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Gensource acquiring 2 potash permits, secures off-take deal

GensourcePotash Corp. said April 6 that it struck a definitive deal withYancoal Canada Resources Co.Ltd. to acquire two potash exploration permits in Saskatchewan,conditional upon their conversion into mineral production leases.

The deal also includes an off-take term sheet for the saleof potash from Gensource's planned production facility. Pricing will be basedon benchmarks for the various port locations and delivery terms.The off-take will be for the full planned production rate of 250,000 tonnes perannum from the facility.

To acquire said permits, the company will pay about C$2.5million in two installments with half to be paid in cash within 30 days ofclosing the transaction, while for the remainder, the company will issue adebenture convertible into shares.

In addition, Gensource agreed to pay about C$300,000 for thelease conversion costs, which can be refunded if the permits are not convertedto leases.

The two potash exploration permits, KP-483 and KP-363 covera total of some 63,800 acres.

The transaction will close once the permits are converted toleases and those leases are delivered to Gensource, the off-take agreement iscompleted and all necessary regulatory approvals are received. It will alsolook to raise money from a private placement, which is also a condition forclosing the deal with Yancoal.