Gensource Potash Corporation (GSP) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Gensource Potash Corporation Investor presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Mike Ferguson, CEO; Alton Anderson, CFO; and Rob Theoret, VP of Finance and Business Development. Good afternoon.

Good afternoon. Thank you, Paul. Good afternoon, everybody. Thanks for joining us here today. We're pleased to present our company, Gensource Potash and the exciting opportunities we have in the fertilizer space ahead of us. So we're going to turn cameras off to let the slides be a little bit bigger for your viewing ease, and we'll turn the cameras back on during the Q&A session at the end. So Gensource Potash, we're here to do potash with purpose. We're a small publicly traded company in Canada and on [ A ] listing on the LSE [ A ] market now. And we have some exciting ideas, plans on potash development. During the course of today's presentation, we'll be talking about some forward-looking statements, so please be aware of that. And we'll jump right in. I'd like to start with introducing the management team to you. On the call here, we have, as Paul indicated, we have Alton Anderson, our CFO; and Rob Theoret, our VP, Corporate Finance and Business Development. Rob and Alton, would you please introduce yourselves quickly?

Sure. Yes. Good afternoon, everybody. Yes, Alton Anderson, I joined Mike and Rob just coming up on 2 years. And I've been in the fertilizer industry almost my entire career. I have over 30 years' experience, 22 of those with Potash Corp, some of you may know was one of the largest suppliers prior to the merger with Nutrien, and now they're considered the largest -- one of the largest suppliers in the world. My background is I'm a chartered -- CPAC, chartered accountant. Had background in finance and then in operations, sales, marketing across the entire company doing transformation initiatives. I'm very pleased to come work with Mike and Rob, who are doing a transformation initiative on a very -- we say a modular approach, but it's a very transformational initiative that we're leading here.

Rob? Looks like we've lost...

Rob, I think you're on mute. Give me just one second. Let me just unmute.

Thank you, everyone. Good afternoon. Thank you, Mike and Alton for the kind introduction. My name is Rob Theoret. I'm the co-founder with Mike of Gensource Potash. My background is purely financial. I've been part of the financial industry for over 25 years and being pretty much an entrepreneur for my entire career as well. And we are very excited to present to you all here today what we have designed and planned and are executing as we speak right now is, as Alton said, something that's very transformational within the potash space of the world. And of course, potash is a key macro nutrient that is in fertilizer that is used to grow food. And in today's environment, food security, crude pricing, access to food is incredibly important. And the whole nutrient supply chain is incredibly important and vital for all of us here today. So I'll turn it back over to Mike, and Mike can proceed with the presentation.

Thanks, Rob. The introduction of the team is a key feature here. My name is Mike Ferguson. I'm an engineer in my background. Spent my entire career in Saskatchewan, working in potash. I started working at the Vanscoy potash mine in the summer of 1984 and haven't been able to get out of it since. The -- if you look further on this presentation into the appendix and on our website, you'll see additional members of our team. And the team -- as I mentioned, the team is critical because this is the same project team that was part of a small company called Potash One starting in 2006 and '07, where we develop what we call the legacy project. We ultimately sold that company to K+S, the large German fertilizer manufacturer in 2011. They went on to construct it. It's now called the Bethune mine, and it's the newest operating mine in Canada. And it's a good -- it's a really good data point. That mine cost, the published numbers that K+S provides publicly is $4.5 billion construction time -- construction costs. It took 10 years end-to-end to develop it. That mine has a design capacity of 2.8 million tonnes per year, and it will ramp up to 4 million tonnes per year over a decade or two. So that's a good snapshot of what it used to take to get into the potash industry, and it's a key reason why there's no real new players in the industry. These projects are large, expensive, resource-consuming, and they add tremendous amount -- tremendous volume of tonnage to the market each time a new project comes on. So they're lumpy -- we like to call them lumpy additions to the marketplace. During that exercise, we started to get some new ideas on how to enter the potash industry. And we'll talk a little bit about the industry coming forward that this is an industry that you really want to be in. So what do we have here in Gensource Potash? At a high-level summary level, we have a modular project that is -- has attractive financials all by itself as a single module, and it uses some transformational methods. Those methods are a form of selective -- sorry, a form of solution mining called selective solution mining, and they have a number of benefits that we'll describe as we go forward here. We further derisked the project with our partner, HELM AG. HELM is a large German company with a very significant U.S. presence in the fertilizer distribution trade, and they have signed with us a 10-year take-or-pay offtake agreement where they will purchase 100% of the production from the project for a period of 10 years. Further to that, HELM has also committed -- you'll see from some of our news releases last fall, HELM has committed a $50 million check into the equity for the project. So they are both our equity partner and the off-taker. So that's a strong partner in HELM and a significant derisk for the project. The project is fully licensed. It's ready for construction. It has its environmental approval. Call it shovel-ready, if you like. And it's -- we will describe the project in a moment here, but we have designed them as modules. And Tugaske, the name of this project is -- initially consists of one module. The plans are certainly in place to add modules as we go. But even at one module, it shows robust IRRs and financial performance. So the context that we're working in here is, as Rob mentioned, food security. And food security is a global issue and so is the fertilizer business that supports it. The context is that depending on who you believe, we will be 9 billion or 10 billion people by 2050, and those people need to eat. Those people need to be fed from a decreasing arable land base around the world. Arable land is disappearing through urbanization as well as climate change impacts. And at the same time, the diets for people around the world are increasing in protein. So all of those factors together place a tremendous strain on the agricultural industry to produce enough food for the world. That is accomplished and can be accomplished through proper fertilization. Agronomic practices are well-understood and well-practiced in many areas of the world, and it involves the correct mix of nutrients on the land to produce the best quality and the best yield from any particular crop. That involves, as Rob said, the macro nutrients primarily, which are N, nitrogen; P, phosphorus; and K, potassium. Of course, potash is the K part. The chemical symbol this PCl, potassium chloride. And it's a key part of a balanced fertilizer regime that's going to allow us to feed the growing population around the world. And we're doing all of this in a sustainable manner. And we'll speak a little bit more about the environmental performance of the Tugaske Project that is world-beating. So the Gensource business model coming out of our experience on the legacy project or the Bethune mine, it stands on two pillars. The first pillar is around technical innovation. We're here to be modular, efficient and environmentally sustainable. Those are three aspects that essentially you can't say with the word potash in the context of the current industry right now. There's no scalable, efficient or environmentally sustainable operations currently. We are out to change that. and build the first one that is. The second key pillar is vertical integration. Now in our dictionary, vertical integration simply means to create a direct connection between this producing facility, which happens to be in Saskatchewan, Canada, and a very clearly identified market area. This pillar of the business plan is facilitated through our partnership with HELM with the offtake agreement that we have in place. HELM will purchase the product that we produce at Tugaske, and they'll purchase it directly at the plant site in their own rolling stock, their own railcars, and they will deliver that product directly to their end customer. Nobody else in between and no other stores or distribution centers in between. So essentially, what this means on the vertical integration side is that we are creating a new and independent supply chain for this product outside of the existing supply chain, which is a large hub and spoke type of operation where there are major warehousing areas in the U.S. and resellers, distributors, wholesalers buy out of those warehouses and redistribute around the countryside. That supply chain is owned and controlled by the existing producers. And we have no intention, of course, of entering that supply chain. We're here to create a new model of direct ship from mine site to end customer. The customers that we're speaking of are HELM's existing customers. As we mentioned, they are a major fertilizer distributor in the United States. They have a broad book of business. They move potash as we speak today. And these customers are not wishful customers out there as they are their existing customer base. So a little bit more on the vertical integration side because it's key. And I want to make a link back to the first pillar of the business plan, which is the scalable and sustainable part of the operation. If you show up with a typical potash project that produces 2 million or 3 million tonnes per year, you cannot be vertically integrated. If you show up with a project of that size and scale, you are immediately launched into the requirement of being a global marketer. You've got to move those tonnes wherever the market will take them. So the vertical integration piece is facilitated by the scalable nature of the project. One of our modules produces just 250,000 tonnes per year. That's 1/10 the size of a typical large-scale potash project. When you do that, you actually allow for the vertical integration. For a volume of 250,000 tonnes per year, there's all kinds of places where you can strategically move that product. When you have, again, millions of tonnes to distribute, you are not able to be strategic about where you place the product. Here's our marketing area. The map on the left shows the marketing plan, which has been developed in conjunction with our partner, HELM. The green dot shows the approximate geographic location of Tugaske. Tugaske sits on, you'll see in a moment, sits on a main rail line. So it has excellent access to infrastructure. All products will leave the site by rail, and it will be taken again directly to the customer base in these regions. The predominant regions here will be the Northern Plains, Pacific Northwest and a little bit into California. There will be minor tonnes go to the Corn Belt area. We are not out to compete in the corn belt, which can also be served by river bound -- Mississippi River bound product from overseas. Our market area is strategically chosen as an area with strong retail prices and because of its relative proximity to the Tugaske site, low transportation costs. Transportation costs for this product are a significant part of the landed cost, so we are strategically looking for areas and again, strategically looking for areas where we can place this product with the highest net act to the mine site. And that's key. And again, the scalable nature, the small starting volumes allows us to be very strategic about what we're doing here. On the right, we see a general demand curve over time. We have -- again, depending on who you believe, a number of different groups have slightly different numbers, but it's in the 2% to 2.5% combined average annual growth rate, potash demand growth over time. It certainly jumps up and down year-to-year. But over the long term, many decades, it's a steady growth. That indicates to us that we are not out to compete with the existing producers. We are out to fill on an incremental basis, growing demand in a very strategic way. So I'd like to talk a little bit now about the project itself. So our approach is modular. So this is a new approach for the industry. As we mentioned, most of the projects, all of the projects to date have been large mega projects that add millions of tonnes at a time, and that causes market upset. It causes poor capital use because you're building a mine for 100% of its capacity, but you're never really able to run at 100%. You're always running at some reduced percentage of production in order to feed your tonnes into the market. So again, with the vertical integration, selling the product before we start to construct the project that produces it. That is key. So we can build a modular design that will simply run at 100% of its design capacity and produce on a steady-state basis. So the project itself, as we mentioned, 250,000 tonnes per year of final product, low capital, low operating costs. We'll talk about the CapEx costs and operating costs in a moment here. We've completed several studies on the project. It's well past feasibility. We've completed what's called a FEED study, a front-end engineering design study. And the project team is actually ramping up right now as we speak, getting ready for final procurement of long lead items and starting to get geotechnical work done on the plant side and get ready for project kickoff later this summer. The project sits on -- right on top of critical infrastructure. The rail is 30 meters away from the plant site. So very close and easy to access. We're right on roads and rail. High-pressure natural gas is within a couple of kilometers of the plant site. So all the key infrastructure is in place and ready to go. Key approvals are also in place. As I mentioned, the project has received its environmental approval from the Saskatchewan government. And interestingly, it has received its environmental approval without the need to create a full environmental impact statement. Now we did most of that work. We produced most of an environmental impact statement ourselves to simply prove our point. But at the end of the day, the regulator agreed with us that this project does not trigger any of the issues that might require a full EIA to be produced, and we were given our environmental approval on that basis. Now that's key. That's first ever for a potash mine. And that is specifically because of the technology that we're using, selective solution mining. And the way Gensource is implementing it produces no salt tailings. We leave all of the excess salt down in the formation. So when you don't create salt tailings, of course, you don't have to surround those tailings with brine ponds. So on the surface, you will not see salt tailings or brine ponds. They don't exist for Tugaske like they do for every other potash mine in the world. We have some photos in the presentation that show you a mountain of salt in Germany that they even have a name for. They call it Monte Kali. It's 300 meters high. In Saskatchewan, we have a little more land to deal with. Every potash mine in Saskatchewan has salt tailings. Some of them are stretching 4 square miles in area and 60 and 80 meters high. This is a major environmental impact, together with the surrounding brine ponds that a potash mine produces. And Tugaske simply doesn't have it. So this will be a transformational project in how it's implemented and fundamentally what it is and what it isn't. The other aspect that we like to talk about, ESG has become a big thing these days. Everybody is investing in ESG projects. But this is something that we started 8 years ago now as a fundamental part of our DNA that we should be smaller and scalable and environmentally sustainable. And ESG has 3 letters to it: environment, social and governance. Gensource has implemented some significant governance regulations within its own corporate structure to cover the G part. Environmental part is well taken care of. We are head and shoulders above anything else in the industry from an environmental impact perspective, as evidenced by the regulatory approval of the environmental assessment. And on the social side, because we hire only -- these plants will be run by only a staff of an estimated 46 people, they actually fit in very well to the local small town, agricultural environment in Saskatchewan. A typical potash mine will employ over 500 and will have 2,500 construction workers over a period of 4, 5 years to construct it. Those things do not fit into local communities. They dominate local communities. On the other hand, for Tugaske, we'll fit in nicely. And as a result, the surrounding towns have become significant supporters of the project. They're looking forward to the smaller scale, non-dominating economic activity for the project. These are things we're very proud of, and we hold as fundamental values in the company. It's in a strategic location. Tugaske is located in Southern Saskatchewan, as we mentioned, right on rail infrastructure to serve the close buying market of the U.S. There's strong rail connections between Canada and the U.S. So it's a change of locomotive as it crosses the border to be hauled into the U.S. Saskatchewan, I may say just to reiterate for those who are potentially not aware, Saskatchewan and the darker green box there. It's a province in Saskatchewan that is home to 50% of the world's known potash resource and currently produces 1/3 of the world's annual demand of potash. There are now 11 operating mines in Saskatchewan. We've been mining potash in Saskatchewan since 1959 when the Patience Lake mine opened up. And it's still running. No mines have shut down. It continues to run. The resource is thick and rich and enormous. Some estimates have it at 3,000 years of world demand sitting on the ground in Saskatchewan. A little bit about the environmental side of the Tugaske Project. We are -- as we mentioned, we're using selective solution mining method. We have a patented energy system in the surface plant that helps provide us with a low operating cost to operate the facility. The mining methods are Gensource proprietary methods that are being used, but the key features are -- for the mining method is a significantly reduced water consumption, fresh water consumption. And fresh water is a precious resource, particularly in Southern Saskatchewan. It's becoming more and more so around the world. Freshwater is key to life, of course. And we use 75% less per tonne than conventional solution mining methods. The other aspect of the selective solution mining is that it leaves excess salt down below, as I mentioned, so we create no tailings. And it's a continuous process. We inject our brine into the mining caverns below ground, where it picks up the KCl, it dissolves the KCl. There's no fancy chemistry going on. It's simply dissolving KCl in the brine, brings that KCl rich brine to surface, where it is cooled down through a crystallization process. the KCl crystallizes, becomes saturated crystallizes and it's collected and processed as the final product. That same brine then is simply reheated and pumped it down into the caverns again. So it's a continuous recycle, and that gives us our low water use and lack of salt tailings. We have elected through our patented energy system to power our own electrical needs on site. So we have a version of what you would recognize as a combined heat and power plant that provides cooling, heating and electrical power through one energy source. Currently, our transitional energy source is natural gas. But because of the design of the system, that natural gas can be displaced in the future with a green hydrogen or another green fuel to provide us. And as far as we can tell from our own research, we are the only potash operation globally that has a rational path to net zero. So -- and that's because of the centralized energy plant concept that we've gone to. In the immediate term, because Saskatchewan's Power Grid is still approximately 50% powered by thermal coal, by not drawing power from the grid, we actually avoid some 24,000 tonnes of CO2 emissions each year simply by using our self-generating power on-site. So we have a significant profile for CO2 emissions and a great future path towards net zero. We use significantly less water. And because of the lack of salt tailings and the modular nature of what we're doing, we have a very small footprint on the land. We have a situation where our facility is actually decommissionable sometime in the future. Potash mines last a very long time. They're generational, intergenerational things. Once they get going, they just keep going forever. So nobody has actually decommissioned a potash mine. But looking at the salt tailings that exist, the current mines are not rationally decommissionable, whereas the Tugaske Gensource Project will be when it's time to do that. This just gives you a little picture of the process that I described with the brine being injected underground, brought to surface with the KCl dissolved in it. Crystallization, that brine then is returned back to the caverns for another cycle through the mining process. And from thereon, the product simply is derived. It's compacted and recrushed to attain the correct size distribution for the particles. And then it's stored and loaded out and shipped out by rail from there. It's a very simple, clean, linear process. And the lack of salt tailings, brine ponds and the need to construct those facilities and operate those facilities for the life of mine actually gives us a cost advantage. We have a CapEx advantage because of that, and we have an OpEx advantage because of the lack of salt tailings. At this point, I'd like to turn it over to Alton Anderson, our CFO, and let him walk through some of the operating capital cost and financing information that we have to share today.

Thank you, Mike. Yes. So regarding our cost -- operating cost, first, let's focus on that on the right-hand side, you see once we've constructed and we're up and running, our total OpEx and CapEx, sustaining CapEx, will be $85 -- just over $85 a tonne. And that compared -- not just on its own does it compare very well on a global scale, but it puts us in the lowest cost quartile. And if you look on the left-hand side, combine that with a delivered -- total delivered cost on the left-hand side, what we've done is taking the Corn Belt as a proxy just because you can get other tonnes into the Corn Belt from global producers. So we wanted to compare ourselves there first and see where we sit. And this was in conjunction with -- Argus Consulting gave us some information that we placed us in the second lowest cost position on the far left-hand side there. So we're in the lowest cost quartile of delivered producers. And that delivered is important to be a low-cost delivery producer because potash is globally traded. So there's very few countries in the world that produce and sell potash, but all countries require it. So that way you want to be in your target market in that lowest quartile. You see the average retail corn price -- Corn Belt price for potash is -- was [ 7 83 ] back in October. And if you're following the market at all, you'll know that it's up. The prices increased from that point in time today. So the other thing to note here is you'll notice the ocean freight, the next three closest cost competitors are actually offshore competitors. And that's into the Corn Belt. And as we service our market, which is closer to Corn Belt, what it does is reduces our delivery cost but actually increases those next three producers' delivery cost because now they have to ship it off to Mississippi on either rail or truck and land to the delivered market. We'll go to the next slide. And you'll see from this first -- very first module only, this is the IRR. The number to focus on is before the 21.74, which is before the Sask PPT, which is a -- we call it a profit-sharing tax of the provincial government. So we get a tax holiday based on our capital cost that we were able to deduct against the PPT shows a very high internal rate of return of 21.74%. Now for future expansions, we -- the unique situation is that you were able to claim those capital costs of expansion against this tax and defer it further as you incur those capital expenditures. So the 21.74% is a nice number to remember and why it's there. If you didn't do any expansions, and this was the only module you have, your return then would be on the far right-hand side, which is the 17.1%, which is after all taxes are paid. So we are sitting in a very nice position when it comes to a return on the invested capital. Going to the next slide on sources of uses for the actual construction of the initiative for this first module. The total sources and total uses, total sources on the left, you'll see the total of CAD 471 million, which is made up of -- immediately above that, it says the project finance debt, and this is a debt facility that's CAD 280 million is underwritten by KfW IPEX-Bank and Societe Generale. And they together have underwritten the debt component. The capital required is at the very top number, $191 million. Part of that is already available and being contributed to the project from Gensource parent corporation We have a $36 million carry for the investment and -- to date on this initiative. And so that remains the cash required is $155 million. Mike referred to this earlier. Our partner in this is HELM, our offtake partner. They are contributing $50 million cash, which leaves Gensource a cash contribution that they will be putting into this initiative of CAD 105 million. On the right-hand side, you see the uses. Again, to reconcile down to that $471 million, you'll see all the cost numbers. What I'd like to highlight is the actual top number. The CapEx number of $318 million is the actual capital cost of the equipment -- platinum equipment to get it ready for production. There is also a project contingency, the fourth line down of $34 million. Even if you took that number, you're still well below the $471 million. However, the 2 numbers to really focus on here other than the CapEx is the second line, the cost overrun of $40 million and the project contingency of $34 million. Those together make up $74 million of cash reserve that we have to fund any cost overruns. If as expected, we come close to our capital cost on the project of the $318 million -- anything that's left in that $74 million cash reserves can be used for any ongoing potential reserves that are required operating reserves on -- from an operational basis. It can be used for expansion capital on this module or the next one, and it can also be returned to equity. So that's the total use of funds. Then on the next slide, we have the makeup, the pictorial that shows us who actually owns the initiative. So together with our partner, so Gensource will have 67% of the equity in clean potash, which is the special purpose vehicle, which has been created to actually build and own the Tugaske project. HELM will insert their cash requirement, and they will own 33% of the special purpose vehicle. KClean Potash, we thought we were very ingenious in the name, KCl, for clean and it will own and operate the Tugaske project. And you can see down in the bottom on the left-hand side, we have our senior lenders, KfW and SocGen, which are providing the underwritten $280 million senior debt facility. It's also to note that Euler Hermes is looking at being the backer of 50% of this due to the German content of the equipment that we're purchasing for this capital initiative. And I think with that, I will turn it back to Mike.

Thanks, Alton. So with kind of coming to the end of the formal part here. I'd like to show you the nominal time line here. The construction period is a little less than 2 years. We currently have it laid out at 20 months. Some of that work is actually starting now. As I mentioned, the project team is ramping up at our engineering partner in Saskatoon. So what we're looking to do here is begin construction this year. And that will give us, at the end of the day, first product in early 2024. We're hopeful to have first product for HELM for the 2024 growing season. So that's the development time line. You can think of it as 2 years just for ease. And that compares to, as I mentioned before, 10 years for the full large-scale mines. And I mean, you can see even from articles, I'm sure you've seen around what BHP is planning to do. They've been already working at it for almost 15, and they've got another 6 or 8 to go a minimum before they're going to get themselves into production. So these are -- the typical potash project is a very large unwieldy mega projects that take a very long time to bring to market. We see what we're doing here as -- I used the word transformational a number of times, and it is. It's transformational technically in how we're producing the product, although it is not -- I have to say, it is not a technology play. This is not a technology play. All of these techniques are existing and used in the industry now. We're simply -- we have the advantage, to be honest, of doing this in 2021, 2022. This is our -- this is what a 21st century potash operation looks like. So it's transformational in that perspective. It's transformational in how it delivers its product to the end market, and it's transformational from the structure of the potash industry that we see what we're doing here beginning to move the industry to more of a manufacturing model where incremental capacity is brought on strategically to meet demand increment, rather than the bulk mining model that it operates in right now where these enormous undertakings are brought on that are so big they each affect the market. They can't be absorbed by the market as you go. So we think the future of the potash industry is around the manufacturing model and adding incremental tonnes strategically where they are needed, and as you can see in this short development time line, when they are needed. And these are key pieces to the puzzle. So the -- we've touched on the ESG aspects of the development so far. We won't spend a lot of time here, but we have talked about the three pieces of E, S and G, and we have considered all of them. And our -- as I mentioned, it's part of how we started this 8 years ago. when we started to develop this transformational way to enter the potash space. Our goal is to be net zero. We are not net zero now, but we are the only project operation even out there that actually has a rational path towards net zero. And that's key. We start in a way that makes the future possible. And we actually started in a way, too, that allows us -- for those of you who are into the ESG side of things, you'll know about Scope 1, Scope 2 and Scope 3 emissions. It's fascinating when you look at almost all mining company sustainability reports, everyone is quite silent on Scope 3. And Scope 3 in most industries is the majority of all emissions. Yet the mining industry has a hard time following through to understand what Scope 3 emissions are. Gensource, due to its business model of vertical integration, can follow every single tonne that it produces. It knows where it goes, it knows how it got there. and it knows where and when it was delivered to a farmer's field. So for the first time, we'll be in a position to actually understand and calculate Scope 3 emissions. And that's a big step forward for the industry. That's a step change to bring Scope 3 on to the table and to be able to discuss it intelligently with some actual data. The other part of this is because of how we process this product in the module -- in the Gensource module, we actually have the ability to create an organic product. Of course, you cannot obtain organic certification until you actually have a producing facility that can be inspected and certified. So organic certification is not a paper thing. Unless you're producing it, you cannot be organic. But we have engaged organic certifying agencies, and they have reviewed what we're doing and indicated that there doesn't seem to be any impediment for us to create an organic certified product. So that's part of the value-add in the future that Gensource will be looking towards. So I'd like to leave you with a brief overview. This is a similar slide to how we started. Gensource is here as a transformational player in the potash industry. Potash is a key nutrient to support agricultural productivity, which supports food security for a growing population around the world. We're doing it in an environmentally sustainable way. Our environmental profile is head and shoulders above anything else in the industry. The transformational methods we're using and our transformational business practices of vertical integration with the specified market, we believe, will begin to change the industry to more of a manufacturing model and will result in, at the end of the day, better access to this product by those who need it, which is the agricultural grower. At the same time, this project shows excellent financials, excellent paybacks and is highly derisked with the addition of HELM as both our equity partner with skin in the game and our offtake partner, who will purchase 100% of the product from the first module and deliver that product directly to their existing customer base at the retailer level and even at the large grower level. That's the message that we'd like to leave you with. This is the future. Not only is potash -- and potash has been branded recently as a future-facing commodity. We believe that forever. But Gensource is now advancing and about to execute its first project to show that -- what the future of that future-facing commodity looks like. And it looks green, and it looks efficient, and it looks focused on the end user, which is the agricultural grower. So with that, we'd like to leave it. And thank you very much for your time. We appreciate your time listening to us, and we're happy to deal with some questions.

[Operator Instructions] I'd like to remind you the recording of the presentation along with a copy of the slides and the published Q&A can be accessed in your investor dashboard. [Operator Instructions]

Sure. Thanks very much. It's Rob Theoret here. I'll answer the first question, which is, can you give us a sense of the current interest in modules beyond the Tugaske project? That's a very good question. you probably noticed, if you look at our news releases towards the end of 2021, basically in December last year, we acquired another block of land that fits right adjacent to, right up against our existing land holdings. We have an enormous amount of potash resource on our lands. And one of the reasons that we've secured further lands is because we do have continued interest in other projects directly, very similar to a structure that we have with HELM. We're very careful not to cannibalize our relationship with HELM and that interested parties that are approaching us. And again, there's no shortage of interested parties wanting to have and wanting to secure their own direct supply of potash around the world. A lot of the interest is offshore. And as a result, we are preparing ourselves for the future in the expectation of multiple projects going forward.

Absolutely. Thanks, Rob. So yes, we have interest in additional project areas. And it's actually a good opportunity to talk about the growth plan for Gensource as the public company, as the company in the middle. As you saw, Tugaske will be executed under a joint venture arrangement, and our general business plan is to continue that model. We don't need to own 100% of all of these things, but we are the company in the middle that owns the resource, is an expert in this field and owns the technology. So we will be joint venture owners in all of these facilities, so there's a number of paths for Gensource to grow strategically. The first path, of course, is to simply add more modules to the Tugaske Project to clean the product. HELM has also already expressed interest in that. So it's a modular system. We simply add another 250,000 tonnes as we go. The second pathway is to create new projects that Rob discussed. In our existing lease areas, we have space for more than a dozen of these modules, each of them lasting more than a century. So the resource is not constraining under our business model. The trigger is to find the right offtake partner who is going to strategically deliver this product to an identified market that doesn't cannibalize any of our other markets and then to progress with a structure very similar to what you saw for Potash Corporation. The third path to growth for Gensource is what we call it taking it on the road. There's a number -- for those of you who followed the potash industry over the decades, there's a number of resources around the world in Africa, Central America, South America, Southeast Asia that are very close to high consumption market areas. Those deposits are well-known. They've been studied many times over the years, but they've always found to be uneconomic under the old models of multimillion time middle mine production scenario. We're of the view that our methods, our technologies can be brought to those smaller deposits to make them viable. If that is true, then what you end up with is a situation where you are producing a product very close to its point of consumption. Transportation costs are a major factor in the landed cost for this product. So wherever you can be closer to that end consumption market, the better you are. So we're looking forward to following that pathway as well. So Rob, just to kind of amplify on your response to identify those areas of growth for Gensource as the public -- the top company, the public company in the middle of all this, we are of the view, not to take it too far, but we are of the view that what you're seeing here is the beginnings of the next major fertilizer producer in -- starting in North America. We start with potash, MOP. We'll start to look at broadening the range of potassium products into SOP and NOP, nitrate potash, and you start to broaden that product range and increase your tonnages. And this is how it looks at the beginning. Other questions. There's a good one on the execution risk. It's an interesting time in the world where we're living. And the project team, as I mentioned, is ramping up right now with a bunch of planning activities. And they are looking at all of the risks that are out there. And the risks for Gensource in the context of the world economy, the way things are now are, of course, on supply chain issues, transportation costs. That's a major hurdle that we're looking at. We have a specialized global logistics transportation company who has been engaged now and is working with us directly to, again, be very strategic about how we're going to do this. And we're engaging that company 6, 8, 10 months ahead of when we'll need to be shipping material. And that is key that allows you to do some planning and mitigate whatever supply chain or transportation side risks there are. The other risk, of course, is on cost of materials. Specialty metals are jumping around. Steel prices are increasing in general. So we're monitoring those very, very carefully. The execution team, though, in Saskatchewan here is formed and has been formed for several years now. We have a very close partnership with our construction company, Southeast Construction, and our engineering company, [indiscernible] Engineering in Saskatoon, where we are creating an integrated team. And this team has been together for several years and is responsible for the completion of the feasibility study and the FEED study. So that same team now is ramping up into execution mode. And we are very confident with the inclusion of our construction contractor in the team at the very beginning. We're very confident in our ability to execute the project under the current CapEx and schedule constraints that we have. That's an excellent question. Everybody is concerned about the world supply situation. There's another question here around update on equity. Can I hand that one over to you, Rob, to field?

Yes, sure. So I have to be -- for regulatory purposes, in a public forum, we're precluded from providing too much information currently. So suffice it to say that we are on our last mile of financing for the project, and we have full expectations of having that completed before spring and construction for summer time. And again, due to our regulatory items, that's as open as I can be right now. Stay tuned for future news releases that we will be providing and updates that are forthcoming. There is also another question around how much of our production will be taken up by HELM. For the Tugaske Project, HELM will take 100%. Everything that is made or produced from the Tugaske Project, they will take and they will sell into the United States. There is also an opportunity that we're discussing with HELM to expand the production from 250,000 to some 500,000 tonnes, and they would take 100% of the incremental expansion as well. There is a sufficient demand in the United States. There's a demand to have an alternate source of direct supply potash into the United States. And this helps -- this business model that we have with HELM helps farmers or growers secure and understand the delivery times of potash for their use and also from a pricing perspective. It's critical to understand in today's environment, we have exceedingly high potash prices. There's exceedingly high demand for all nutrients, all fertilizers. There's talk of shortages of fertilizers. We're seeing price increasing food price increases. And our business model is exactly designed to help minimize the supply chain problems and issues that we're seeing in the market today.

We're just coming up to the hour mark, and you have covered all the questions we've had through from investors. Of course, if there are any further questions that do come through, the team will have the ability to review those questions, and we'll publish responses where appropriate to do so on the Investor Meet company platform. And before I redirect investors to provide you with some feedback, so it's particularly important to you. Mike, perhaps I can ask you for a few closing comments, please.

Sure. I'd like to leave you with the idea of Gensource. This is transformational activity at the beginning in process. Gensource is out to change how potash is produced and to do it in a sustainable way, with an environmental profile, head and shoulders above anything else in the industry as we begin to transform the potash industry to more of a manufacturing model, strategically adding incremental tonnes to meet incremental demand on a rational and strategic basis rather than the large lumpy addition model, the bulk mining model that has been the hallmark of the industry up to now. While we do this, we're showing even a very small-scale project has exceptional financial returns, robust financials and it's highly derisked. This is the future of the industry, and we look forward to exciting things ahead, and we invite you to join us on this journey.

Fantastic. Mike, Alton, Rob, thank you again for updating investors today. Could I please ask investors not to close the session to be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. This would only take a few moments to complete and I'm sure is greatly valued by the company. On behalf of the management team of Gensource Potash Corporation, we would like to thank you for attending today's presentation. That concludes today's session. Good afternoon to you all.

Thank you.

Thank you.