November 29, 2011 / 7:54 AM / 6 years ago

UPDATE 2-K+S sees 2.86 mln t of potash from Canada project

* Eyes capex of C$3.25 bln (2.4 bln euros) at Legacy project

* Says plans funding from liquidity, future cash flows

* Output capacity could reach 4 mln t of potash from 2033 (Adds premarket price indication, comparison to initial estimates)

FRANKFURT, Nov 29 (Reuters) - Germany’s K+S expects to mine 2.86 million tonnes of potash per year from its project in Canada from 2023, on top of the roughly 7 million tonnes it currently extracts from German soil, it said on Tuesday.

The fertiliser company said it planned to invest C$3.25 billion ($3.15 billion)(2.4 billion euros) until 2023 to develop the so-called Legacy deposit in the Province of Saskatchewan, to be funded predominantly from liquidity and future cash flows.

While the mine’s annual capacity is just slightly more than the 2.7 million tonnes K+S had originally projected a year ago, the planned investments are more than a quarter above initial estimates of $2.5 billion.

The shares were indicated to rise 1.8 percent in premarket trading at 0700 GMT, while Germany’s bluechip index was seen 0.4 percent higher.

K+S, the world’s fourth-largest potash miner, agreed about a year ago to buy the company that owned the rights to the Legacy project for C$434 million ($420.8 million), to gradually replace domestic deposits it expects will be depleted in about four decades.

The company said it expects to expand production capacity at the Legacy mine to 4 million tonnes of potash per year from 2033.

Cash flows to be channelled into its Canadian mine will not change the group’s dividend policy of a payout ratio of 40-50 percent of adjusted net income, it said, adding that it would also strive to keep its investment grade credit rating. ($1 = 1.0313 Canadian dollars) (Reporting by Ludwig Burger; Editing by Sophie Walker)

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