IC Potash and Cartesian enter into Letter of Intent regarding Ochoa Deposit
August 08 2017 - 6:00AM
IC Potash Corp. (TSX:ICP)
(OTCQB:ICPTF) (“IC Potash”, ICP or the “Company”) and Cartesian
Capital Group, LLC (“Cartesian”) announced today the entrance into
a binding letter of intent (the “LOI”) regarding the indirect
ownership of ICP in Intercontinental Potash Corp. (USA)
(“ICPUSA”). ICPUSA (in which ICP holds an interest through
common shares) fully owns the Ochoa Sulphate of Potash
project.
Under the LOI, ICPUSA will, subject to the
shareholder vote of the shareholders of ICP, redeem those of its
common shares that are indirectly owned by ICP. This transaction
represents the sale by ICP to Cartesian affiliates of ICP’s
indirect ownership in the Ochoa Project.
The Board of Directors of ICP estimate the value
of the proceeds of disposition to be approximately USD $15
million.
The proposed consideration is composed as
follows:
- USD $1.4 million in cash funded by Cartesian promptly upon
release of executed settlement and transaction documents;
- A Promissory Note of USD $1.4 million due to ICP, directly or
indirectly, by ICPUSA, to be guaranteed by Cartesian, and due on
January 8, 2018;
- A water royalty equal to 75% of the revenue of ICPUSA derived
from all sales of water and/or water rights to an aggregate of USD
$12.2 million. The water royalty will be backed up by a
Mining Royalty of 1%, in the event that the full USD $12.2 million
is not received by December 31, 2022. ICPUSA will agree to
use all reasonable commercial efforts to source and enter into
agreements to sell the water resources as soon as reasonably
practicable. The Board of Directors of ICP note that water is in
great demand in New Mexico and Texas due to the large oil and gas
fracturing industries in the United States.
As part of the agreement, which is subject to
final documentation and shareholder approval, existing litigation
between the parties and their affiliates would be settled and
associated claims released.
Mehdi Azodi, the President and Chief Executive
Officer of ICP Canada stated: “The potash markets have been in a
substantial downturn since 2012. The Cartesian affiliates have
taken a long-term view on the value of Polyhalite and Sulphate of
Potash, and are committed to continuing to fund the Ochoa Project
from private capital sources. ICP has attempted to find alternative
financing for its share of the capital in private as well as public
markets, under terms that are value-added to the common
shareholders. Given the market capitalization of ICP, and the
bearish current perspective of public investors in the Canadian
junior potash space for development companies which require
substantial capital, it has not been possible for us to continue to
maintain the Company’s financial interest in the project by funding
our share of capital requirements. Therefore, the Company has
determined that the sale of its interest in the project, at an
estimated value of USD $15 million to the Cartesian affiliates, is
the best option to maintain or increase shareholder value under
present circumstances.”
Mehdi Azodi continued: “The Board of Directors
of IC Potash Corp. appreciates the ongoing efforts of Cartesian,
which commenced in late 2014, in the financing and moving forward
of the Lea County Polyhalite asset. We believe that upon the
completion of the build, which yet requires substantial capital, a
profitable and unique fertilizer asset will have been developed for
the benefit of the agricultural industry of the United States and
for the benefit of the State of New Mexico.”
Peter Yu, Managing Partner of Cartesian stated:
"This transaction will enable us to accelerate the development of
the Ochoa Project and build a world-class producer of specialty
fertilizer. We are grateful to our partners at ICP Canada,
and the strong leadership of its CEO Mehdi Azodi, for all of their
efforts in developing this important resource.”
About IC Potash Corp.IC Potash
has previously demonstrated a method to make Sulfate of Potash
(“SOP”) from the Ochoa polyhalite deposit in Southeast New Mexico
in which it has an interest and is currently examining ways to
become a low-cost fertilizer producer. The current review of the
Ochoa project’s existing feasibility study is being extended to
determine a viable positive economic path to the production of
direct application polyhalite. The Ochoa project has access to
excellent local labor resources, low-cost electricity and natural
gas, water, rail lines, and the Port of Galveston, Texas. The Ochoa
project’s land holdings consist of nearly 90,000 acres of potassium
prospecting permits and mining leases issued by the U.S. Bureau of
Land Management and State of New Mexico. For more information,
please visit www.icpotash.com.
About Cartesian Capital Group
Cartesian Capital Group, LLC is a global private equity firm with
proven expertise in assisting closely-held companies to expand
internationally. Cartesian manages more than $2.7 billion in
capital commitments and has offices in New York, São Paulo,
Shanghai, Warsaw, and Bermuda.
Forward-Looking
StatementsCertain information set forth in this news
release may contain forward-looking statements that involve
substantial known and unknown risks and uncertainties and other
factors which may cause the actual results, performance or
achievements of IC Potash to be materially different from any
future results, performance or achievements expressed or implied by
such forward-looking statements. Forward-looking statements include
statements that use forward-looking terminology such as “may”,
“will”, “expect”, “anticipate”, “believe”, “continue”, “potential”
or the negative thereof or other variations thereof or comparable
terminology. Such forward-looking statements include, without
limitation, statements regarding trends in the markets for Sulfate
of Potash and polyhalite, the timing for completion of an updated
feasibility study by the Company, the Company’s intention to
investigate the feasibility of polyhalite product production, the
potential value of water resources and other statements that are
not historical facts. These forward-looking statements are subject
to numerous risks and uncertainties, certain of which are beyond
the control of IC Potash, including, but not limited to, changes in
market trends, the completion, results and timing of studies
undertaken by IC Potash, risks associated with mineral exploration
and mining activities, the impact of general economic conditions,
commodity prices, industry conditions, dependence upon regulatory
and environmental approvals, the uncertainty of obtaining
additional financing, and risks associated with turning reserves
into product. Readers are cautioned that the assumptions used in
the preparation of such information, although considered reasonable
at the time of preparation, may prove to be imprecise and, as such,
undue reliance should not be placed on forward-looking
statements.
For More Information, Please Contact:
Peter Yu, Cartesian Group, Managing Partner, 212-461-6363, peter.yu@cartesiangroup.com
Mehdi Azodi, IC Potash, President & CEO, 416 779 3268, mazodi@icpotash.org