TSX-V-listed Gensource has secured a $50-million equity investment commitment into the 250 000 t/y Tugaske potash project and announced the creation of a special purpose vehicle (SPV) to finance, own, construct and operate the project, in Saskatoon, Canada.

Chemical marketing company HELM, which is committed to purchase all the production from the mine for ten years, will invest in the project once the remaining equity and debt financing for the project have been concluded.

Joint lead arrangers KfW IPEX-Bank and Societe Generale would raise up to C$280-million for the project, Gensource confirmed in a statement.

The new SPV, to be called KClean Potash Corp, would be owned by Gensource (67%) and HELM (33%) following final equity investments.

Tugaske will be the first production module on Gensource’s Vanguard area, located about 170 km south of Saskatoon and about 360 km north of the US-Canada border. Gensource said it expected to implement several potash production modules over the course of the next decade.

Meanwhile, Gensource was encouraged by the robust fertiliser market, said president and CEO Mike Ferguson.

“The presence of today’s higher prices will, no doubt, bring additional new projects to the industry; however, it is important to note that Tugaske does not rely on the current high prices to be economically sound. Tugaske was developed under much lower potash pricing scenarios than we are seeing today and shows robust economics at both low and high pricing environments; this is one of many fundamental and differentiating strengths of the project,” he noted.

Fertiliser prices have shot up over the past year, with prices of major fertilser products throughout North America increasing by more than 50%. The average retail potash prices across the US increased from $380/t in 2020 to $661/t in 2021 to date. The last time the potash price was above $600/t was in November 2012.