Encanto Potash signs MOA for 20-year off-take deal

2017-01-04 09:12 ET - News Release -- Mr. Stavros Daskos reports 

ENCANTO POTASH ENTERS INTO MEMORANDUM OF AGREEMENT WITH INDIA'S NATIONAL FEDERATION OF FARMERS' COOPERATIVE FOR 100 MILLION TONNE 20 YEAR OFFTAKE AGREEMENT

 

Encanto Potash Corp. has successfully completed the foundation for an evolutionary off-take agreement with the National Federation of Farmers' Procurement, Processing and Retailing Cooperatives of India Ltd. (NACOF). The terms of the off-take agreement are summarized in a memorandum of agreement that provides for a minimum supply of five million tonnes per year for a minimum 20-year term, pending final negotiations related to the off-take agreement.

 

NACOF is a national farming co-operative under the Indian Ministry of Agriculture, government of India, representing farmers in 25 states across India. One of its primary goals is to enter into contracts and collaborate for the purchase, production, manufacture and marketing of raw materials, finished products and byproducts.

 NACOF also enters into joint marketing and exchange agreements with co-operative institutions and public-sector undertakings such as Metal Mineral Trading Company of India (MMTC) (see Encanto news release dated April 13, 2016) or other government agencies in India and abroad. Food security obtained via procurement of a secure alternative supply of muriate of potash and eliminating middlemen for Indian farmers is a fundamental objective. As such, NACOF represents fertilizer end-users in India, being farmers, with a membership comprised 67 state-level federations, district-level federations and large, primary-level societies from 25 Indian states.

 

The memorandum of agreement with NACOF now positions Encanto for the transition of the previously announced memorandum of understanding between Encanto and MMTC into a commercial marketing and distribution agreement to provide for the sale of an additional minimum of two million tonnes of potash annually, as MMTC was appointed Encanto's exclusive worldwide potash marketing agent. Under the MMTC memorandum of understanding, MMTC has the ability to sell potash sourced by Encanto into India or beyond. Encanto is exploring third party sources as short-term supply under the MMTC memorandum of understanding until such time as its flagship Muskowekwan project is developed to supply potash under the NACOF memorandum of agreement and the MMTC memorandum of understanding.

 

MMTC is a public-sector undertaking of the government of India and one of the largest institutional buyers of potash in the world, handling more than two million tonnes of potash annually. The MMTC memorandum of understanding continues to be expected to provide access to markets and increased pricing well beyond the primary market in India and, as such, it is envisioned that sales to MMTC will primarily be bound for the Indian export market.

 

Encanto's chief executive officer and president, Stavros Daskos, stated: "I have so far travelled to India 12 times in the last 20 months and have developed a very deep understanding of India's regulatory systems in trading potash and other minerals. I now have a better vision of their true agricultural requirements and most importantly have cemented the trust, integrity and respect that is necessary to formulate an agreement of this magnitude. These agreements allow Encanto to participate in satisfying the Indian government's need for food security instead of simply trading five million tonnes of a commodity for profit. It has taken significant time and effort, but India is a key to the world market. These relationships and the proposed off-take agreement form the basis of our overall strategy and business plan to develop the Muskowekwan project and secure project financing required to build Canada's next major potash mine.

 

"There are many key policy individuals in the government of India who have helped educate, guide and give life to this transaction. I would like to formally acknowledge Shri Vinay Maloo, a very distinct gentleman and skilled businessman, who, among many projects of national importance, co-founded the first private industry company to enter into the telecom sector in India, connecting over 800,000 villages across India. He was and continues to be instrumental in this process.

 

"I would also like to thank Chief Bellerose, the people of the Muskowekwan First Nations, as well as his team that worked tediously and tirelessly to help bring this project together and [who] continue to support its future."

 

Muskowekwan First Nation Chief Reg Bellerose commented: "Final commercial terms are currently being completed by Encanto and NACOF principals and are expected to be available in the near term. We're extremely proud to be a partner in this important agreement. For the first time in history, first nation potash will help to feed communities around the world, both in India and nations beyond and to the benefit of all stakeholders -- first nations, farmers, the consumers of agricultural products, the governments of Canada and India, as well as Encanto shareholders -- for decades to come."

 

About Encanto

 

Through a joint venture agreement with Muskowekwan Resources Ltd. on the company's flagship property, Encanto has a project land package which totals approximately 61,000 largely contiguous acres. The company has a 5-per-cent interest in the 55,000-acre Ochapowace/Chacachas property, also located in Saskatchewan.

 

 

The technical content of this news release has been reviewed and approved by James Walchuck, a qualified person as defined by National Instrument 43-101.