SASKATOON – North Atlantic Potash Inc., the Canadian subsidiary of Russian fertilizer company JSC Acron, says it has sold eight of its potash exploration areas in Saskatchewan to a Chinese company.
North Atlantic said early Friday it had sold the potash properties to Yancoal Canada Resources Co. Ltd. of China for $110 million.
The company said the sale of potash licences north of Regina allows it to focus on its other exploration properties in Saskatchewan.
The potash explorer will use the money raised from the sale to explore and drill its assets in other parts of the prairie province.
The deal comes a few days after North American Potash struck a partnership with global mining giant Rio Tinto PLC to jointly explore and develop potash mines in Saskatchewan.
“North Atlantic Potash has moved quickly to prioritize and maximize the potential of its potash permits in Saskatchewan,” company president Arie Zuckerman said in a release before stock markets opened Friday.
“With the resources in place, the promising location of our focus area, and the mining experience that our mother company Acron provides, I am confident in the success of North Atlantic Potash,” he added.
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“After a successful closure of an important joint venture with Rio Tinto, this deal positions North Atlantic as a central player in the emerging potash development arena.”
Saskatchewan’s potash industry is growing rapidly as demand for the mineral – a key ingredient in fertilizer- is rising in China and other parts of the world as farmers seek to boost crop yields and food production.
For Yancoal, the deal continues a trend that has seen Chinese companies use their rich cash reserves to acquire oilsands, mining and other resources companies in Canada and around the world.
Late Thursday, Montreal-based copper producer Anvil Mining Ltd. (TSX:AVM) got a $1.3-billion friendly takeover offer from Minmetals Resources, part of a vast China-based mining group that’s been on the hunt for base metal producers.
In the wake of the North American Potash deal with Rio Tinto, the world’s largest miner – BHP Billiton – said this week there is the potential for several new potash mines to be built in Saskatchewan.
BHP Billiton (LSE:BLT) has about 14,500 square kilometres of land in the prairie province and thinks there’s the potential for about five more mines.
The British-Australian company with global operations – including diamond and potash businesses in Canada – is currently developing its Jansen mine in Saskatchewan and hopes to start producing potash in 2015.
Last year, BHP failed in a $40 billion bid to buy Saskatoon-based PotashCorp (TSX:POT), the world’s biggest fertilizer producer and one of Canada’s best known companies.
The Saskatchewan government strongly opposed the sale, and Ottawa later rejected the takeover after concluding it did not benefit Canada.
The Noirth Atlantic joint venture with Rio Tinto gives the miner a stake in the world’s most prolific potash producing region, while the Russian company will benefit from the Anglo-Australian miner’s rich cash resources and longstanding mining experience in Canada and around the world.
North Atlantic Potash holds nearly 1.1 million hectares and 26 exploration permits in the Saskatchewan potash belt.
The joint venture will cover nine permitted areas that cover about 241,000 hectares extending from the eastern shore of Last Mountain Lake southeast to Broadview in eastern Saskatchewan. The joint venture partners said they plan an extensive exploration program.
David Waugh, CEO of North Atlantic Potash, said that Friday’s deal with Yancoal Canada will help boost the company’s exploration program in Saskatchewan.
“In addition to our JV, the other area remains our Foam Lake property where we have completed an extensive seismic survey and are currently preparing drilling sites to begin a drilling campaign in November.”
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