Western Potash ends talks with investor, shares plunge
By Rod Nickel
(Reuters) - Shares of Western Potash Corp WPX.TO remained sharply lower on Thursday as the company confirmed that it had ended talks with a potential investor, raising concerns about when it can get into production.
By mid-afternoon, shares of Western Potash were down 21 percent. Shares of Karnalyte Resources Inc (KRN.TO: Quote), another junior Canadian potash company, recovered to be off 2 percent, after being down about 14 percent around midday.
Both companies are seeking investors to build potash mines in the Western Canadian province of Saskatchewan. "Junior" is an industry term that generally refers to a potash exploration and development company that does not yet have a mine in production.
Andrea Rubakovic, an analyst at Salman Partners, said Western Potash stock came under pressure early on Thursday from market talk that a deal with a potential Chinese investor fell through. Investor concerns spilled over into the stocks of other junior potash companies like Karnalyte.
John Costigan, Western Potash vice-president of corporate development, later on Thursday confirmed the company had recently ended negotiations with one potential investor, but said it continues to talk with others.
"We're moving on to someone we've had negotiations with for nine months, so we're pretty deep in negotiations," Costigan said in an interview. "Somebody seems to have made a pretty big deal out of this."
Ron Love, Karnalyte's chief financial officer, said there had been no change in the company's project and was at a loss to explain the steep fall in the shares.
"The poor market has something to do with it." said Love. "People have shied away from junior development companies and risk." Continued...