Potash One, Potash North Resource Corp. merger approved
A company working to build Saskatchewan’s first new potash mine since the 1980s is another step closer to its goal.
The British Columbia Supreme Court has approved the merger of Potash One Inc. and Potash North Resource Corp. (both based in Vancouver), a move that gives Potash One $40 million toward its solution mine project and additional Saskatchewan potash properties once Potash North shares are de-listed from the Toronto Stock Exchange.
Paul Matysek, Potash One’s president and CEO, said the company’s treasury of nearly $50 million will support it through the feasibility study of its 97,240-acre Legacy project in southern Saskatchewan.
While Potash One is still in the developmental stage of its new, or greenfield, potash project, Matysek said if all goes to plan, con- struction on the mine site could start as early as 2011.
The company has plans for a pre-feasibility study and a resource estimate of the site in May and hopes to file an environmental impact assessment with the provincial government later in the year.
“The type of mine we’re looking at developing, a solution mine, is scaleable, and that means we can start off at a smaller scale and grow bigger. So we’re looking at the business case around a 800,000-tonne-per-year operation. . . . I would hazard to guess (it would cost) anywhere between $600 million to $800 million,” Matysek said.
The company president estimates the construction phase of the Legacy project could create up to 1,000 jobs, while site operations would add 200 to 300 multiplier jobs to the province, meaning each of those jobs at the mine could result in two or three supporting positions outside the company.
The next step is to find financing for the project, he said, adding bullish attitudes toward potash should help Potash One in fundraising. Matysek has already had discussions with potential investors.
“We believe we could probably do it through a debt-equity financing, but I think it might be diluted to the company, so we’re obviously talking to other people about financing arrangements,” he said, adding he would consider an offer from an investor looking to buy Potash One.
The provincial government is watching Potash One’s advancements with interest, said Roy Schneider, spokesperson for the Ministry of Energy and Resources. Expanding Saskatchewan’s potash industry has become popular of late, he noted, with three companies (Potash Corp. of Saskatchewan Inc., Mosaic Co. and Agrium Inc.) adding to their 10 combined potash mines in the province, while at least three additional companies, including BHP Billiton, eye greenfield ventures.
“What, in a way, sets Potash One Inc. apart is they are a junior mining company and they are kind of toe-to-toe, head-to-head, with outfits like BHP Billiton, which is one of the biggest companies in the world. So that adds a little interest to the mix as we follow the progress of this,” Schneider said.
The province supports the expansion of the potash industry, but the race is on to see who can build their greenfield mines before, or if, the day comes when there are too many potash operations in Saskatchewan.
“They’re (Potash One) in with the heavyweights, and I cannot imagine there could be three or four or five new mines developed concurrently, particularly given the expansion plans the existing companies are already carrying out. At some point you reach the saturation point, so it will be interesting to see how it unfolds,” Schneider said.