Pacific Potash Corporation announced that it has entered into a non-binding Memorandum of Understanding of strategic investment with Northern International Group, a Chinese conglomerate, witnessed by the Canadian Prime Minister Stephen Harper, Canadian Minister of Foreign Affairs John Baird, and Canadian Minister of Agriculture and Agri-Food Gerry Ritz, during the Prime Minister's official visit to China and the APEC Economic Leaders' Meeting. The M.O.U demonstrates and represents a significant part of the further deepening bilateral commercial relationship between Canada and China.
The M.O.U outlines the proposed terms of a transaction pursuant to which Northern International Group will subscribe for CDN $15,000,000 by way of convertible debenture of Pacific Potash. The proceeds from the investment will be used for development of Pacific Potash's exploration program, consisting primarily of drilling, and for general working capital. The proposed terms of the debenture, which remains subject to definitive documentation and approval from the TSX Venture Exchange, are: interest at 3.5% per anum payable semi-annually, a three year term, unsecured and convertible into common shares of the Company at $0.37 per share. The Company will have the right to force conversion of the debenture in certain circumstances.
On successful completion of due diligence phase, the parties will diligently and in good faith negotiate a definitive subscription agreement for the Convertible Debenture. This agreement is subject to the regulatory approval of the TSX Venture Exchange.