Dec 01, 2016
Essel Group Middle East announces MOU for 70% JV with Gensource Potash Corporation
Essel Group Middle East ("EGME") announces that it has signed a Memorandum of Understanding ("MOU") with Gensource Potash Corporation ("Gensource") to form a joint venture ("JV") company that will focus on the development of one of Gensource's potash projects in Saskatchewan, Canada.
The agreement is EGME's second significant investment in the potash industry after the company acquired the exploration license for the Bada potash mine in Eritrea's Danakil Depression in August 2015. The investment is notable for being EGME's first natural resources investment outside of Africa and marks an important step in the Group's ambition to become a global, diversified natural resources company.
Under the terms of the MOU, EGME will provide business and logistic expertise and will deliver financing totalling USD 200m in two stages. The first financing tranche will fund the completion of the feasibility study that is currently underway and expected to be completed in Spring 2017. The second injection of capital will fund the construction of the project, which is situated in Gensource's Vanguard area, within the Saskatchewan province. Gensource will commit its project execution team to the JV, which possesses the necessary technical experience of selective solution potash mining and specialized processing.
When construction financing has been committed, EGME will hold a majority 70% stake in the JV.
Punkaj Gupta, Chief Executive of EGME said, "We are pleased to have reached this agreement with Gensource and look forward to working with them to bring this asset through to production. Today's investment demonstrates our continued commitment to building our portfolio of high-quality natural resources assets."
Mike Ferguson, President and CEO of Gensource, said, "This is an exciting milestone for Gensource and we are so pleased to be working with a strategic and forward thinking group like Essel Group Middle East. 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."