SASKATOON, SASKATCHEWAN -- (Marketwired) -- 06/20/13 -- Gensource Capital Corporation ("Gensource" or the "Company") (TSX VENTURE: GSP) announces that it has executed a binding term sheet (the "Term Sheet") with Canada Potash Corp. ("CPC") pursuant to which the skills, people and assets of CPC and Gensource would be combined to explore and develop potash properties in the Province of Saskatchewan. CPC is a private resource company engaged in the exploration and development of potash mineral properties in Saskatchewan, Canada.
Under the Term Sheet, Gensource has agreed to issue from its treasury to CPC that number of shares so that CPC will hold 51% of Gensource's issued and outstanding shares, in consideration for:
a. Gensource acquiring from CPC Saskatchewan potash exploration permits KP445 and KP437 (the "Permits");b. CPC using reasonable commercial efforts to introduce Gensource to CPC's contacts and establish working relationships between Gensource and CPC's contacts carrying on business in the fields of: (i) project joint ventures; (ii) project finance; (iii) the import and sale of potash internationally, including to and within the People's Republic of China ("PRC"); and (iv) the shipping or logistics associated with the distribution of potash internationally, including to and within the PRC; andc. CPC using reasonable commercial efforts, to the extent commercially practical, to assign to Gensource any contracts or agreements CPC has with respect to the matters described in clause (b) above.
In addition, on closing, provided that CPC holds not less than 20% of Gensource's issued and outstanding common shares:
i. CPC will have the right to nominate four individuals for election to a seven member board of directors of Gensource, and the board will jointly appoint one of CPC's nominees as Chairman.ii. CPC will vote all of its shares of Gensource in favour of Gensource's three nominees to the Board provided that the principal focus of Gensource's business and operations remains the exploration, development or mining of potash properties in the Province of Saskatchewan.
Closing is subject to certain conditions including:
-- completion of due diligence, satisfactory to each of Gensource and CPC in their sole discretion;-- receipt of all required approvals, including approval of Gensource shareholders and approval of the TSX Venture Exchange;-- execution of a shareholder's agreement between CPC and Gensource (the "Shareholder's Agreement");-- no material adverse change in respect of Gensource or the Permits;-- delivery of title opinions in respect of the Permits and Gensource's Lothar and Lazlo potash projects; and-- other conditions as are customary for transactions of this nature to be set out in a definitive share subscription and exploration permit purchase agreement to be entered into between the parties (the "Subscription and Purchase Agreement").
The parties have agreed to use their commercially reasonable efforts and act in good faith to complete their respective due diligence and to execute the Subscription and Purchase Agreement within 30 days.