VANCOUVER, Jan. 18, 2017 /CNW/ - Encanto Potash Corp.
("Encanto" or the "Company") (TSXV: EPO)
has successfully finalized a historic offtake agreement with the
National Federation of Farmers' Procurement, Processing and
Retailing Cooperatives of India Limited ("NACOF").
The agreement provides for the supply of a minimum of 5 million
tonnes per year for a guaranteed period of twenty years for muriate
of potash ("MOP"). Food security obtained via
procurement of an alternative supply of MOP and eliminating
middlemen for Indian farmers is a fundamental objective for
NACOF.
NACOF is India's national farming cooperative established by the
Joint Secretary and Central Registrar, Cooperative Societies under
the Ministry of Agriculture, Government of India and representing
farmers across 25 out of 29 states in India. NACOF has a 2016-2017 annual
budget of $7.67 billion (USD) and one
of their primary goals is to enter into contracts and collaborate
for the purchase, production, manufacture and marketing of raw
materials, finished products and by-products, and also enter into
joint marketing and exchange agreements with Cooperative
Institutions, Public Sector Undertakings or any other agency in
India or abroad.
Encanto President Stavros Daskos
stated "This is clearly a defining moment for our company and the
industry. India imports 100% of its potash and is susceptible
to cartel-like practices from producers that can hurt its national
food security. Establishing long term offtake agreements are
difficult and require a great amount of time and understanding of a
country's food security policies and how they interface with the
dynamics of a supply environment controlled by a small number of
entities.
In 2011-12 limited potash was imported by India as a result of
India's strategy against the pricing practices of producers.
The reduced supply, a shift in foreign exchange rates and
reductions in government subsidies all contributed to an increase
in the retail price for MOP in India which reduced demand. The recent
decline in price for potash and government efforts to promote the
use of more potash based fertilizers set the stage for increased
demand in India. The Encanto Potash Corp strategy was to
focus solely on addressing the current and future needs of India
over the next twenty years.
Historically, potash consumption in India had reached around 6 million tonnes in
2010-11, and their aim, per the Ministries of Chemicals and
Fertilizers, is to return to this level as potassium is required in
large amounts to sustain and grow their crop based industry.
The comparatively high retail cost of MOP and other potash-based
fertilizers in India prompted many
farmers to favour the use of fertilizers biased towards higher
nitrogen content due to their lower cost. NACOF and Encanto
believe a secure and stable supply of MOP at reasonable prices will
incentivize India's farmers to progress to a balanced fertilization
program where the growth rate in consumption of potash-based
fertilizers will be higher than the growth rate of consumption of
alternate fertilizers. Part of Encanto Potash Corp's immediate
strategy is to also source potash from existing producers pending
the commercialization of its own flagship Muskowekwan
project.
The Indian government has set an objective to double the
farmer's income in the next five years, and continues its efforts
to educate Indian farmers on the long term benefits and potential
increases to crop yield that can be achieved from a balanced and
strategic fertilization program. Soil health assessments
being provided by the Indian government and sustained marketing
targeted at farmers will play an important role to help prevent
over-use and misuse of urea fertilizers.
The Encanto / Muskowekwan First Nation / NACOF strategy changes
the economics of the industry as it is focused on the security of
India's food supply, increasing India's agricultural exports, the
interests of the Muskowekwan First Nation ("MFN") and the
interests of Encanto's stakeholders for the next twenty years.
NACOF and Encanto have come together with the MFN to take a
critical step for the Muskowekwan project on the MFN reserve lands
and to secure India's demand for the future."
We want to thank the Government of India; the management of
NACOF and the representatives of the MFN for working tirelessly and
cooperatively throughout this twenty month process in order to
craft an agreement that meets all of our interests and objectives
over the next two decades. We would also like to thank the
Government of Canada through the
Ministries of Foreign Affairs, International Trade, Finance,
Natural Resources and Indigenous and Northern Affairs whom have
played a very important role and remain critical for the
realization of this endeavour. Chief Reginald Bellerose, from Muskowekwan First
Nation, would like to thank the past and current Muskowekwan First
Nation Council; FSIN Chief Bobby
Cameron; AFN National Chief Perry
Bellegarde; his Excellency High Commissioner of India Nadir Patel; and President and CEO of
Encanto Potash Corp Stavros Daskos for this type of a project
allows Muskowekwan First Nation to generate its own source revenue
and helps the Muskowekwan people with training, jobs and
opportunities which enable a path forward towards a better
future.
The management of Encanto also looks forward to working with
NACOF on other possible initiatives relating to the procurement and
marketing of other Canadian products in India in connection with the agricultural,
mineral, grain/seed, aqua/horticultural, forestry and food/animal
sectors through the Company's previously announced intent to form a
trading company.
ABOUT NACOF:
Formed in 2009 under the ministry of Agriculture, Government of
India, the membership of NACOF is comprised of 67 State Level
Federations, District Level Federations and large size/primary
level societies from 25 States i.e. the States of Delhi, Uttar Pradesh, Madhya Pradesh, Bihar,
Maharashtra, West Bengal, Chhattisgarh, Uttarakhand, Odisha,
Rajasthan, Jharkhand, Himachal Pradesh, Andhra Pradesh, Gujarjat,
Karntaka, Kerala, Punjab, Arunachal Pradesh, Jammu & Kashmir,
Assam, Manipur and Chandigar.
ABOUT ENCANTO:
Encanto Potash Corp. is a TSX Venture Exchange listed and traded
Canadian resource company engaged in the development of potash
properties in the Province of Saskatchewan, Canada, the largest producing
potash region in the world. Through a joint venture agreement with
Muskowekwan Resources Ltd. on our flagship property, Encanto has a
project land package which totals approximately 61,000 largely
contiguous acres. A Pre-Feasibility Study dated February 28, 2013 titled "Encanto Potash Corp.
Technical Report Summarizing the Preliminary Feasibility Study for
the Muskowekwan First Nations Home Reserve Project in South Eastern
Saskatchewan, Canada" confirms the Proven and Probable KCI Reserves
totaling 162 MMt grading 28% (average) which supports primary and
secondary mining for over 50 years at an assumed annual rate
extraction rate of 2.8 million tonnes.
The technical content of this news release has been reviewed and
approved by James Walchuck, a
qualified person as defined by NI 43-101.
For additional information about Encanto Potash Corp., please
visit the Company's website at www.encantopotash.com or review the
Company's documents filed on www.sedar.com.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
THE FOREGOING INFORMATION MAY CONTAIN FORWARD-LOOKING
INFORMATION RELATING TO THE FUTURE PERFORMANCE OF THE COMPANY.
FORWARD LOOKING INFORMATION IS SUBJECT TO A NUMBER OF KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN OUR
FORWARD LOOKING STATEMENTS. SUCH RISKS AND OTHER FACTORS INCLUDE,
AMONG OTHERS, THE SATISFACTION OF ANY APPLICABLE CONDITIONS IN
RESPECT OF THE MMTC MOU AND THE OFFTAKE AGREEMENT INCLUDING THOSE
IN RELATION TO PROJECT TIMELINES, THE ASSUMPTIONS AND ESTIMATES IN
THE COMPANY'S PRE-FEASIBILITY STUDY OF THE MUSKOWEKWAN PROJECT (THE
"PFS") PROVING TO BE ACCURATE OVER TIME INCLUDING APPLICABLE
RESOURCE ESTIMATES, THE POTENTIAL FOR DELAYS AND INCREASES TO
PROJECT COSTS AS A RESULT OF POTENTIAL CHANGES IN PLANNED
PRODUCTION RATES, CHANGES IN WORLD COMMODITY MARKETS OR EQUITY
MARKETS, THE ADEQUACY OF THE COMPANY'S FINANCIAL RESOURCES AND THE
AVAILABILITY OF ADDITIONAL FINANCING ON REASONABLE TERMS OR AT ALL,
THE RISKS OF THE MINING INDUSTRY INCLUDING, WITHOUT LIMITATION,
THOSE ASSOCIATED WITH THE ENVIRONMENT, DELAYS IN OBTAINING
GOVERNMENTAL APPROVALS, PERMITS OR FINANCING OR IN THE COMPLETION
OF DEVELOPMENT OR CONSTRUCTION ACTIVITIES, TITLE DISPUTES, CHANGE
IN GOVERNMENT AND CHANGES TO REGULATIONS AFFECTING THE MINING
INDUSTRY, AND OTHER RISKS AND UNCERTAINTIES DETAILED FROM TIME TO
TIME IN THE COMPANY'S FILINGS WITH THE CANADIAN SECURITIES
ADMINISTRATORS (AVAILABLE AT WWW.SEDAR.COM). FORWARD-LOOKING
STATEMENTS ARE MADE BASED ON VARIOUS ASSUMPTIONS AND ON
MANAGEMENT'S BELIEFS, ESTIMATES AND OPINIONS ON THE DATE THE
STATEMENTS ARE MADE. SHOULD ONE OR MORE OF THESE RISKS AND
UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE
INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED
IN THE FORWARD-LOOKING INFORMATION CONTAINED HEREIN. READERS ARE
CAUTIONED THAT CURRENT MARKET PRICES FOR THE COMPANY'S PROPOSED
PRODUCTS ARE MATERIALLY DIFFERENT THAN THE ESTIMATES USED IN THE
PFS AND CHANGES TO THE PROPOSED PRODUCTION RATE WOULD BE EXPECTED
TO CAUSE MATERIAL CHANGES TO THE REQUIRED CAPITAL COSTS OF THE
PROJECT. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS IF THESE ASSUMPTIONS, BELIEFS, ESTIMATES
AND OPINIONS OR OTHER CIRCUMSTANCES SHOULD CHANGE, EXCEPT AS
REQUIRED BY APPLICABLE LAW.
SOURCE Encanto Potash Corp.