Western Potash Corp of Vancouver, BC has announced that Beijing Tairui Innovation Capital Management Ltd has agreed to make a strategic equity investment of CDN$80 million in the company. The transaction will result in Tairui holding, upon closing, a 51% ownership stake in Western Potash on a non-diluted basis. Proceeds from the investment will be used for the development of a pilot scale selective solution mining operation on its Milestone property in southern Saskatchewan in accordance with a recently completed scoping study. The pilot study outlines how the company may effectively exploit the Milestone asset through reduced targeted levels of potential production, using selective potash solution mining techniques, while projecting reduced capital expenditure and competitive operating expenses. The study reports capital expenditure for the pilot plant of CDN$80.6 million, operating expenses of CDN$60/tonne, and annual production of 146,000 tonnes. A scoping study conducted in 2010 for the full project, estimated capital costs of over CDN$2.5 billion and an annual production of 2.5 million tonnes. The pilot study envisions the simultaneous operation of three pilot production caverns. The horizontally drilled wells inject saturated brine having a temperature higher than the in-situ rock formation temperatures. Potassium chloride is then selectively dissolved within the potash formation, leaving a lattice of salt behind. Potash rich brines are then brought to the surface through each production well and delivered to a surface crystallization facility. Pat Varas, Western Potashs CEO, commented, In the current pricing environment, it has been very difficult to find solutions for financing and moving the Milestone project forward. In taking a step back and re-scoping the project, the company is greatly encouraged by the results of this study, as it projects a significantly reduced risk profile and allows for the staged development of our Milestone project. The anticipated lower capital expenditure requirements, alternative potential production scenario and improvement in projected economics will potentially facilitate a fresh look at investment in the company by a much larger project financing and investment pool. With this new platform, management is looking forward to renewed interest by the investment community to fund the initial development of Milestone.
Volume 29 issue 13