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1/20/17

The Encanto Potash (EPO.v) rip-off

This one is hilarious. On Wednesday evening the small potash junior Encanto Potash (EPO.v) announced a deal with the National Federation of Farmers' Procurement, Processing and Retailing Cooperatives of India Limited ("NACOF"). To quote the NR, "The agreement provides for the supply of a minimum of 5 million tonnes per year for a guaranteed period of twenty years for muriate of potash ("MOP")". And to further quote the NR, EPO.v's President, Stavros Daskos, called the deal, "...clearly a defining moment for our company and the industry".

Well maybe it's more of a defining moment for Mr. Daskos rather than anyone else, because when you look at the smallprint of the deal it's one of the most self-serving rip-offs I've seen for quite a while. In fact I wouldn't have noticed if it weren't for regular reader and mailpal A. Person, who was kind enough to give your humble scribe the heads-up on this scam (after all potash isn't really my beat). In his words (edited very slightly but really nothing has changed)...
"Interestingly, Encanto has a partner that is completely hidden save for one line in the MD&A and a single document on SEDAR. This partner, Horgen, has a rather interesting partnership and is led by the president of Encanto, Stavros Daskos. Did you know that upon successful announcement of an off-take Encanto must:

- Pay Horgen U$5.5m within 15 days
- Issue 15 million shares of Encanto.
- Place the project into a Newco where Horgen has an option to acquire 51% of the NewCo."

And indeed that's all true. The poor saps who bought into EPO.v yesterday...



...and in greed and ignorance turned a $40m market cap company into a $60m mkt capper have no idea how little they're getting from this supposedly transformative deal and how much Daskos is lining his own pockets at their expense. Here's just one section of that SEDAR filing to show some of the Heads-I-Win-Tails-You-Lose terms that Daskos has slapped on this deal:




Moral: This is Canadian junior mining, read the smallprint.