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GENSO POT
A pioneering vision for the futu
OURCE TASH
ure of the global potash market
MINING | GENSOURCE POTASH
Gensource Potash is an innovative pre-production company in the potash industry with a plan to operate in a markedly different manner to the incumbents of the global fertiliser market. The TSXV-listed firm’s business model rests on two core ‘pillars’ – the first is to be a small, efficient and environmentally sustainable potash producer and the second is to be vertically integrated from mine to farm. Gensource’s vision is to ‘achieve food security by supplying the world with a key macronutrient at an affordable cost within an open, transparent and sustainable environment’. “We think our vision represents the way potash will be done in the future,” says Gensource’s president and CEO Mike Ferguson. “Our method is clean, efficient and we have the end-user, the farmer, in mind. It’s focused on what the market needs rather than what’s best for the producers of the product.”
MINING | GENSOURCE POTASH
Gensource aims to ultimately
K+S subsequently brought the
create a series of small-
large-scale solution potash
scale and environmentally
mine into production in May
sustainable potash production
2017 and the US$4.5 billion
facilities referred to as
project (later renamed the
‘modules’, with the Tugaske
Bethune mine) is expected to
Potash Project in Saskatchewan,
produce 2.86 million tonnes
Canada being the first module
(Mt) of potash per year by 2023
to be developed by the
and that could still be ramped
company.
up further to 4 Mt per year.
Skin in the potash game
“It was a conventional solution
The Gensource team has
large potash project that
worked in potash production
required a lot of money and
for several decades and
time to develop and construct.
developed a collective
The global potash industry has
insight into the workings
been, at times, a true cartel,
of the industry, focusing
but nowadays is more properly
particularly on market-focused
described as an oligopoly.
mining method and a typically
improvements.
“For this reason, it’s been very In fact, the core team at
difficult for outside players to
Gensource is the same one
enter the fray, regardless of
that led a company called
whether they can afford to pay
Potash One from 2007 to
the billions of dollars required
2011. This Canadian firm
to develop the large tonnage
developed the Legacy potash
projects.
project in Saskatchewan until it was acquired by German
“While we were still
fertiliser manufacturer K+S
developing the Legacy project
Aktiengesellschaft.
at Potash One, we started to develop these ideas of small-
scale, efficient production. After selling the project, we reconvened within Gensource to implement those ideas around entering on a small scale with environmentally friendly mining practices. That’s the story of how we formed Gensource.� While new participants continue to find it difficult to break into the established oligopoly of potash producers, Gensource has also identified other weaknesses in the potash market, including inefficient and environmentally damaging production methods, and a lack of integration among supply chains. Gensource’s pillared approach aims to address these issues. First, the production of small modules will allow the company to start small and ramp up into additional modules as the market develops. Second, its production method is remarkably more efficient and environmentally friendly
MINING | GENSOURCE POTASH
than conventional potash mines. And third, a vertically integrated mine-to-farm structure will directly unite the potash supply chain all the way to end user.
Right sizing production Gensource’s first module from the Tugaske project will produce 250,000 tonnes per year of potash – a significantly smaller operation when compared with the Legacy project developed by the team in their former roles. The Tugaske project will use a selective solution mining method along with industry-standard cooling crystallisation processing, both of which are driving the project’s unprecedented levels of efficiency and environmental sustainability. In contrast to traditional solution mining, which uses fresh water to dissolve potash and salt underground,
MINING | GENSOURCE POTASH
selective solution mining uses
product become insignificant
need for surface brine ponds,
brine to only dissolve potash
and subsequently, it ends up in
for either tailings or cooling.
from underground caverns.
large tailings piles next to the
Selective solution mining also
The result is a significantly
operation.
uses about a quarter of the
more efficient extraction,
water per tonne of product
lower capex and opex, no salt
“These huge piles of salt
compared to normal solution
tailings and no brine ponds.
then need to be encircled
mining activity.
with control dykes or ponds, A typical potash operation
which represents a significant
“Overall selective solution
produces almost two tonnes of
environmental issue because
mining lets us be small and
excess salt for each tonne of
over time ponds leak, and you
it puts us at the forefront of
product produced, according
have brine migration down
the whole industry from an
to Ferguson. This is such a
to groundwater sources. But
environmental perspective.�
large volume that the minor
with our method, we leave
secondary uses of the by-
no salt tailings and have no
Full environmental approval
At the local community level,
In fact, having demonstrated
its smaller scale compared
the Tugaske’s negligible
to the 10 existing potash
environmental impact to
operations in Saskatchewan.
the local regulator, the
All of these mines are much
TSXV:GSP
Saskatchewan Ministry of
larger, often employing more
MARKET CAPITALISATION
the Environment, the project
than 2,000 construction
was granted full government
workers over a period of up to
approval without the need
five years and hundreds more
for Gensource to produce
long term at the project site
an Environmental Impact
during operations.
G E NS O UR C E POTAS H AT A G L A N C E
STOCK TICKER
US$25.5 million (as of April 22, 2020)
abj
Assessment (EIA) – an unprecedented feat in the global potash sector.
the Tugaske project has also been warmly received due to
MINING | GENSOURCE POTASH
“The local communities in
period of less than two years,
Saskatchewan are made up
with only 42 people employed
A direct link with the market
of small towns that can have
permanently at the site.
Gensource’s most recent
as few as 50 people in them.
project milestone was
If you show up with 2,500
“Our size and the
the capture of German
construction workers for five
environmentally sustainable
conglomerate HELM AG as
years and 500 more people
aspect of our project have
offtake partner for 100% of
working there permanently,
been enthusiastically
the production from Tugaske.
you can imagine it almost
embraced by local towns
Following the announcement
obliterates the community.”
and local governments as
in January, HELM is also
something that really fits in
expected to become an equity
However, in the case of
to the community, instead
partner in the project.
Gensource’s Tugaske project
of dominating it,” Ferguson
there will be only 200
proudly asserts.
construction workers over a
“They plan to be a future owner of their own supply
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MINING | GENSOURCE POTASH
chain, which is a key business
begin as early as Q2 this year.
tenet to Gensource – to create
The company estimates a two-
that streamlined supply chain
year construction period, with
in the potash world. We are
plant start up and first potash
working with HELM and one
production slated for mid-
other financial partner and we
2022.
are in the middle of the debt
“We think our vision represents the way potash will be done in the future. Our method is clean, efficient and we have the market in mind” Mike Ferguson, Gensource Potash president and CEO
The lead bank that Gensource
The start of something bigger
has mandated for the senior
The Tugaske project resembles
can grow to suit the market.
debt financing is KfW IPEX-
just the tip of the iceberg for
It allows us to grow in small
Bank out of Germany – a world
Gensource and its radical plans increments to meet the
class lender according to the
for the global potash market.
requirements of the market,
company. Ferguson reveals
“The bigger business plan is
rather than what happens
that Gensource expects to
all about becoming a new and
now with large multi-billion
announce project financing
independent producer in the
dollar investments that bring
milestones by late second
potash industry and doing so
multi-million tonnages to
quarter of this year.
by starting small.
the market, which negatively
finance due diligence process.”
impact supply chains and With all environmental
“We are starting with one
prices.”
approvals in place and a
module, but we plan to expand
bankable feasibility completed
this with a second module that
Herein lies Gensource’s novel
back in 2017, the Tugaske
would bring our production to
proposal for the future of the
project is essentially ‘shovel-
500,000 tonnes per year. At the
global potash industry – small,
ready’, and the fulfilment of
same time, we could start an
expandable production, more
project financing is the last
entirely new project under a
like manufacturing than
hurdle that Gensource must
new JV company, operating in
mining, using environmentally
overcome before construction
the same project area and of a
sustainable methods
can begin.
similar small scale.
while establishing a direct connection between the
This means that construction
“The idea is that these things
production facility and the
of the Tugaske project could
can start out very small and
global fertiliser market.
Published by Anderson Murray Media Ltd
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