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Essel Group Middle East Ltd (EGME), Essel Group’s overseas extension based in Dubai (UAE) that focuses on mineral mining, oil explorations and acquisition of natural resource assets globally, has formed a joint venture with Gensource Potash Corporation for the development of one of Gensource’s small scale potash projects in Canada. Essel Group ME already operates a mine in Eritrea (Africa) which has one of the largest deposits of potash in the world.
With the world’s food requirements increasing, demand for potash (a form of potassium and a key component of fertilisers in general) is growing across the world. Through the JV, Gensource and Essel Group aim to create a new and independent supply of potash to the global market.
The JV will be set up as a private corporation into which Gensource will vend a resource from its Vanguard area near Eyebrow and Tugaske, as well as its project execution team including technology and techniques relating to selective solution mining and specialised processing. For its part, Essel Group ME will provide business and logistic expertise to the JV and will provide financing in two stages - first to complete the current feasibility study, and second to finance the construction of the project. Ultimately, when the construction financing has been committed, EGME and Gensource will own 70 percent and 30 percent, respectively, in the JV.
Under the terms of the MoU, a definitive agreement or JV operating agreement will be negotiated to define the detailed aspects of how the JV will operate. Initial terms are for a jointly-appointed board of directors for the company and a jointly appointed management team to lead the development of the new potash facility. Gensource will maintain control of the JV through to the commitment of construction financing.
“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,” said Mike Ferguson, president & CEO, Gensource, in a press statement.
He added, “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.”
Gensource is currently in the detailed development stage of its Vanguard project. A two-well resource confirmation drilling program is currently drilling on the first well near Tugaske, SK, and the detailed feasibility study is underway and expected to be complete by March or April 2017. Until the completion of the feasibility study, the technical and economic viability of the project remains unconfirmed.
