Canada's Western Potash 'to have strategic partner by end of year'

17 April 2012 18:15  [Source: ICIS news]

LONDON (ICIS)--Canadian miner Western Potash Corp hopes to finalise a strategic partner by the end of the year, its vice president of corporate development John Costigan told ICIS on Tuesday.

The miner is seeking a strategic partner to complete the ongoing feasibility work at its potash mine in Saskatchewan. The final feasibility study is expected to be completed around November.

“An ideal partner would have capital to finance the mine, the ability to penetrate the potash market, as well as technical expertise,” said Costigan.

Western Potash is keen on finding a joint venture partner, he said.

The company is also open to other funding options such as a merger, sale or equity and debt transactions, a company release on the Toronto Stock Exchange said.

The final decision will depend on the valuation for the company, said Costigan.

“It would come down to the valuation. That is a decision which the board will take a call on,” he added.

Western Potash, which is listed on the Toronto Stock Exchange, has a market capitalisation of nearly $200m (€152m).

The company is talking to “a lot” of players about a deal, including companies in India and China, said Costigan.

“They [India and China] are the most motivated nations when it comes to potash. India interests us since the nature of the market is attractive. The political environment in the country is also something that would support such a deal,” added Costigan.

India is among the world’s biggest importers of potash. It imported nearly 6m tonnes of potash in 2011.

India is keen to acquire potash assets overseas, as it has no domestic reserves. The Indian government is mulling a proposal to set up a $20bn sovereign wealth fund to facilitate acquisition of fertilizer mines and other assets abroad, but no plan has come through as yet.

As for China, Costigan believes that better access to capital is a positive for Chinese companies.

Chinese firms are keen to acquire potash mines overseas because of growing domestic demand. The country will import 1.7m tonnes of potash in the second quarter, and bought around 6.5m tonnes of potash in 2011.

Western Potash is also open to talking to players in other countries, said Costigan.

He denied speculation that the company was negotiating with China’s Sinofert for a possible stake sale.

Production at the company's Milestone project in Saskatchewan will start in 2016. The company is targeting a yearly production rate of 2.8m tonnes.

Total initial capital spending for the project is expected to be around about $2.8bn.

($1 = €0.76)

By: Deepika Thapliyal
+44 208 652 3214

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