Encanto Announces Private Placement of Convertible Debentures

TSXV: EPO

VANCOUVER, Oct. 4, 2018 - Encanto Potash Corp. ("Encanto" or the "Company") (TSXV: EPO) announces it will complete a private placement of convertible debentures for gross proceeds of $9,505,200 (the "Offering"). The proceeds of the Offering will discharge and replace a portion of the principal owing under the Company's previous convertible debentures that matured on September 1, 2017 which are due and payable, as well as to offset other outstanding payables. The debentures will be secured by a charge over all of the Company's assets, will bear interest at the rate of 5% per annum and will mature 18 months from date of issue. The debentures will be convertible into common shares at the option of the holders at any time on or before the maturity date at a price of $0.25 per share.

Hamad M. Al-Wazzan, an insider of the Company, has agreed to purchase $4.25 million in the Offering. Horgen Holdings Inc. has agreed to purchase $5 million in the Offering and will become an insider on a partially diluted basis pursuant to the private placement. These purchases will constitute a "related party transaction" under Multilateral Instrument 61-101 "Protection of Minority Shareholders in Special Transactions" ("MI 61-101"), and but for available exemptions would be subject to formal valuation and minority approval requirements under MI 61-101. The Company will be relying on the exemption from formal valuation requirements set forth in section 5.5(b) of MI 61-101 on the basis that none of its securities are listed on the Toronto Stock Exchange, Aequitas NEO Exchange Inc., the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS Markets operated by PLUS Markets Group plc. The Company will be relying on the financial hardship exemption from minority approval requirements set forth in section 5.7(e) of MI 61-101.

The Offering is subject to acceptance for filing by the TSX Venture Exchange, and all securities issued in connection with the Offering will be subject to a four month hold period from the closing date.

About Encanto Potash Corp.
Encanto Potash Corp. is a TSX Venture Exchange listed and traded Canadian Resource company engaged in the development of potash properties in the Province of Saskatchewan, Canada, the largest producing potash region in the world. Through a joint venture agreement with Muskowekwan Resources Ltd, Encanto has secured a project land package which totals approximately 61,000 largely contiguous acres. Pre-Feasibility Study dated February 28, 2013 titled "Encanto Potash Corp. Technical Report Summarizing the Preliminary Feasibility Study for the Muskowekwan First Nations Home Reserve Project in South Eastern Saskatchewan, Canada" confirms the Proven and Probable KCI Reserves totaling 162 Mt grading 28% KCl (average) which supports primary and secondary mining for over 50 years at an assumed annual rate extraction rate of 2.8 Mt of MOP. The PEA dated May 24, 2017 titled " NI 43-101 Technical Report on a Preliminary Economic Assessment and Preliminary Feasibility Study of the Muskowekwan Potash Project, South-Eastern Saskatchewan, Canada" summarizes an alternative development option that supports primary and secondary mining of the Mineral Resources for 48 years at an annual extraction rate of 3.4 Mt of MOP. On December 30, 2016, Encanto signed a 20-year off-take agreement  with the National Federation of Farmers' Procurement, Processing, and Retailing Cooperatives of India Ltd., (NACOF) registered under the Ministry of Agriculture, Government of India to supply 5 million metric tons a year of potash. For additional information about Encanto Potash Corp., please visit the Company's website at www.encantopotash.com or review the Company's documents filed on www.sedar.com

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

THIS DOCUMENT MAY CONTAIN "FORWARD-LOOKING INFORMATION" WITHIN THE MEANING OF CANADIAN SECURITIES LEGISLATION AND "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THIS INFORMATION AND THESE STATEMENTS, REFERRED TO HEREIN AS "FORWARD-LOOKING STATEMENTS" ARE MADE AS OF THE DATE OF THIS DOCUMENT. GENERALLY, THESE FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "EXPECTS", "ANTICIPATES", "PLANS", "PROJECTS", "ESTIMATES",  OR VARIATIONS THEREOF OR STATING THAT CERTAIN ACTIONS, EVENTS OR RESULTS "MAY", "COULD", "WOULD", OR "MIGHT" BE TAKEN, OCCUR OR BE ACHIEVED. FORWARD-LOOKING STATEMENTS, WHILE BASED ON MANAGEMENT'S BEST ESTIMATES AND ASSUMPTIONS, ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT MAY CAUSE ACTUAL RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING BUT NOT LIMITED TO: RISKS RELATING TO VARIATIONS IN THE MINERAL CONTENT WITHIN THE MATERIAL IDENTIFIED AS MINERAL RESOURCES FROM THAT PREDICTED; VARIATIONS IN RATES OF RECOVERY AND EXTRACTION; THE GEOTECHNICAL CHARACTERISTICS OF THE ROCK MINED OR THROUGH WHICH INFRASTRUCTURE IS BUILT DIFFERING FROM THAT PREDICTED, DEVELOPMENTS IN WORLD METALS MARKETS; RISKS RELATING TO FLUCTUATIONS IN THE CANADIAN DOLLAR RELATIVE TO THE US DOLLAR; INCREASES IN THE ESTIMATED CAPITAL AND OPERATING COSTS OR UNANTICIPATED COSTS; DIFFICULTIES ATTRACTING THE NECESSARY WORK FORCE; INCREASES IN FINANCING COSTS OR ADVERSE CHANGES TO THE TERMS OF AVAILABLE FINANCING, IF ANY; TAX RATES OR ROYALTIES BEING GREATER THAN ASSUMED; CHANGES IN DEVELOPMENT OR MINING PLANS DUE TO CHANGES IN LOGISTICAL, TECHNICAL OR OTHER FACTORS; CHANGES IN PROJECT PARAMETERS AS PLANS CONTINUE TO BE REFINED; RISKS RELATING TO RECEIPT OF REGULATORY APPROVALS; DELAYS IN STAKEHOLDER NEGOTIATIONS; CHANGES IN REGULATIONS APPLYING TO THE DEVELOPMENT, OPERATION, AND CLOSURE OF MINING OPERATIONS FROM WHAT CURRENTLY EXISTS; THE EFFECTS OF COMPETITION IN THE MARKETS IN WHICH ENCANTO OPERATES; AND OPERATIONAL AND INFRASTRUCTURE RISKS. ALTHOUGH MANAGEMENT HAS ATTEMPTED TO IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN FORWARD-LOOKING STATEMENTS, THERE MAY BE OTHER FACTORS THAT CAUSE RESULTS NOT TO BE AS ANTICIPATED, ESTIMATED OR INTENDED. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL PROVE TO BE ACCURATE, AS ACTUAL RESULTS AND FUTURE EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS. ACCORDINGLY, READERS SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS. ENCANTO DISCLAIMS ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN OR TO PUBLICLY ANNOUNCE THE RESULT OF ANY REVISIONS TO ANY SUCH STATEMENTS TO REFLECT FUTURE RESULTS, EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LAW. PLEASE REFER TO ENCANTO'S MOST RECENT FILINGS UNDER ITS PROFILE AT WWW.SEDAR.COM FOR FURTHER INFORMATION RESPECTING THE RISKS AFFECTING ENCANTO AND ITS BUSINESS.

SOURCE Encanto Potash Corp.