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A Chinese Company Buys 51 Percent of Western Potash

Western Potash has found an investor that would fund its small project in Saskatchewan. Beijing Tairui Innovation Capital Management Ltd, a Chinese private equity group, would purchase a 51 percent stake in Western Capital for C$80 million, which is C$0.32 per share. The share price is a significant premium to the company’s recent share prices. Although the transaction will cost shareholders control of the firm, Western Potash will be able to materialize the Saskatchewan project thanks to the Chinese money that will fund the pilot-plant scale potash mine at its Milestone project.

The new plant is projected to produce 146,000 tons of muriate of potash, the most common form of potash fertilizer. It will also rely on selective horizontal wells that will focus on high-grade potash horizons within a much bigger source. Western Potash said that its new solution mining plans are based on resources comprising 7.2 million tonnes percent 39.5% KCl (measured), 11.6 million tonnes @ 39 percent KCl (indicated) and 1.8 million tonnes @ 39 percent KCl (inferred).

The Milestone project is situated in a region that is well-known for potash mining. K+S’s Legacy project, which Potash Corporation of Saskatchewan wants to buy, is only 60 kilometres to the north-west. Mosaic is also present in the region with its Belle Plaine potash mine. Few years ago, Western Potash wanted to develop a large solution mine to make use of extensive potash resources. It therefore came up with a C$3 billion project to produce 2.8 million ton a year in a 2012 feasibility report. However, the company has not been able to get financiers for the project, which is why it opted for a smaller design. This year, Western Potash presented a more humble project to build a small-scale mine costing about C$81 million.

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