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28 March 2022
Audited financial statements for the year ended December 31, 2021
SASKATOON, Saskatchewan and London, U.K., March 28, 2021 - Gensource Potash Corporation ("Gensource" or the "Company") (TSXV: GSP, AIM: GSP) announces that it has released its audited financial statements and management's discussion and analysis for the year ended December 31, 2021. The reports will be available under the Company's profile on SEDAR (www.sedar.com) and on the Company's website (https://gensourcepotash.ca/financials-and-presentations/). An extract of the key information from both documents is set out below, however Shareholders are encouraged to read the full documents:
Summary of Key Activities During the Year
The main focus of the Company continues to be the advancement of its first project, the Tugaske Project ("Tugaske" or the "Project") through the final financing stages into construction. That process continues with negotiations underway with several "keystone" investment groups, who, when negotiations and definitive agreements are complete, will set the structure for the remainder of the financing required for Tugaske.
However, the Company's larger business plan involves several growth pathways. One pathway is the expansion of its first project with its partner, HELM AG, as agreed between the parties and as the market is prepared. Secondly, Gensource is laying plans for replicating its business model with other partners serving other non-competing markets. The third pathway to growth for the Company is to take its technology "on the road": to deploy its specialized, efficient and environmentally sustainable techniques and technology in other known potash deposits around the world, closer to consuming markets.
To prepare the path to growth, in December 2021, Gensource acquired an additional potash exploration permit immediately adjacent to its Vanguard area. Adding Saskatchewan Permit to Explore for Subsurface Minerals, SMP200 ("SMP200"), to the Vanguard Area, provides an additional 7,244 hectares (almost 18,000 acres) of prospective minerals. What Gensource calls the Vanguard Area now comprises leases KL244, KL245 and SMP200. The area is so named because Gensource believes its approach to potash production and marketing of the product to be at the forefront of a change sweeping the industry - in fact, Gensource is a driver of that change. SMP200 is so close to existing Gensource-drilled wells, that a significant portion of the data from those existing wells will be applicable to the minerals contained within SMP200, making resource confirmation
in SMP200 much more cost- and time-efficient. Further development work for SMP200 will be announced as it is defined and approved. Gensource continues discussions towards agreements to advance additional projects with several parties interested in Gensource's vertically integrated business plan and direct marketing structure.
Other highlights of Q4 2021 and the year ending December 31, 2021 are (some repeating from previous MD&A filings in 2021):
· The Company acquired SMP200 from the Saskatchewan Government on December 21, 2021.
· The Company continued negotiations with cornerstone investors towards completing the final equity financing for the Tugaske Project.
· The Company announced that admission to trading (the "Admission") on the AIM Market of the London Stock Exchange ("AIM") commenced, at 08:00 GMT November 5, 2021. Trading continues under the symbol (formally the TIDM code) GSP, the same as its TSX Venture Exchange ("TSXV") symbol. With respect to the AIM listing, Strand Hanson is acting as Nominated Adviser to the Company and Peel Hunt is acting as Broker to the Company. (See news release dated November 5, 2021).
· The Company's Tugaske Project entered into mine development effective October 14, 2021 when the technical and commercial feasibility of the mine was met. As a result, all costs that were capitalized to the Tugaske Project have been transferred to property, plant and equipment under construction.
· The Company completed a non-brokered private placement offering of $2,000,000 principal amount of 5% convertible redeemable unsecured debentures of the Company at a price of $1,000 per debenture. All directors and officers of the Company participated in the Offering, purchasing a total of $1,985,000 principal amount of Debentures (the remaining amounts were purchased by other employees of the Company). (See news release dated October 19, 2021).
· The Company announced the filing of an updated National Instrument 43-101 Technical Report, summarizing the Tugaske Project. (See news release dated October 19, 2021).
· The Company received conditional binding commitment letters from its two mandated joint lead debt arrangers, KfW IPEX-Bank and Société Générale, following successful risk approvals and credit approvals within each organization. The commitment letters provide for a senior secured debt facility in the amount of up to $280 million. The Debt Facility is intended to fund, in part, the construction and ramp up of the Company's Tugaske potash development project. The senior debt commitment is based on an agreed to, and binding, term sheet for the Debt Facility. (See news release dated September 23, 2021).
· The Company incorporated a subsidiary company, KClean Potash Corporation ("KClean"). KClean will be the special purpose vehicle that will receive project assets from Gensource, equity investments from Gensource and HELM AG and receive senior debt financing from the senior lenders.
· The Company's subsidiary company, KClean, entered into an unsecured $5,000,000 loan agreement with HELM (the "HELM credit facility") August 27, 2021 for expenses in connection with the Tugaske Project development. The HELM credit facility bears interest at a rate of 2.5% per annum, payable in arrears on the maturity date, which will be August 31, 2024.
· Additional work was completed on the project to support the AIM listing process, specifically the creation of a Competent Person Report (similar in content and structure to an NI 43-101 Technical Report), which was published along with the AIM listing document.
· The Company announced the appointment of Alton Anderson and Stephen Dyer to its Board of Directors, effective April 21, 2021. (See news release dated April 21, 2021).
· The definitive off-take agreement between Gensource and HELM Fertilizer USA was completed and executed. (See news release dated May 12, 2021).
· The Company announced the completion of a National Instrument (NI) 43-101 Technical Report. (See news release dated March 22,2021).
· The terms of the shareholder agreement between HELM Fertilizers and Gensource have been agreed upon and will be executed as the project advances. Current project company setup work is focused on several sub-agreements to the shareholder agreement.
· The Company completed a non-brokered private placement financing for gross proceeds of $5,225,782.14. (See news release dated February 12, 2021).
Outlook
For the immediate future, the Company intends to raise additional financing for the following purposes:
· complete the financing of the Tugaske Project,
· working capital purposes, and
· to begin to develop a second project.
The Company continues to monitor its spending and will amend its plans based on business opportunities that may arise in the future.
Subsequent Events
· On January 31, 2022, KClean Potash received a $1M draw against the unsecured HELM $5M credit facility.
· In February, 2022, 500,000 stock options with an exercise price of $0.18 and an expiry date of April 23, 2022, were exercised and 100,000 stock options with an exercise price of $0.17 and an expiry date of February 20, 2022, were exercised.
· On February 14, 2022, the Company announced that the Company, HELM and Michael Ferguson (collectively, the "Defendants") entered into a mutual release and settlement agreement dated February 11, 2022 (the "Settlement Agreement") with Frank Eberhardt, Carl F Peters GmbH & Co. and 11664735 Canada Ltd. (collectively, the "Plaintiffs") with regards to the statement of claim filed by the Plaintiffs against the Defendants (the "Action").
| Consolidated Statements of Financial Position (Expressed in Canadian Dollars) |
|
|
|
| As at December 31, 2021 | As at December 31, 2020 |
| ASSETS |
|
|
| Current assets Cash |
$ 1,712,079 |
$ 748,946 |
| Prepaid expenses and deposits | 304,628 | 11,185 |
| GST/HST and other receivables | 143,433 | 37,189 |
| Investments | 11,273 | 6,305 |
| Total current assets | 2,171,413 | 803,625 |
| Non-current assets Deferred financing costs |
935,120 |
366,658 |
| Exploration and evaluation assets | 3,680,903 | 13,289,180 |
| Property, plant and equipment | 12,825,445 | 14,550 |
| Right-of-use assets | 127,960 | 44,289 |
| Total non-current assets | 17,569,428 | 13,714,677 |
| Total assets | $ 19,740,841 | $ 14,518,302 |
| SHAREHOLDERS' EQUITY AND LIABILITIES |
|
|
| Current liabilities Amounts payable and other liabilities |
$ 278,590 |
$ 480,848 |
| Short-term portion of lease liability | 40,181 | 49,777 |
| Total current liabilities | 318,771 | 530,625 |
| Non-current liabilities Lease liability |
95,080 |
6,851 |
| Convertible debt | 1,937,036 | - |
| Helm credit facility | 1,005,000 | - |
| Total liabilities | 3,355,887 | 537,476 |
|
Shareholders' equity |
|
|
| Share capital | 40,993,968 | 34,707,530 |
| Contributed surplus | 6,387,449 | 5,464,065 |
| Equity portion of convertible debt | 72,526 | - |
| Deficit | (31,068,989) | (26,190,769) |
|
Total shareholders' equity |
16,384,954 |
13,980,826 |
|
Total shareholders' equity and liabilities |
$ 19,740,841 |
$ 14,518,302 |
Consolidated Statements of Operations and Comprehensive Loss (Expressed in Canadian Dollars)
Years Ended December 31,
|
Expenses | 2021 | 2020 |
| General and administrative | $ 3,212,604 | $ 961,098 |
| Share-based payments | 1,593,400 | 132,900 |
| Depreciation | 55,141 | 59,316 |
| Other exploration and evaluation | 1,422 | - |
|
|
4,862,567 |
1,153,314 |
|
Income (loss) before under noted items |
(4,862,567) |
(1,153,314) |
| Interest income | 5,530 | 9,912 |
| Unrealized gain on FVTPL investments | 4,968 | 4,012 |
| Gain on modification of lease liability | 5,211 | - |
| Accretion expense | (52,327) | (20,061) |
| Foreign exchange gain | 25,965 | 157,090 |
| Interest on credit facility | (5,000) | - |
|
Loss and comprehensive loss |
$ (4,878,220) |
$ (1,002,361) |
| Basic and diluted loss per share | $ (0.01) | $ (0.00) |
|
Weighted average number of common shares outstanding - basic and diluted |
412,512,577 |
383,114,356 |
Consolidated Statements of Cash Flows (Expressed in Canadian Dollars)
Years Ended December 31,
2021 2020
Operating activities
| Net loss Adjustments for: | $ (4,878,220) | $ (1,002,361) |
| Depreciation | 55,141 | 59,316 |
| Share-based payments | 1,593,400 | 132,900 |
| Accretion expense | 52,327 | 20,061 |
| Unrealized gain on FVTPL investments | (4,968) | (4,012) |
| Interest on credit facility | 5,000 | - |
| Gain on modification | (5,211) | - |
|
| (3,182,531) | (794,096) |
| Changes in non-cash working capital | (601,946) | (1,384,168) |
|
Net cash used in operating activities |
(3,784,477) |
(2,178,264) |
|
Investing activities Purchase of property, plant and equipment |
(7,378) |
(7,776) |
| Acquisition and expenditures on exploration and evaluation assets and exploration assets in development stage |
(3,199,583) |
(4,218,905) |
|
Net cash used in investing activities |
(3,206,961) |
(4,226,681) |
|
Financing activities Cash proceeds from issuance of convertible debt (net) |
1,980,413 |
- |
| Cash proceeds from Helm credit facility | 1,000,000 | - |
| Cash proceeds from issuance of shares | 5,225,782 | - |
| Cash proceeds from exercise of warrants | 4,309 | - |
| Cost of issuance | (289,668) | - |
| Cash proceeds from exercise of stock options | 675,999 | 107,000 |
| Deferred financing costs | (568,462) | (366,658) |
| Repayment of lease on right-of-use asset | (73,802) | (76,939) |
|
Net cash provided by financing activities |
7,954,571 |
(336,597) |
| Net change in cash | 963,133 | (6,741,542) |
| Cash, beginning of year | 748,946 | 7,490,488 |
|
Cash, end of year |
$ 1,712,079 |
$ 748,946 |
For further information on Gensource, please contact:
| Gensource Potash Corporation |
|
| Mike Ferguson - President & CEO | +1-306-974-6414 |
|
|
|
| Strand Hanson Limited (Nominated & Financial Adviser) | +44 (0) 20 7409 3494 |
| Ritchie Balmer / Rory Murphy / Charles Hammond |
|
|
|
|
| Peel Hunt LLP (Broker) | +44 (0) 20 7418 8900 |
| Ross Allister / David McKeown / Georgia Langoulant |
|
|
|
|
| Camarco (Financial PR) | +44 (0) 20 3757 4997 |
| Gordon Poole / Charlotte Hollinshead / Lily Pettifar |
|
For any press enquiries please contact us on gensource@camarco.co.uk
Further information on Gensource Potash Corporation can be found at www.gensourcepotash.ca
Follow us on twitter @GensourcePotash
About Gensource
Gensource is a fertilizer development company based in Saskatoon, Saskatchewan and is on track to become the next fertilizer production company in that province. With a small scale and environmentally leading approach to potash production, Gensource believes its technical and business model will be the future of the industry. Gensource operates under a business plan that has two key components: (1) vertical integration with the market to ensure that all production capacity built is directed, and pre-sold, to a specific market, eliminating market-side risk; and (2) technical innovation which will allow for a small and economic potash production facility, that demonstrates environmental leadership within the industry, producing no salt tailings, therefore eliminating decommissioning risk, and requiring no surface brine ponds, thereby removing the single largest and negative environmental aspect of potash mining.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward-Looking Statement
This news release may contain forward looking information and Gensource cautions readers that forward- looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of Gensource included in this news release. This news release includes certain "forward-looking statements", which often, but not always, can be identified by the use of words such as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". These statements are based on information currently available to Gensource and Gensource provides no assurance that actual results will meet management's expectations.
Forward looking statements include estimates and statements with respect to Gensource's future plans, objectives or goals, to the effect that Gensource or management expects a stated condition or result to occur, including any offering of securities by Gensource. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated in such statements for many reasons such as: failure to complete an offering of securities; failure to finance the Company's Tugaske potash project or other projects on terms which are economic or at all; failure to settle a definitive joint venture agreement with a party and advance and finance the Tugaske Project; changes in general economic conditions and conditions in the financial markets; the ability to find and source off-take agreements; changes in demand and prices for potash; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with Gensource's activities; an inability to predict and counteract the effects of COVID-19 on the business of Gensource, including but not limited to the effects of COVID-19 on the price of commodities, capital market conditions, restriction on labour and international travel and supply chains, failure to obtain required regulatory approvals; and other matters discussed in this news release and in filings made with securities regulators. This list is not exhaustive of the factors that may affect any of Gensource's forward-looking statements. These and other factors should be considered carefully, and readers should not place undue reliance on Gensource's forward-looking statements. Gensource does not undertake to update any forward-looking statement that may be made from time to time by Gensource or on its behalf, except in accordance with applicable securities laws.
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