Gujarat State Fertilisers and Chemicals (GSFC) today said it will invest up to 60 million Canadian dollar (about Rs 333 crore) to acquire nearly 20 per cent stake in Canada-based Karnalyte Resources.

The acquisition price also includes cost of financing the construction of Karnalyte's potash mining project.

With this deal, GSFC has also secured an assured long term supply of potash to India, which imports almost all of its domestic requirement of about 5-6 million tonnes.

In a filing to the BSE, GSFC informed that the company has executed "definitive agreements and committed a strategic investment up to C$ 60 million in Karnalyte Resources Inc (Wynyard Carnallite Project) in Canada to secure long term supply of potash."

According to Karnalyte, GSFC will make an investment of Canadian dollar (C$) 45 million to acquire 19.98 per cent stake in the company.

"GSFC will subscribe for 19.98 per cent of the issued and outstanding common shares after giving effect to this transaction at a price of C$ 8.15 per common share in a non-brokered private placement for total gross proceeds of approximately C$ 45 million," Karnalyte Resources said in a statement.

As per the off-take agreement, GSFC will purchase 3.5 lakh tonnes per year of potash from Phase 1 of Karnalyte's Wynyard Carnallite Project.

The Indian fertiliser major will have to buy 6 lakh tonnes per year of potash after completion of phase two of the project for 20 years on "a take or pay basis", it added.

GSFC will appoint one nominee to the board of directors of Karnalyte.

"In addition, GSFC retains the right to maintain its equity position in future equity offerings and has agreed to commit approximately C$ 15 million in the next rounds of public equity financing by Karnalyte to finance the construction of Phase 1 of the Project," Karnalyte added.

Toronto Stock Exchange-listed Karnalyte is engaged in exploration and development of high quality agricultural and industrial potash and magnesium. It plans to operate a mining facility that will initially produce 6.25 lakh tonnes per annum of potash, increasing to 2.125 million tonnes annually.

The miner owns 100 per cent interest in subsurface permit and subsurface mineral lease for a total of 85,126 acres of land near Wynyard town in Saskatchewan province in Canada.

Apart for production and marketing of urea and other fertilisers, Vadodara-based GSFC is also into petrochemicals, chemicals, industrial gases, plastics, fibers among others.