Sage Potash Corp Enhances Operations with New Equipment Deal

Transaction to Improve Project Efficiency

Sage Potash Corp. is taking a significant step to enhance its production capabilities by purchasing critical processing equipment. This strategic move is designed to accelerate the project's timeline and reduce startup costs, marking a pivotal moment for the company in its mission to become a leading domestic producer of potash.

Details of the Equipment Acquisition

The company has entered into a Purchase Agreement with a subsidiary of International Process Plants (IPP) for processing equipment at a total value of $12.6 million in Canadian dollars. The newly acquired equipment has a processing capacity of up to 300,000 tonnes of potash annually and has been maintained in storage in Europe since its fabrication in 2012, which originally cost about €36 million.

Financing the Purchase

Sage Potash Corp. will finance this purchase through a combination of cash, equity, and a secured convertible debenture. Specifically, the company plans to pay $6.3 million in cash, issue 12.6 million common shares valued at $0.20 each, and provide a secured convertible debenture of $3.78 million. This debenture will mature in five years and accrue interest at 12% annually, with an option for IPP to convert the debt into shares at a price of $0.40 each.

Private Placement for Working Capital

To meet its financing requirements, Sage Potash is also conducting a non-brokered private placement with plans to issue 37.6 million common shares at $0.20 each, aiming for gross proceeds of $7.52 million. Additionally, convertible debentures totaling $3.78 million will be part of this offering. These funds are crucial for satisfying the Purchase Agreement obligations and ensuring ample working capital for ongoing operations.

Enhancing Shareholder Value and Project Timeline

CEO Peter Hogendoorn expressed excitement about the project's progress, emphasizing that the combined $17.6 million support from both IPP and Moneta Securities will significantly facilitate the transition to pilot production. Hogendoorn noted, "Today's lead times for stainless steel and titanium fabrication can create uncertainty. By procuring existing equipment, Sage is mitigating risks regarding costs and timelines, which is critical for attracting project funding and enhancing shareholder value. We are determined to reduce dependency on potash imports."

Expertise Behind the Acquisition

This important acquisition is spearheaded by Shilo Sazwan and his skilled engineering team, who bring over 25 years of experience in acquiring quality processing plants and equipment. Sazwan pointed out that current market dynamics have significantly increased the cost of materials; however, by buying this equipment now, Sage is avoiding projected expenses of $75 to $100 million that would otherwise arise from new fabrications.

Aligning with Sustainable Practices

In line with its sustainability goals, Sage Potash aims to utilize environmentally friendly solution mining techniques to maximize its production capabilities in the Paradox Basin. This aligns well with the company's commitment to developing domestic potash supplies, reducing reliance on imports.

Future Prospects and Market Positioning

The completion of the private placement and the terms of the Purchase Agreement are pending approval from the TSX Venture Exchange. All securities issued will have a hold period of four months, as is typical in such financial arrangements.

Frequently Asked Questions

What is the main goal of the equipment purchase by Sage Potash?

The primary aim is to improve project efficiency, reduce startup costs, and enable quicker transition to production.

How is Sage Potash financing the equipment acquisition?

The acquisition is being financed through a blend of cash, equity issuance, and a secured convertible debenture.

What will the private placement funds be used for?

The proceeds will support the obligations under the Purchase Agreement and provide working capital for the company.

Who is leading the acquisition process at Sage Potash?

The process is led by Shilo Sazwan and his experienced engineering team known for their expertise in procuring processing plants.

What are Sage Potash's sustainability goals?

Sage is committed to employing sustainable solution mining techniques to enhance domestic potash production while minimizing environmental impact.

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