GSFC to buy 20% in Canada’s Karnalyte1 min read . Updated: 10 Jan 2013, 11:33 PM IST
Firm offers to buy 19.98% stake for Canadian $45 million and an assured supply of potash
Ahmedabad: Gujarat State Fertilizers and Chemicals Ltd (GSFC) has offered to buy a 19.98% stake in Canada’s Karnalyte Resources Inc. for Canadian $45 million ( ₹ 250 crore) and an assured supply of potash, according to Atanu Chakraborty, managing director of the Indian company.
GSFC said on Thursday that it has proposed the investment for a committed supply of 350,000 tonnes of potash a year, increasing to 600,000 tonnes a year, from Karnalyte’s Wynyard Carnallite project in Canada for 20 years from the start of commercial production.
“We will be investing another ₹ 80 crore for procuring another 250,000 tonnes per year. We intend to do this at the time of public listing of Karnalyte on Toronto Stock Exchange; hence, our equity stake after this additional investment will remain more or less the same," said V.D. Nanavaty, general manager (finance), GSFC.
Based on its current issued and outstanding common share capital, Karnalyte will sell about 5.49 million shares to GSFC on closing the private placement at a price of $8.15 a share for a total of about Canadian $45 million, Karnalyte said on its website on Thursday.
“GSFC’s strategic investment and off-take agreement will support Karnalyte’s growth strategy of constructing its potash production facility and commercializing a superior potash product," Robin Phinney, president and chief executive of Karnalyte, said in a statement.
Currently, India is fully dependent on imports of potash. Canada is a leading producer of potash.
For GSFC, an agri-business company focusing on the production and sale of fertilizers and industrial products, an assured supply of potash will help it expand its portfolio of fertilizers.
GSFC also intends to use part of the potash imported from Karnalyte for production of high-grade nitrogen, phosphorous and potash, or NPK, fertilizers at Sikka, for which new facilities are being constructed.
The investment by GSFC will part finance the cost of the Wynyard Carnallite project and is subject to various regulatory approvals, according to the GSFC statement.