Gensource Announces the Launch of a New Potash Production Module

SASKATOON, Saskatchewan–(BUSINESS WIRE)–Gensource Potash Corporation (“Gensource” or the “Company”)
(TSX-V: GSP) confirms today that it has entered into non-binding
Memoranda of Understanding (MOU) to form a joint venture company (“JVCo”)
to develop the Maverick Project (“Maverick” or the “Project”)
within the Vanguard Area. JVCo will construct, own and operate the
potash production facility. The Vanguard Area comprises approximately
72,000 acres of crown mineral lease area of known and prospective potash
minerals within leases KL-244 and KL-245. The area is named “Vanguard”
to underscore the leading-edge, industry-changing approach to potash
production the Company is developing. The Maverick project is being
developed alongside the Company’s other project, Vanguard One, within
the Vanguard Area.

The parties to the Maverick project have reached an agreement in
principal on offtake amount, duration of offtake, equity contribution
and JVCo’s operating structure.

The following agreements have been signed for the Maverick Project:

  • Offtake Agreement: A non-binding MOU for offtake has been completed
    with a large and well-respected international fertilizer manufacturing
    and distribution company. The group has significant infrastructure and
    a well-established distribution network within the North American
    fertilizer marketplace and has developed a marketing plan to
    strategically place 100% of the production from a Gensource facility.
    Offtake MOU terms include:

    • Obligation to purchase 100% of the production from one module of
      250,000 metric tonnes per year,
    • Typical take or pay offtake provisions,
    • 10-year duration, with option to renew,
    • Product sale and title transfer at the mine site (FCA mine site),
    • Market-based pricing formula.
  • Offtaker Project Equity Investment: A non-binding MOU by the offtaker
    for direct equity investment into JVCo, alongside Gensource and one
    other third-party investor. The equity investment will be in the form
    of cash and equal to 25+% of JVCo ownership. In addition to equity
    investment in JVCo, the offtaker has also introduced senior debt
    financing relationships to the Project that will help further
    accelerate project finance activities.
  • Third Party Project Equity Investment: A non-binding MOU for the
    largest equity investment of about 33% from a third-party investor.
    The third party is a private investor strategically invested in and
    owner of a highly respected and established shipping and commodity
    transportation group which is internationally active in the field of
    shipping chemicals, oil and agricultural products for world-wide
    active commodity producers and trading houses. The group also owns
    real estate and has development interests, the roots of which go back
    to the early nineteen fifties. The strategic investor wishes to become
    actively involved in the Project as part of its strategic plan to
    further diversify its investments on a long-term basis.

Going forward, the next steps to be taken include:

  • Execute a shareholder agreement for JVCo. among the three involved
  • Complete a definitive offtake agreement pursuant to the terms of the
    signed offtake MOU, and
  • Formally engage the senior debt providers.

Alongside the above agreements and the financing of Maverick, the
Company continues to progress the financing effort for its previously
announced Vanguard One module in parallel. However, the recent and
significant advancement in development of the Maverick project, also in
the Vanguard Area, has resulted in a situation where Maverick may be
implemented ahead of Vanguard One, driven by project financing.

Mike Ferguson, President & CEO of Gensource, commented “We are extremely
pleased to see Maverick advance as quickly and decisively as it has. The
fact that Maverick has received formal interest on offtake as well as
equity investment as a “bundle” is significant; significant not only
because it underscores the commitment to the project by Maverick’s
offtaker and the third-party investor, but also because of the
accelerating effect it will have on the completion of the senior
financing package for Maverick. Further, Gensource is pleased to have
formal commitment now for two of its small-scale, efficient and
environmentally sustainable projects, a situation that speaks to the
validity of the Company’s business model and overall approach to the
required change in the potash industry.”

Gensource is working with Roc Global LLC of New York as its exclusive
financial advisor.

About Gensource

Gensource is based in Saskatoon, Saskatchewan and is focused on
developing the next potash production facility in that province – but
with a fundamentally different approach. Gensource’s President & CEO,
Mike Ferguson, P.Eng., has assembled a management and technical team
with direct and specific expertise and experience in potash development
in Saskatchewan.

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, which
is much friendlier to the environment to construct and operate – the
output of which can then be directed to a single, specific market.

For further information about the Company please contact:

Neither 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 Statements

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 the ability to finance the Vanguard One or Maverick projects
on terms which are economic or at all, the establishment of vertical
integration partnerships and the sourcing of end use potash purchasers.
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 relating to Gensource’s
financial condition and prospects, the ability to finance the Vanguard
One or Maverick projects on terms which are economic or at all, the
ability to establish viable vertical integration partnerships and the
sourcing of end use potash purchasers could differ materially from those
currently anticipated in such statements for many reasons such as:
failure to finance the Vanguard One or Maverick
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 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; 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.


Gensource Potash Corporation:
Mike Ferguson, President and
(306) 974-6414

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