Primed To Build a World-Class Potash Mine

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Primed To Build a World-Class Potash Mine

We are initiating coverage on Western Potash Corp. (TSX: CCE) due to its attractive risk/reward profile. The company’s Milestone Project is one of the most attractive greenfield (in-development) potash projects in the western world. The complete 20-page research report is available in English and German, whereas the below represents only an excerpt of its key findings. Other companies mentioned: The Mosaic Company (NYSE: MOS) and Verde Potash PLC (TSX.V: NPK).






Western Potash Corp. is focused on building an environmentally-sustainable solution-extraction mine at its Milestone Potash Project, which is located in southern Saskatchewan. A prospectively world-class 2.8-million tonnes-a-year producer, Milestone has an anticipated mine life of at least 40 years. Among its peers, it hosts an unrivalled “proven and probable” reserve of 137 million tonnes of net recoverable high-grade potash (KCl). This makes it an unequivocally world-class asset – one that has an after-tax net present value (NPV) of $2.44 billion CAD. 

Other key value drivers include the following catalysts for success:

The project has been technically de-risked, which means that there are no meaningful impediments to the construction of a world-class potash mine at the heart of the world’s richest potash fields in Saskatchewan, Canada.

The company has formed a strategic alliance with a Chinese government-owned fertilizer manufacturer, China BlueChemical Ltd. By leveraging this emerging business relationship, Western Potash is committed to seeking out the necessary project financing to build and commercialize the Milestone Project.

Milestone compares very favourably with the nearby Legacy Potash Project, which is being developed into an environmentally-sustainable potash-extraction mine by the German fertilizer company, K+S. This reality bodes well for the realization of a commercially successful potash mine at Milestone, which promises to benefit from project metrics that are equally as attractive as those at Legacy.

Milestone vs. Legacy: How These Regional Peers Match-Up 

Comparable industry transactions provide a useful valuation benchmark for junior potash developers. In particular, we believe that the $434 million CAD acquisition of the Legacy Potash Project by the German fertilizer manufacturer K+S in November 2010 offers the most relevant comparison. For context, Legacy and Milestone are geologically similar in size, grade, and amenability to solution-extraction mining. Most other logistical metrics, as well as the availability of necessary project infrastructure, are likewise similar. K+S is currently developing Legacy into a mine and is on schedule to start production in 2016. In order for WPX to gain up to a comparable market capitalization of $434 million CAD, its stock must rise to $1.95 CAD; an appreciation of 457% from its current share price of $0.35 CAD. 

Yesterday on February 19, Verde Potash PLC (AMHPF) reported to receive more than $100 million USD to develop its Cerrado Verde Potash Project into a mine. The funds are provided by the Brazilian Government via the Brazilian Development Bank and/or FINEP (Financing Agency for Studies & Projects). This latest transaction strengthens our confidence that the depressed state of the potash market is history - we anticipate the potash price to start recovering now. Our research report on Western Potash Corp. also includes a look into the fundamentals of the potash market and why we expect it to become one of the most profitable markets for investors to participate via advanced-staged exploration and development projects that are ready to be brought into production once a price recovery has become obvious. Verde's stock has tripled its market value in the last 7 days only rising strongly from around $0.30 CAD to more than $1 CAD on the TSX. We are confident that similar appreciation will occur with Western Potash as well, whereas its stock has been successfully breaking out of a triangle price formation lately - which is a bullish sign: 

The above represents an excerpt of a research report which also includes a look into the fundamentals of the potash market and its rosy outlook. The 20-page PDF can be downloaded via the following links:





Neither Rockstone Research Ltd. nor the author was remunerated by Western Potash Corp. to produce or publish this content. However, the author holds shares of Western Potash Corp. (TSX.V: WPX, FSE: AHE) and may sell those any time without notice. Please read the full disclaimer inside the research report and on as none of this content is to be construed as an “investment advice”.