Encanto Potash Corp V.EPO.H

PLUMS FOR THE PICKING

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Potash takeover action heats up in Canada

by Gold Editor on February 3, 2010

Potash takeover action heats up in Canada 

The race to build up Canada’s potash supplies to keep pace with burgeoning global demand is turning Saskatchewan’s tiny handful of junior potash explorers into ripe plums for the picking.

Last week’s proposed $341 million buy-out of Athabasca Potash Inc. (TSX: API) by the world’s largest mining company, BHP Billiton Ltd. (NYSE: BHP), leaves only three publicly traded junior explorers remaining.

One of them, Potash One Inc. (TSX: KCL), is striving to develop its own mine, and the newest arrival on the scene, Encanto Potash Corp. (TSX.V: EPO), is still at an early stage of development. This leaves only Western Potash Corp. (TSX.V: WPX) as the next most likely buy-out candidate – now that it finally has a grasp on the actual size and potential of its flagship deposit.

To be more specific, the Vancouver-headquartered company has just announced a preliminary resource calculation for its emerging Milestone potash deposit. A total of 34 million tonnes of potash have been estimated in the ‘indicated category,’ along with a further 245 million tonnes in the more approximate ‘inferred category.’

These numbers were determined by an independent U.S. engineering firm, Agapito Associates, which next has the task of upgrading the deposit to a much more definitive ‘measured and indicated’ category. This should allow the company to proceed with a preliminary economic assessment.

Around 80% of the deposit’s ‘in situ’ (mineable and non-mineable) size of 1.3 billion tonnes has been discounted by Agapito. This is due to the potential presence of "unknown geological anomalies" and because of tonnage that needs to remain in place to support the mine, and various logistics related to anticipated mineral losses during production.