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GENSOURC
Leading the way to sus
MINING | GENSOURCE POTASH
CE POTASH
stainable food security
The United Nations estimates that the global population will rise to just under 10 billion people by 2050. This fact alone highlights how food security will be one of the greatest challenges facing societies in the coming three decades. Potash is a type of natural plant fertiliser that could play a pivotal role in expanding agricultural food production for the growing human race, however contemporary methods of potash extraction and production typically place a heavy toll on local ecosystems and communities. For many years, the industry has been dominated by an oligopoly of large-scale producers whose operations leave permanent scars on the environment, in the shape of huge piles of salt tailings and brine ponds that slowly contaminate shallow acquifers, while the sustained mining activity permanently disturbs and displaces communities, often rural and indigenous in nature. A few years ago, a number of individuals from the technical team that delivered one of these large operations - the Legacy Potash Project/Bethune Mine in the Canadian Province of Saskatchewan – started to develop ideas around a different way of operating in the potash game. Their concept was crystallised in a new company called Gensource Potash, now listed on the TSXV with a twopillared business model. 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.
“We’re trying to create a new
in the world for developing
way of producing potash that
a sustainable potash project,
is open and transparent,” says
based on an unrivalled
Gensource’s president and CEO
collective insight into the
Mike Ferguson. “We hope our
workings of the large-scale
production method becomes
industry.
more broadly available in order for this key macronutrient in
Marrying ESG and economics
the agricultural sector.”
While being smaller naturally
to create an open supply chain
reduces the environmental Gensource aims to create
impact of the Tugaske project
a series of small-scale and
by using less surface land
sustainable potash production
and having a reduced impact
facilities referred to as
on local infrastructure and
‘modules’, with the Tugaske
communities, the standout
Potash Project in Saskatchewan
environmental feature of
the first of those modules to be
the project is undoubtedly
brought into operation.
Gensource’s selective dissolution extraction method.
Tugaske will initially produce 250,000 tonnes per year of
In contrast to traditional
potash, making it a significantly
solution mining, which uses
smaller operation when
fresh water to dissolve potash
compared with the 2.8 million
and salt underground, selective
tonnes (Mt) per year Bethune
dissolution uses brine to
mine developed by the
dissolve only potash from
Gensource team in their former
underground caverns. The new
roles with Potash One.
method is a real ‘gamechanger’ for the industry, according to
Incidentally, Ferguson is of the view that his technical team at Gensource is the best
Ferguson.
MINING | GENSOURCE POTASH
G E NS O UR C E POTAS H AT A G L A N C E
“Selective dissolution creates
for a much lower cost
no salt tailings and requires
production facility. It’s nice
no brine ponds on surface,” he
when you combine a strong
proclaims. While erasing the
ESG footprint with strong
presence of redundant piles
economics. They run together
of salt up to 100 metres high
in this case.”
and stagnant brine ponds next STOCK TICKER TSXV:GSP
MARKET CAPITALISATION
US$58.8 million (as of January 26, 2021)
to the mine site, the method
The 2017 bankable feasibility
also uses about a quarter of
study for the Tugaske project
the water per tonne of product
estimated operating costs of
compared to the normal
just US$39.57 per tonne, with
solution process.
sustaining capital expenditure and various royalties
aj “Coincidentally, selective
contributing to all-in operating
dissolution mining makes
costs of about US$100 per tonne.
MINING | GENSOURCE POTASH
In addition, being roughly
that is only 65 Mt globally,
Tugaske project through
a tenth of the size of the
those are big lumps of new
the development timeline,
prevailing large-scale potash
production that the market has
notably achieving automatic
operations, which Ferguson
to deal with. By adding small
environmental approval from
labels ‘lumpy’, allows
scale, incremental production,
the Saskatchewan Ministry of
Gensource to track demand
I think we’ll start to see a
Environment in August 2018.
and ramp up incrementally
much smoother ramping up
with new modules so as not to
of supply to meet the demand
This unprecedented
flood the market with millions
side.”
decision to approve the
of tonnes of production at once.
Shovel-ready
project without the need for a formal environmental
Since acquiring 100% of
impact assessment was
“When you show up with a 4
the Vanguard Project Area
made by the Ministry after it
Mt per year project in a market
in June 2016, Gensource
designated Tugaske as ‘not a
has rapidly advanced the
“We’re trying to create a new way of producing potash that is open and transparent. We hope our production method becomes more broadly available in order to create an open supply chain for this key macronutrient in the agricultural sector” Mike Ferguson, Gensource Potash president and CEO
development’, due to its lack
over the last 12 months due to
of environmental impacts.
the COVID-19 pandemic.
Without knowing, Gensource had made history as the
“We are working through
first ever potash project in
the debt financing and the
Saskatchewan to receive this
approval process for the
type of determination.
Export Credit Agency and that hasn’t stopped despite of
The project is currently in the
the slowdown in the business
financing stage and has been
world that is a product of the
‘shovel-ready’ for some time,
various cycles of COVID-19,”
however the pace of progress
says Ferguson.
has slowed as a result of upheaval to working patterns
MINING | GENSOURCE POTASH
of local vendors and service providers operating in the ‘potash capital of the world’. Gensource’s construction partner SECON is another local partner with decades of experience working on potash projects in the region. “We hope to reach financial close in Q2 this year. As soon as we do, we will be on the ground with construction, because of the parallel work we have been doing for project ramp up,” Ferguson reveals.
Offtake and equity Perhaps the most vital partnership Gensource has made is with German MIKE FERGUSON, GENSOURCE POTASH PRESIDENT AND CEO
conglomerate HELM AG, who came on board in January 2020 with an offtake arrangement
“We’re moving a bit slower
In fact, Gensource is already
for 100% of the potash
than we would under ideal
working on some engineering
production from the first
conditions, but things carry
activities at the project site
Tugaske module, via its North
forward. We have great
along with its partners,
American subsidiary HELM
support from our senior
including Saskatoon-based
Fertilizer Corp.
debt partners and the whole
Engcomp. The engineering
process continues to progress.”
firm is one of a multitude
MINING | GENSOURCE POTASH
In addition to the offtake deal,
as its marketing arm. With
interveners in between. HELM
HELM also committed to
an existing infrastructure
will take our product from
invest equity in the project, in
and customer base in the US,
mine site at Tugaske and move
doing so helping Gensource
HELM has visibility straight
it directly to the customer,
create a streamlined supply
through to the customer.
with no intermediaries.”
line with its second business
“Besides the small-scale
Going global
pillar: Vertical integration.
production, the other part
Gensource is tantalisingly
of our business plan is about
close to delivering its first
“To find an offtaker who
vertical integration and
small-scale, efficient and
believes in the project enough
making sure we have the
environmentally sustainable
to become an equity investor
most efficient supply chain
potash production module in
was key for us. We now have
from the Tugaske project in
Saskatchewan, which is being
perfect alignment between
Saskatchewan to the identified
touted as a ‘gamechanger’ for
the project and what we see
market, with no other
the potash sector. However,
chain for the potash space, in
this is just module number
MINING | GENSOURCE POTASH
Mike Ferguson, Gensource Potash president and CEO
one and Gensource’s vision is
supply chain that we are
“Being close to market in the
global.
offering, that’s what sparks
fertiliser world is important
another module.”
because a lot of the costs
“The Tugaske project is set
involved in the supply chain
up to expand incrementally
Crucially, the company’s
are around transportation and
with additional modules. So
downsized approach to potash
logistics. The closer you can
as we work with HELM on
production is set to unlock
get to that market the better off
the market side of things, we
an entire cache of projects
you are. We’re excited about
aim to add modules based on
around the world previously
the prospect of identifying
demand. But more broadly
deemed too small to be
and putting into production
speaking, our approach
economic. Gensource’s aim is
these various – some known
is always ‘market first’. As
to find these deposits in close
and some currently unknown
we identify a market that
proximity to key agricultural
– resources in locations
is interested in an efficient
regions.
around the world,” Ferguson concludes.
Published by Anderson Murray Media Ltd
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