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Transcript of POTASH REVIEW - · PDF file tse:prk Potash Ridge 0.24 0.05 0.50 $29.0 tse:wpx Western Potash...

  • Key Portfolio

    Announcements

    March 2017 March 2017

    2017-02-23 Arianne Phosphate Secures Favourable Power Agreement with Quebec Government

    2017-02-17 Gensource Report

    Pegs Vanguard at 144 Million Tonnes Sylvinite 2017-02-16 GrowMax Provides Long Term Strategic Guidance

    2017-02-09 Agrium Reports Q4, Foresees Solid Spring Season 2017-02-06 GrowMax Announces Results of Sulfate of Potash Study

    MONTHLY

    POTASH REVIEW

    Double the Expected Resource –

    Gensource Continues to Deliver

    Palisade Research / www.palisade-research.com 2017-02-27

    Chalk another milestone up for Mike Ferguson, Rob Theoret, and their

    hardworking team at Gensource Potash.

    The last update we released in November 2016, outlined a non-binding

    MOU of a transformational JV with the Essel Group. Under the terms of

    the JV, Gensource will vend-in a project from its Vanguard area, as well

    as its project execution team. In turn, Essel will earn 70% of Vanguard

    by paying for the rest of the feasibility study (~C$5 million) and

    financing the construction of the project (~C$250 million!).

    Gensource is now one step closer to their FS, releasing an updated

    resource. And this resource is double than what they have originally

    indicated! The report defines a resource in the Vanguard area of 145

    million tonnes of indicated potash, and 320 million tonnes of inferred

    potash.

    With 3D seismic already underway, Gensource plans on releasing a

    bankable feasibility study by the end of April or early May. However,

    there is an extremely important catalyst in the near-term, being the

    finalization of the Essel JV. We expect that news to hit the wire

    sometime towards mid March.

    Lastly, in macro news, India scared potash producers when the Indian

    government ministry proposed slashing potash subsidies by 17% in the

    next financial year to reduce fiscal deficit. We believe this is to scare

    Canpotex and Uralkali into lower prices when negotiating annual

    contracts.

    How distribution to farmers normally work is, a major buyer will

    negotiate a price with potash exporters, and then will resell to

    distributors. By the time fertilizer ends up in the hands of a farmer,

    there can be mark-ups as high as 50-100%! The more hands that

    handle the potash, the more expensive it becomes. Everyone needs to

    be paid.

    Essel is positioning itself to buy directly from the source, and will sell

    directly to farmers, saving them and end-users significant costs. The

    win-win situation is apparent: Gensource receives a guaranteed stream

    of income, Essel receives much needed potash, and best of all, the

    once disadvantaged farmers of India can breathe a bit easier.

    Gensource is up 83% since our last update, but the market has still

    been slow to realize its portfolio of assets. We reiterate, the Vanguard

    area will be able to produce 6 to 8 more projects. It is a large land

    package and Gensource’s modular production plan cookie cutter JV

    model could be replicated time and time again. Gensource’s market cap

    is currently C$47M and each project is worth at least at C$285.5 million. It is the only potash company that makes sense.

    Relative Stock Performance

    52-Week and Monthly Stock Performance on page 2.

    TSX-V: GSP

    Significant Portfolio Announcements

  • 2

    MONTHLY POTASH REVIEW

    MARCH 2017

    Ticker Name

    Recent

    Price

    52 Week

    Low

    52 Week

    High

    Mkt Cap

    (Million)

    tse:agu Agrium 127.58 104.7 146.99 $17,338.8

    cve:dan Arianne Phosphate 0.82 0.68 1.25 $79.1

    cve:cpm Crystal Peak Minerals 0.50 0.17 0.56 $102.4

    cve:epo Encanto Potash 0.10 0.06 0.18 $44.2

    cve:gbl Gb Minerals 0.07 0.05 0.10 $59.3

    cve:gsp Gensource Potash 0.19 0.04 0.22 $52.3

    cve:gq Great Quest Fertilizer 0.22 0.14 0.35 $11.1

    cve:gro GrowMax Resources 0.14 0.13 0.22 $28.5

    tse:icp IC Potash 0.11 0.05 0.15 $26.0

    ipi Intrepid Potash 1.90 0.85 3.04 $138.9

    tse:krn Karnalyte Resources 0.69 0.64 4.15 $18.0

    mos Mosaic 30.22 22.77 34.36 $10,514.6

    tse:pot Potash Corp 22.90 19.93 26.62 $18,910.6

    tse:prk Potash Ridge 0.24 0.05 0.50 $29.0

    tse:wpx Western Potash 0.19 0.12 0.36 $84.3

    52-Week Relative Stock Performance

    Potash Portfolio Feb 2017 - Monthly Return

    *IPI-US and MOS-US data in US dollars, all others CAD dollars

  • 3

    MONTHLY POTASH REVIEW

    MARCH 2017

    Commodity Price Performance

    Performance of Key Fertilizer / Ag Commodity Prices

    Source: BMO Capital Markets, CRU, Argus, SX Coal, FactSet, Bloomberg.

  • 4

    MONTHLY POTASH REVIEW

    MARCH 2017

    Arianne Phosphate (DAN-V) Secures Favourable Power Agreement with Quebec Government

    Mkt Cap Projects Type Stage Jurisdiction

    $79.1 M Lac a Paul Surface Permitted, Financing Canada (Quebec)

    2017-02-23 Arianne Phosphate Inc. has secured a favourable power agreement with the Ministry of Energy and Natural

    Resources. This agreement confirms that an additional power bloc of 14 megawatts from Hydro-Quebec will

    be made available for the Lac a Paul project's ore processing facilities. This power bloc now totals 129 megawatts. Details of the agreement were laid out in a letter to Arianne dated Feb. 21, 2017.

    With this additional power bloc, Arianne will be able to supply all of its processing facilities with hydroelectric

    power, making it the apatite concentrate producer with the lowest greenhouse gas (GHG) emissions on the

    market. A significant portion of the whole power bloc of 129 megawatts (42 megawatts) will be used for the

    electric dryer to dry the apatite concentrate. The innovative technology integrated into the dryer will prevent

    the equivalent of 86,000 metric tonnes per year of carbon dioxide emissions. It will also have a positive economic impact on the Lac a Paul project.

    "Once again, we would like to thank the Quebec government for the additional power bloc," said Jean-

    Sebastien David, Arianne's chief operating officer. "The hydroelectric supply for all of our mining facilities will make the Lac a Paul project the most environmentally responsible phosphate project in the industry."

    Gensource (GSP-V) Announces NI 43-101 Report for Vanguard

    Mkt Cap Projects Type Stage Jurisdiction

    $52.3 M Vanguard & Lazlo Selective Dissolution Prefeasibility Study Canada (Saskatchewan)

    2017-02-17

    Gensource Potash Corp. has completed an updated National Instrument 43-101 technical report on its 100-

    per-cent-owned Vanguard project in central Saskatchewan. The Vanguard area comprises two leases, KL 244

    and KL 245, as well as several parcels of freehold encompassed by KL 245 now leased by Gensource. While

    other freehold lease negotiations are in progress, a cut-off date of Feb. 1, 2017, has been applied for

    reporting purposes. Initial project and resource development work has occurred, as a starting point, primarily within KL 245.

    The updated technical report, dated Feb. 16, 2017, supports that the Vanguard project area overlies a rich

    and thick potash resource. The report documents the geological work completed by Gensource since the initial NI 43-101 resource report was announced April 28, 2016.

    Since that initial resource report, Gensource has completed two exploration wells on the property, which,

    when combined with the two existing wells (completed in 2012) and the reinterpreted 2-D seismic, provide the data for the current resource modelling effort.

    http://www.arianne-inc.com/en/ http://www.gensourcepotash.ca/

  • 5

    MONTHLY POTASH REVIEW

    MARCH 2017

    The technical report defines a resource at Vanguard in the indicated and inferred categories as defined by

    CIM Standards 2010. The technical report was completed by Terra Modelling Services Inc., an independent

    geological/geostatistical consultant.

    Gensource's president and chief executive officer, Mike Ferguson, said: "The updated 43-101 resource

    technical report announced today shows an excellent resource, amenable to our planned selective solution

    mining method. The results support our earlier estimations of the resource on the Vanguard property and

    our decision to commence project development work in the area. The resource defined in this technical

    report will now be used as part of the ongoing feasibility study work and will help define the initial mining

    area and mine life of the first small 'module' that we plan to construct and operate at Vanguard. Using only

    the indicated resource numbers from the technical report, a very long life potash production facility here is

    possible. We're very pleased with the results of the technical report and are excited to continue to drive

    forward in our project and business development work towards our goal of becoming the next independent producer of potash in Saskatchewan."

    Summary of the technical report

    The technical report defines a resource in the Vanguard area of almost