Gujarat State Fertilisers and Chemicals (GSFC) has entered into an in-principle agreement with Canadian firm Karnalyte Resources Inc (KRN) to facilitate debt financing to enable the latter achieve financial closure of Phase 1 of Wynyard Potash Project.
State-run GSFC has 19.98 per cent stake in KRN and an offtake agreement of 3.5 lakh tonnes of potash from Phase I production and further 2.5 lakh tonnes from the Phase II.
"With a view to enable KRN achieve the financial closure for its Wynyard Potash project phase-I, GSFC, as the largest shareholder of KRN, has entered into an in-principle agreement with KRN to facilitate debt financing," GSFC said in a regulatory filing.
GSFC will arrange debt financing by procuring Standby Letter of Credit (SBLC) from Indian banks and backstop the untied equity/mezzanine financing subject to the required Indian regulatory approvals, it said.
"This intimation is being sent as an abundant precaution and the actual financial scheme and the exposure of GSFC to backstop the deficit funding under the financial scheme would only get firmed up after due negotiations, discussions and approvals likely to be completed by September 2016," it added.
KRN is engaged in the business of exploration and development of high quality potash magnesium products. It owns a 100 per cent interest in Subsurface Permit KP 360A and Subsurface Mineral Lease KLSA-010 located near Wynyard, Saskatchewan, comprising a total of 85,126 acres.
The first phase of Wynyard Potash Project would produce 6,25,000 tonnes of potash a year and 2.12 million tonnes on completion of all three phases, the filing added.
