Canadian potash group Gensource is looking to float on AIM to raise funds to develop the Tugaske Project in Saskatchewan.
Tugaske has a resource of 519mln tonnes of Potassium Chloride (KCl) assuming a 40% recovery rate and Gensource is looking to bring it to production in partnership with offtake partner Helm AG.
A new vehicle, KClean Potash Corporation, is being set up to move the project forward and will be owned 67% by Gensource and 33% by Helm
Helm will enter a ten-year offtake agreement, while the production of potash will involve solution mining techniques that avoid salt tailings and brine ponds, making it more environmentally acceptable.
As part of the deal, Helm has agreed to inject C$50mln (GBP30mln) into KClean for its 33% holding, with Gensource to find C$105mln in cash.
Additional funding will be provided through debt arranged by senior lenders, KfW IPEX-Bank of Germany and Societe Generale.
The lenders have provided binding conditional commitment letters to provide a senior debt facility for a total of up to C$280mln.
Gensource added it intends to develop other potash projects within the Vanguard and Lazlo Areas of Saskatchewan following the construction of the Tugaske Project.
The company currently is listed on the Toronto venture exchange where it is valued at C$145mln or around GBP86mln.
