Wednesday 7th December 2016

Resource Clips


Posts tagged ‘Western Potash Corp (WPX)’

Back on the autobahn

November 2nd, 2015

Twelve Zimtu Capital companies bring their exploration opportunities to Europe

by Greg Klein

Next Page 1 | 2

Overseas investors once again get to meet Canadian juniors in person, as prospect generator Zimtu Capital TSXV:ZC and 11 of its holdings visit four European cities from November 5 to 11. Now in the event’s fifth year, company reps will hold conferences in Munich, Geneva, Zurich and Frankfurt to largely institutional audiences, demonstrating the wide-ranging interest in exploration opportunities.

“Essentially it’s a commitment by Zimtu and all the participating companies to keep the European investor informed about what the companies are doing, to meet the management and form a relationship with the guys who are going to be making the decisions, effectively spending their money,” says Zimtu president Dave Hodge.

Twelve Zimtu Capital companies bring their exploration opportunities to Europe

The Zimtu bus arrives as crowds enter
Munich’s Edelmetallmesse in 2014.

“Many of the investors who are still interested in the sector had made great money in the past and experienced tremendous upside in some stocks. Certainly the Canadian junior market is very unique globally and provides that opportunity for the European investor to speculate on discovery.”

Describing himself as a “grizzled veteran of the Zimtu bus,” Chris Berry acts as MC, moderator and keynote speaker. The president of House Mountain Partners and co-editor of the Disruptive Discoveries Journal says, “I like to go back and get a sense of what institutional investors in those cities are thinking about, not just about commodity markets but central bank policies and the macro economy.”

His talk will briefly review the perspectives he offered last year then “challenge the audience” with four questions to consider in 2016. “It’s really more of a discussion than a lecture and I hope there’s a lot of pushback and debate. That gets people thinking and hopefully planning for better times next year.”

While the downturn’s all too obvious, several Zimtu holdings have made impressive strides over the last year. Some of the more remarkable stories include the creation of ALX Uranium TSXV:AL after Lakeland Resources and Alpha Exploration won overwhelming shareholder approval to combine their companies. The result is a distinguished team overseeing one of the Athabasca Basin’s largest and most prospective portfolios.

Competing for flagship status are a number of drill-ready projects including Kelic Lake, where a rig’s currently at work. Gibbon’s Creek has a ground gravity survey underway to follow up on last winter’s 2,550-metre program on a property hosting some of the Basin’s highest radon levels. The company’s Carter Lake and Hook Lake properties feature around 15 kilometres of untested corridors on strike with the Patterson Lake South, Arrow and Spitfire discoveries. Other drill-ready projects include Newnham Lake and Lazy Edward Bay, a 60% stake in the Carpenter Lake joint venture and an 80% share of the Gorilla JV.

Well financed for additional campaigns, the ALX team has been poring over property data to further establish priorities.

Twelve Zimtu Capital companies bring their exploration opportunities to Europe

Commerce Resources addresses last year’s Munich conference.

Focusing on a rare earths project with relatively simple mineralogy, Commerce Resources TSXV:CCE continues to make progress with drilling, metallurgy and community engagement as its Ashram deposit in northern Quebec moves towards pre-feasibility. Last month the company increased rare earth elements recovery from 71% to 76% at a high grade of 42% total rare earth oxides, while also simplifying the plant’s flowsheet. The most impressive concentrates so far have graded 48.9% TREO at 63% recovery and 45.7% TREO at 71% recovery.

Following high-grade, near surface assays from the winter/spring drill program, Commerce has a summer/fall campaign targeting around 32 holes for 3,000 metres. A new infrastructure model indicates cost-cutting potential. The company’s commitment to social responsibility won an award from l’Association de l’exploration minière du Québec.

In British Columbia, Commerce’s Blue River tantalum-niobium project achieved its preliminary economic assessment in 2011.

Recognizing that the great nickel deposits of Sudbury, Norilsk, Thompson and Raglan occur in clusters, Equitas Resources TSXV:EQT acquired the recently assembled Garland project in Labrador, 30 kilometres from Voisey’s Bay. Then, for the first time, Equitas subjected Garland to modern geophysics. Now a drill program under the supervision of Voisey’s veteran Everett Makela has 12 VTEM anomalies targeted.

With over $3.8 million raised since September, the company continues drilling while awaiting initial assays.

Inspired by China’s allure for the beauty and practical qualities of B.C. jade, Electra Stone TSXV:ELT intends to create a vertically integrated nephrite jade mining, trading and marketing platform. The company began by acquiring properties as well as expertise, and has so far confirmed jade at two of six projects before winter conditions ended exploration.

Eager to make contact with potential buyers, Electra bought and shipped an 18-tonne cargo of jade to Shanghai in September and is now preparing a second shipment. The company also produces chalky geyserite, or aluminum silica, from a Vancouver Island quarry. The product’s U.S. customer collaborated with Electra on a drill program last summer to study the project’s expansion potential.

Next Page 1 | 2

Beijing Tairui Innovation Capital Management president Bill Xue discusses the $80-million investment in Western Potash

October 7th, 2015

…Read more

Western Potash gets environmental approval for Milestone, elects chairperson

September 28th, 2015

by Greg Klein | September 28, 2015

Western Potash’s (TSX:WPX) revamped Milestone project has received Saskatchewan environmental assessment approval, the company reported September 28. Approval originally came through in April 2013 for what was then envisioned as a much larger operation. In early July Western announced a preliminary economic assessment for an upwardly scalable project using selective mining. The new plan slashes capex to $80.6 million.

Western Potash gets environmental approval for Milestone, elects chairperson

The new methodology and design then underwent provincial review, with Saskatchewan’s Ministry of Environment concluding the proposal wouldn’t bring impacts significantly different from those identified in the original plan.

Milestone’s funding closed in mid-September with an $80-million investment from Beijing Tairui Innovation Capital Management and $720,245 from CBC (Canada) Holding Corp.

Western also announced the election of Tairui nominee Chang Xiaogang as chairperson. Holding a master’s degree in business administration from Tsinghua University School of Economics and Management, Chang has served as president/chairperson of Shanxi Top Energy Company, deputy chairperson of Shanxi Securities, deputy chairperson of Shanxi Zhangze Power Company and chairperson/president of Shanxi International Power Group. Chang also served as a full-time independent director of China’s state-owned Assets Supervision and Administration Commission.

“Mr. Chang and Tairui bring a wealth of relevant experience that will help guide Western as the company begins the transition to project construction,” commented CEO Patricio Varas.

Western Potash secures Milestone capex as $80.7-million financings close

September 16th, 2015

by Greg Klein | September 16, 2015

Private equity has bought into Western Potash TSX:WPX with an $80-million investment that covers capital costs for the company’s Milestone project in Saskatchewan. On September 16 Western announced it closed a deal with Beijing Tairui Innovation Capital Management, which now holds a 51% stake in the company. Chinese joint venture CBC (Canada) Holding Corp invested another $720,245, leaving it with 10.1% following a $31.9-million investment that accompanied the JV’s 2013 offtake agreement.

At $0.3358 per share, the two investors paid a premium of about 53% over Western’s volume-weighted average for 30 days ending July 3.

In combining the resources of Tairui with the high-quality Milestone project and an innovative development process, we are excited about the future prospects for Western.—Bill Xue, president of Beijing Tairui Innovation Capital Management

Western bases its $80.6-million capex on a July preliminary economic assessment for a downsized but upwardly scalable potash solution mine in infrastructure-rich southern Saskatchewan. With all major permits in place, the company intends to begin development after further engineering work but probably without a feasibility study. Construction could take around two years.

The revised plan uses horizontal drilling and selective mining for a project considerably more modest than envisioned in a 2012 feasibility study. But Western maintains the new plan is not only viable under current market conditions but allows for potential expansion. The “scalable and more flexible approach” attracted the $80-million infusion, acknowledged Tairui president Bill Xue.

In addition to financing, its strategic alliance with Tairui offers Western “technical expertise in large-scale project construction, and management and marketing channels for future potash sales.” Four Tairui nominees have been appointed to Western’s board of directors.

Calling Tairui “an ideal partner,” Western president/CEO Pat Varas said, “We believe that this strategic investment provides our shareholders with much greater value than an outright sale of the project or a dilutive standalone public financing would in the current depressed markets. The transaction represents an opportunity not afforded to the shareholders of many junior companies at the moment.”

“At Tairui, we look to invest in advanced projects with a large resource base and without environmental complications,” Xue added. “The Western Potash team is highly skilled, committed and passionate. In combining the resources of Tairui with the high-quality Milestone project and an innovative development process, we are excited about the future prospects for Western.”

Read more about the Milestone project.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Western Potash.

Investment equals capex

August 26th, 2015

Private equity backs Western Potash’s upwardly scalable Saskatchewan project

by Greg Klein

A new Saskatchewan potash mine should have funding in place by about September 16, assuming exchange approval and lack of an even better offer, according to Western Potash TSX:WPX. On August 24 investors approved an $80-million deal that would transfer a 51% stake in their company to Beijing Tairui Innovation Capital Management, a Chinese private equity firm. The announcement follows last month’s revised preliminary economic assessment projecting an $80.6-million capex for Western’s Milestone project. Significantly downsized from its 2012 feasibility study but believed to have considerable expansion potential, the project could begin operation in about 24 months.

Tairui’s buy-in would come through the purchase of 238.26 million shares at $0.3358 for a total of $80 million. Western shareholders also approved the $720,245 purchase of another 2.14 million shares at $0.3358 by CBC (Canada) Holding Corp, leaving it with a 10.1% stake. CBC already has an offtake agreement for the lesser of 30% or one million tonnes of potash annually for 20 years.

Private equity backs Western Potash’s upwardly scalable Saskatchewan project

Assuming a potash price of $315 per tonne FOB Vancouver and using a 10% discount rate, the new PEA projected a net present value of $56.7 million and a 25.2% internal rate of return after taxes and royalty.

The mine life now comes to 12 years, a considerable drop from the 40 years calculated in a 2012 feasibility study. But that project called for capital expenditures of $2.44 billion and assumed Uralkali/Belaruskali cartel prices around $450 a tonne. Western now attributes much of the solution mine’s reduced capex to a new approach using directional drilling to extract the deposit selectively, eliminating the need for salt tailings.

Forecast to produce 145,600 tonnes of standard grade muriate of potash per year, the new plan’s smaller but scalable, emphasizes president/CEO Pat Varas. Should additional offtake offers come in the project could expand very considerably “utilizing the same methodology,” Varas says. “This is a first step. It’s a stepping stone. And it’s a good thing for us to do in these markets. By going into a smaller operation, a pilot project, Milestone becomes a much bigger attraction for investment.”

Eminently enviable is southern Saskatchewan’s infrastructure, Varas points out. “You can see multiple sets of power lines” from the 35,420-hectare property. “There’s roads every quarter-section. There’s major highways and two railway lines. The things you’d look for to develop a project anywhere in the world are right here.” The company also has an agreement with the city of Regina, 30 kilometres away, to supply the solution mine with treated waste water. All major permits are in place.

Once financing closes, Western estimates, development would take about two years. Varas doesn’t anticipate a feasibility study, although plans call for some further engineering. “It’s not a complicated engineering exercise,” he maintains. “It’s more about execution and keeping within budget and timelines. The way things are going in the commodities sector, I think it’s a good time because there are more people available with skills.”

Western’s in-house expertise includes project director Richard Lock, a De Beers veteran who joined Rio Tinto NYE:RIO to take the Northwest Territories’ Diavik diamond mine into production. Lock also completed an Alberta oilsands project for Canadian Natural Resources and served as project director on Resolution, an Arizona engineering wonder that could become North America’s largest copper mine.

Of course Tairui’s buy-in would dilute ownership. But Varas points to the opportunity. “We can do nothing and eventually run out of money and watch ourselves die like many other companies,” he argues. “Or we can move the project forward. This is the market we have.”

We haven’t closed, so anybody could still come in and make an alternate proposal. But I also like the prospect of what these fellows want to do.—Pat Varas, president/CEO
of Western Potash

“I don’t see any other deals out there, although one could come soon. We haven’t closed, so anybody could still come in and make an alternate proposal. But I also like the prospect of what these fellows want to do. They’re market people, not miners or fertilizer people. They look at the markets, see an opportunity and invest. And I think their vision is to take this company and dual-list it in Hong Kong. I think that could offer a tremendous amount of potential to boost value for our shareholders.”

He says other parties showed interest prior to last month’s Tairui agreement, which was signed within days of the revised PEA’s release. Not to be ruled out is the possibility of an alternative transaction or additional offtake without an ownership position. “Until the money’s in the bank, obviously, we don’t know what’s possible out there.”

As for the commodity, Varas sees continued opportunity. “I think there’s always going to be demand for potash,” he says. “The markets are very well controlled by the parties that are out there. But I think the world needs projects that can produce at low cost and I believe we can do that. What we envision as our cost to produce potash will be very competitive.”

Read more about Western Potash’s revised PEA.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Western Potash.

Shareholders approve $80-million buy-in that would cover Western Potash’s capex

August 25th, 2015

This story has been expanded and moved here.

Western Potash president/CEO Patricio Varas discusses Milestone’s development as the project gains a strategic investment equal to its capex

July 27th, 2015

…Read more

Western Potash gets $80-million investment to cover Milestone capex

July 6th, 2015

by Greg Klein | July 6, 2015

An $80-million strategic investment from a Chinese private equity firm could put Western Potash’s (TSX:WPX) Milestone project into production. Announced July 6, the deal offers enough to cover capital costs of the southern Saskatchewan project as calculated in a revised scoping study reported four days earlier. The investment by Beijing Tairui Innovation Capital Management remains subject to approvals, including a shareholder vote. The parties expect to close by August 31.

“We anticipate approximately 24 months for development,” Western president/CEO Patricio Varas tells ResourceClips.com. “Obviously we need to do a little more engineering before we really tie down dates but I think in two years we could have an operation running.”

Western Potash gets $80-million investment, covers Milestone capex

Chinese private equity would back
production of potash-rich Milestone.

Milestone reached full feasibility in December 2012, with a $2.44-billion capex and other calculations based on higher potash prices. The breakup of the Uralkali/Belaruskali cartel sent prices downward the following summer. Last week Western announced a preliminary economic assessment for a scaled-back but upwardly scalable operation using horizontal drilling and selective solution mining. That dropped the capex to $80.6 million. Based on prices of $315 per tonne, the PEA showed a net present value of $56.7 million and a 25.2% internal rate of return after taxes and royalty.

The $80-million investment would come through 249 million shares at $0.3213, giving Tairui a 51% stake in Western. The price represents a 46% premium over the company’s volume-weighted average for 30 days ending July 3.

The Chinese interests “understand the need for potash over there, how southeast Asia needs potash,” Varas points out.

Additional investment might come from CBC (Canada) Holding Corp. Currently with a 19.9% interest in Western, CBC may participate to maintain its stake. “So this financing might get bigger yet,” Varas says. Referring to CBC’s response to the new PEA, he adds, “They’re onside. They like the idea that we’re moving it forward.”

CBC also has an offtake agreement for the lesser of 30% or one million tonnes of Milestone potash annually for 20 years.

Milestone has all major permits in place, two rival rail lines crossing its property and an agreement with the city of Regina, 30 kilometres away, to supply the mine with treated waste water.

Read more about Western Potash.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Western Potash.

Western Potash slashes costs

July 2nd, 2015

Update: $80-million investment puts Milestone on the road to potash production

by Greg Klein

Update: On July 6 Western Potash announced an $80-million strategic investment from private equity firm Beijing Tairui Innovation Capital Management. Read more.

 

Showing a dramatic cut in capital and operating costs, Western Potash TSX:WPX revived its Milestone potash project with a preliminary economic assessment announced July 2. Taking advantage of improvements in horizontal drilling and selective mining, the company now proposes an initially smaller but upwardly scalable approach to solution mining for the southern Saskatchewan property. With an offtake agreement already in place and amid a backdrop of potash M&A activity, Western expects the new plan to attract a wider range of investor interest.

To be sure, the new PEA proposes a more modest project than originally envisioned. A December 2012 feasibility study projected 40 years of production, but at a capex of $2.44 billion. The following summer saw the Uralkali/Belaruskali breakup, ending a cartel-like partnership that kept prices around $450 a tonne. Obviously Milestone needed a re-think.

Western Potash slashes capex and opex with a new plan for Milestone

By providing a key ingredient for fertilizer, Western Potash’s
Milestone project could help feed a hungry world.

That came with a scoping study for a downsized but scalable pilot project. The new calculations assume a potash price of US$315 per tonne FOB Vancouver. Capex now comes to $80.6 million, opex to $80 per tonne and transportation costs to $70 per tonne (all prices Canadian, except where noted). Using a 10% discount rate, the PEA calculates a net present value of $56.7 million and a 25.2% internal rate of return after taxes and royalty.

Those streamlined numbers result from a different approach to solution mining. The new plan calls for simultaneous operation of three caverns. They’d be injected with a sodium chloride-saturated brine that would dissolve potassium chloride. Once brought to surface, it would be recovered through a simplified process that wouldn’t produce salt tailings. The result would be about 145,600 tonnes of standard grade muriate of potash (potassium chloride) per year over a 12-year lifespan.

“We looked around the world at what others were doing, not just in potash but in soluble salts and soda ash, and what other processes were being done,” project director Richard Lock tells ResourceClips.com. “One of the key advantages was the advance of directional drilling. We could use that to establish the cavern and then focus only on selective mining or secondary mining. Instead of the conventional process of opening up a primary cavern and taking out both KCl [potassium chloride] and NaCl [sodium chloride], we just take out the KCl.”

“Obviously when you don’t have to bring the NaCl to surface and separate it from the solution, you have a major capital cost saving. That’s the real critical issue here—that by taking basically half the process plant away you get that major capital cost saving.”

With 25 years’ experience in mine development, Lock adds, “When we apply those technologies to the Saskatchewan resource it’s in some ways easier than other projects I’ve done around the world.”

Lock began his career with De Beers in South Africa before working with Rio Tinto NYE:RIO to take the Northwest Territories’ Diavik diamond mine into production. Lock also finished an Alberta oilsands project for Canadian Natural Resources and served as project director for Arizona’s Resolution project, an engineering marvel that could become North America’s largest copper mine.

Western’s 100%-owned Milestone has two continental railways cutting through its 35,420 hectares and a deal with the city of Regina, 30 kilometres away, to supply the mine with treated waste water.

Milestone’s PEA comes with a new resource using a 15.8% KCl cutoff to show:

  • measured: 7.17 million tonnes averaging 39.5% KCl

  • indicated: 11.56 million tonnes averaging 39% KCl

  • inferred: 1.77 million tonnes averaging 39% KCl

“We’d be starting with a small facility to prove up the technology,” Lock explains. “There’s no question there’ll be some fine-tuning of our methodology and processes as we develop these three test caverns, but we’re very confident that we can apply this technology to Saskatchewan. The endgame isn’t 150,000 tonnes, it’s a million tonnes plus. So once we’ve demonstrated this mining methodology we hope to quickly expand to a full-scale million-tonne-plus facility.”

The endgame isn’t 150,000 tonnes, it’s a million tonnes plus. So once we’ve demonstrated this mining methodology we hope to quickly expand to a full-scale million-tonne-plus facility.—Richard Lock, project director
for Western Potash

He sees the pilot project happening without a feasibility study. “Depending on raising the funds, we’d go straight into engineering and construction.”

Still in effect is a June 2013 offtake agreement with a joint venture of Benewood Holdings and China BlueChemical, the latter a majority-owned subsidiary of China National Offshore Oil Corp, China’s largest offshore oil and gas producer. With a 19.9% interest in Western, the JV has agreed to buy or designate a buyer to purchase the lesser of either 30% of Milestone’s production or one million tonnes of potash annually.

“Obviously we’ve shared everything we’ve done with them and they’re very excited by what this could mean,” Lock says.

The PEA comes amid heightened potash M&A activity, with the world’s largest producer, PotashCorp of Saskatchewan TSX:POT, trying to woo Germany’s K+S AG with a reported US$8.5-billion offer. A few weeks earlier Israel Chemicals Ltd NYE:ICL scooped up TSX-listed explorer Allana Potash for $137 million.

Milestone’s neighbours consist of K+S, BHP Billiton NYE:BHP, Vale NYE:VALE and a JV of Rio and North Atlantic Potash.

As for the revamped project, “We’re very confident we’ll be attractive to some mining investors who are looking for a good entry into the potash space,” Lock says. “I think this really opens up the field of investors to those who can see the game-changing advantage of what we’re proposing.”

 

Update: On July 6 Western Potash announced an $80-million strategic investment from private equity firm Beijing Tairui Innovation Capital Management. Read more.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Western Potash.

Western Potash presents Milestone to India

November 24th, 2014

by Greg Klein | November 24, 2014

A company with a development-ready potash project in Saskatchewan is taking part in a trade show at one of the commodity’s largest markets. Western Potash TSX:WPX forms part of Saskatchewan’s delegation at the Agro Technology and Business Fair 2014 in the northern India city of Chandigarh. The event expects to attract over 85,000 visitors.

Having reached full feasibility and cleared all permitting, Western “anticipates that the financing and development of Milestone will likely include the involvement of a multi-party consortium, with participation divided between a number of fertilizer industry players alongside financial institutions providing project finance,” the company stated.

Western Potash brings Milestone to India

The Indian event follows Western’s participation last month at the IFA Crossroads Asia-Pacific 2014 in Singapore and, in September, the 2014 World Fertilizer Conference in San Francisco and the International Fertilizer Association Production and International Trade Conference in Beijing.

Saskatchewan Premier Brad Wall joined his province’s delegation in Chandigarh to deliver a keynote speech. Saskatchewan’s potash and uranium reserves are expected to encourage closer trade relations with India.

In a September report, the Saskatchewan-Asia Advisory Council advised the province to identify “at least 10 major in-province investment opportunities for Asian investors” and to triple exports to Asia by 2020 “through enhancements to the Saskatchewan Trade and Export Partnership.”

Earlier this month Wang Hui joined Western’s board to represent CBC (Canada) Holding Corp, a joint venture of fertilizer producer China BlueChemical and Benewood Holdings, a subsidiary of Hong Kong investment firm Guoxin International Investment Corp. CBC has invested $31.98 million in Western with a 20-year offtake agreement. Hui serves as CEO/president and party secretary of China BlueChemical as well as chairperson for CBC.

Read more about Western Potash here and here.

Disclaimer: Western Potash Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Western Potash.