As the year draws to a close and we pause to count our personal blessings, there’s no getting around the fact that this has been a challenging year for the potash sector and all potash juniors in particular. Although rebounding, the base commodity price is still on the low side of the last 10 year average. China and India appear to have imported less than their normal yearly average as the tug of war between the primary consumers and main producers continues unabated.
Flying in the face of that though, is the fact that we are very likely completing what is yet another record for overall potash shipments year over year. Higher than 2015, even higher than 2016 and yes, higher again than 2017. As opposed to potash stories that simply focus on price alone, demand and consumption has never been higher globally. The hope and belief is that the sector is certainly on the total rebound, price and demand combined.
Even in a challenging year, Encanto was able to transform itself on a number of important fronts. Among them were entering into a 100 million tonne/20 year offtake agreement with the National Federation of Farmers' Procurement, Processing and Retailing Cooperatives of India Ltd ("NACOF").
Ending a multi-year process, our project partners the Muskowekwan First Nation successfully concluded the largest project to ever fall under the First Nations Commercial and Industrial Development Act ("FNCIDA") process and the delivery of the Muskowekwan First Nation Solution Potash Mining Regulations into law as well as executed the mineral lease with the Federal Government.
Last June, the Company released an updated Preliminary Economic Assessment calling for an expanded 3.4 mmty mine with a life span of more than 48 years and subsequently filed a 43-101 compliant technical report.
The Company secured a $100M capital commitment from GEM in New York and has now approved budgets to move the project forward and for company exposure to new investors. I expect them to access the first tranche of the financing in the near term. It’s my opinion that new executives and new companies will align themselves with our project.
Encanto recently announced that they had met with several departments of the federal government and received great interest in moving forward collectively in support of the project. The Government of Canada has indicated that they will move to facilitate a coordinated federal discussion to allow for more streamlined support that will become publicly apparent in subsequent months.
Finally, following the Annual General Meeting this week, Vinay Maloo, Chairman of the Enso Group in India and Former RCF Chairman R.G. Rajan joined the Board of Directors, the former as the new Chairman of Encanto Potash. I’m told the will be playing active roles in the company growth.
So while the share price is nowhere near where we’d collectively like it be and don’t think it reflects the value of the company whatsoever, we also think there’s reason to celebrate the successes we had in 2017 and reason for great optimism as we enter the New Year. Company Management remains totally committed to advancing this project into a productive mine, the Muskowekwan First Nation remains supportive and important partners and our entire network is determined to see this renewed transformation continue at an accelerated pace.
On a personal note, please take the time to count your blessings, spend time with family and friends, think of those less fortunate in your own communities and have a very Merry Christmas from my family to yours and from the entire Encanto team . Here’s to a new and prosperous 2018!
W.N. Gary Deathe
Director – Corporate Development
130 King St West (Stock Exchange Tower) Suite 1800
Toronto, ON M5X 1E3
(905) 510-3079