India’s GSFC backstops first phase of Karnalyte’s Canada potash mine – by Rod Nickel (Reuters India – March 14, 2016)

WINNIPEG, MANITOBA – India’s Gujarat State Fertilizers and Chemicals Ltd has agreed to guarantee payments on $700 million in debt to finance the first phase of Karnalyte Resources Inc’s Canadian potash mine project, Karnalyte said on Monday, adding supply even as other miners cut production. The company’s shares jumped 76 percent in Toronto to C$1.55.

Under the deal, a subsidiary of State Bank of India and other lenders would loan Saskatchewan-based Karnalyte most of the funds, with GSFC guaranteeing payments in exchange for a greater voting share. Karnalyte plans to make payments from cash flow and eventually issuing more shares.

The mine – to be located in Wynyard, Saskatchewan – would add supply to a struggling industry that has already seen production cuts by Potash Corp of Saskatchewan and others, due to weak crop prices and slack Brazilian demand. According to Mosaic Co data, potash prices in the U.S. Midwest averaged $248 per tonne last week, down 38 percent year over year.

But GSFC bought a nearly 20 percent stake of Karnalyte in 2013 that included an agreement to buy more than half of the Wynyard mine’s first-phase production for 20 years.

Karnalyte has informal commitments from other potash buyers in the United States and Brazil for most of the rest, said president Robin Phinney.

For the rest of this article, click here:

Comments are closed.