EarthRenew Inc (CSE: ERTH) this morning had a major announcement, in that it has entered into a letter of intent with that of K+S Potash Canada. The proposed arrangement will see the company lease a total of 15 acres from K+S as part of a new manufacturing facility.
The proposal outlines an arrangement whereby EarthRenew would establish a new fertilized manufacturing facility adjacent to the K+S potash mine and processing plant near Bethune, Saskatchewan. The proposed facility is expected to be capable of producing up to 100,000 tonnes of granulated regenerative and organic fertilizer product on an annual basis.
From a financial perspective, the finished product produced from the facility is expected to receive between $345 to $545 per metric tonne, with the company expected to produce the product at a margin of 30%. High level, it translates to potential revenues of between $34.5 to $54.5 million on a topline basis once operational based on current commodity prices for potash derived products. The facility itself is expected to cost between $10 to 15 million to construct.
Additionally, as part of the letter of intent entered into by the two firms, it is expected that EarthRenew will enter into a potash supply agreement with K+S, whereby K+S would supply the potash byproduct raw materials required to manufacture the fertilizer. The land lease, as well as the supply arrangement, is expected to be for an initial 15 year term. The LOI, among other items, also outlines the potential option to collaborate on future product innovation and R&D within the facility.
“The signing of this LOI represents our commitment to working towards increased manufacturing capacity. We are very excited to be pursuing an opportunity that would allow us to work closely with a global leader like K+S Potash and to secure consistent access to their high-quality potash.”Keith Driver, CEO of EarthRenew
The arrangement is subject to the entering of a definitive agreement.
EarthRenew last traded at $0.32 on the CSE.
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