Exciting News For Wynyard...
A financing agreement worth about US$700 million means construction of the first phase of a proposed potash mine near Wynyard could begin as early as this fall, according to Calgary-based mining company Karnalyte Resources Inc.
“By Sept. 30 we’ll have the financing in place, and I’ll have dirt flying the next day. That’s how fast we’re ready to go,” Karnalyte founder and president Robin Phinney said Monday, noting that all permits and engineering work for the proposed mine site are in place, and that construction and commissioning are expected to take 30 months.
Karnalyte plans to build its solution mine, the Wynyard Carnallite Project, in phases. The first phase is expected to produce 625,000 tonnes per year, and the completed mine’s capacity is expected to reach 2.125 million tonnes per year. Work on the first phase will be entirely underwritten by Gujarat State Fertilizers and Chemicals Ltd. (GSFC), a fertilizer company based in India, in exchange for a temporary 51 per cent voting share in the company.
On Monday, the companies announced an agreement in principle that involves the Indian firm covering phase one development costs and agreeing to buy 56 per cent of phase one production at market price for 20 years. Phinney said GSFC “fell in love” with the project because of the ore body’s high grade and its attractive capital costs.
The two companies have also agreed to spin out Karnalyte’s secondary mineral assets, including a promising magnesium resource with “no significant impurities,” and unexplored land in the Wynyard area, Phinney said.
“This groundbreaking deal structure demonstrates GSFC’s long term commitment and desire to secure supplies of key natural resources through investment structures that are aligned with the values of Canadian shareholders,” GSFC senior vice president and chief financial officer Vishvesh Nanavaty said in a statement.
Last year, Karnalyte reconstituted its board of directors after a group of shareholders led by Phinney became concerned about the board’s decision to suspend work at the Wynyard site due to a weak global potash market. Work on the project resumed in July, according to a news release.
Global potash prices are currently mired below US$300 per tonne, considerably less than their peak of about US$900 per tonne in 2008, leading some Saskatchewan producers to lay off employees or cut mine production. Phinney said the weak market isn’t a concern for Karnalyte’s Wynyard project, as demand is expected to pick up in 2016 and its project’s grade and competitive costs “will win the day” over conventional underground producers.
“My economics are still strong enough that we were still able to get our financing even in the most difficult of potash markets,” he said.
Phinney said the mine’s first phase could create up to 300 construction jobs and between 80 and 90 permanent jobs. He added that first phase of production is also expected to finance the mine’s second and third phases, each of which can be built in 24 months.
“It’s a great time for us to build now, when the market is at its lowest and we can get all of our equipment and all of our steel — everything — at bargain basement prices,” he said. “This is the time when we should be building, and GSFC and the Indian government and the Indian state bank all agree.”
Taken from the Saskatoon StarPhoenix