply of potash to the market.
The MoU will provide a defined path to create the JV using technical innovation, management expertise, logistics and capital. The synergy will accelerate construction and operation of the new potash facility.
For the JV, Gensource will provide resource from its Vanguard area and its project execution team. It will also vend technology and techniques for selective solution mining and specialised processing.
EGME will finance the project in two phases and offer business and logistic expertise to the JV.
In the first stage of financing, a current feasibility study will be completed followed by construction of the project in the second stage.
After construction financing, EGME will own 70% interest in the JV, while the remaining 30% will be with Gensource.
Under the MoU, a definitive agreement or JV operating agreement will be negotiated to define the detailed aspects of JV operations.
Initially, a jointly appointed board of directors and management team will lead development of the new potash facility.
Gensource will manage the JV until construction financing.
Gensource president and CEO Mike Ferguson said: “This is an exciting milestone for Gensource. 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.
“We are so pleased to be working with a strategic and forward thinking group like Essel Group Middle East.
“With a presence in Europe, Middle East and North Africa, EGME understands the potash business very well and has positioned itself to strategically enter the industry.
“The global business acumen and financing ability of EGME coupled with Gensource’s experienced potash development team, rich potash resources and novel small-scale technologies creates a combined entity that has all the required components to successfully enter the highly controlled potash industry.”
Currently, Gensource is in the detailed development stage of its Vanguard project.