A Calgary-based junior mining company is being purchased for $282 million, the payoff on a massive Saskatchewan land-staking effort started about four years ago.
Anglo Potash Ltd., known as Anglo Minerals Ltd. until changing its name this year, has agreed to be purchased by British-Australian mining giant BHP Billiton in a deal that could pave the way to a $4.2-billion potash mine.
"It was a matter of when, not if," said analyst Robert Winslow of Wellington West Capital Markets, estimating the 3.8-million-tonnes-per-year mine BHP is expected to build will cost $4.2 billion.
"(Anglo founders) were early and they rode the wave of the rising commodity complex and the rising potash prices and here we are today."
Anglo shares rose about 33 per cent to a 52-week high close of $8.06 Monday, near the $8.15 BHP has offered. The 52-week low is $1.55.
Anglo president and CEO Todd Montgomery, who holds 4.4 million shares or about 14 per cent of the company, has agreed with directors holding another 12 per cent to irrevocably vote with BHP.
"We have been joint venture partners with BHP Billiton for two years of exploration and development, the success of which is underscored by today's excellent offer," said Montgomery in a statement.
Company director Brent Walter credited "modern-day prospector" Montgomery for having the vision to make the initial investments in Saskatchewan in 2004-05.
"Todd thought fertilizers in general and potash in particular were a good place to be. But I don't think anybody could have predicted . . . the markets in that sector exceeding everyone's expectations."
Walter said Anglo used the sale of an oilsands lease to fund its initial potash permit purchases.
He said the Calgary office will close and Anglo will cease to exist if the deal is approved.
Anglo, based in Calgary but with a Saskatoon office, has been working as a 25 per cent partner with BHP to assess the joint venture's land holdings of 720,000 staked hectares in Saskatchewan.
With a reserve ore body of 479 million tonnes that could produce 206 million tonnes of finished product, the Anglo-BHP joint venture could have 100 years of reserves.
Spot prices are around $575 per tonne in Vancouver, up from $147.50 at the start of 2005, but $1,000-a-tonne contract prices have been rumoured.
dhealing@theherald.canwest.com