Karnalyte Resources lands investor for Canada potash mine

Thu Jan 10, 2013 9:04am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

* India's GSFC to buy 20 pct stake, assures potash supplies

* Saskatchewan mine would compete against Potash Corp

By Rod Nickel

Jan 10 (Reuters) - Tiny Canadian mining company Karnalyte Resources has landed a small, but strategic investment from India, pushing i t s planned potash mine closer to direct competition with the world's dominant sellers of the crop nutrient.

Gujarat State Fertilizers & Chemicals Limited, an Indian farm business that makes fertilizer and industrial products, will buy a nearly 20 percent stake in Karnalyte for C$45 million ($45.5 million), or C$8.15 per share. The deal, announced by the companies early on Thursday, is a premium of less than 2 percent over the last traded price for Karnalyte on Tuesday before trading halted the following day, but a 20 percent premium to the volume-weighted average price for the 20 trading days that ended Dec. 20.

The stock has risen sharply in recent days.

GSFC also agreed to buy 350,000 tonnes of potash per year for 20 years, or more than half of the output from the first phase of Karnalyte's planned potash mine near Wynyard, Saskatchewan. The off-take agreement increases to 600,000 tonnes per year once phase 2 is built.

"At present, India is fully dependent on imports of potash," Atanu Chakraborty, managing director of GSFC, said in a statement. "This is a significant partnership by an Indian fertilizer manufacturing company with a potash mining company abroad to procure high quality potash for the Indian market."

The mine would be small compared with those operated in the resource-rich province by giant fertilizer companies Potash Corporation of Saskatchewan Inc, Mosaic Co and Agrium Inc. If built, it would be the first in the province with such significant influence by investors from China or India, the world's two biggest consumers of the nutrient used to boost crop yields.   Continued...