BHP buys up all of Sask. potash venture

The Canadian arm of Australian mining firm BHP Billiton has bought up sole ownership of a joint-venture potash project in Saskatchewan.

The company on Monday announced a $284 million, $8.15-per-share cash deal to buy Calgary-based Anglo Potash, with which BHP had co-owned 1.8 million acres of potash landholdings in a belt that surrounds Saskatoon and six major mines owned by other companies.

The deal gives BHP the 25 per cent of the joint venture that it didn’t already own.

Formerly called Anglo Minerals, Anglo Potash until now had traded on the TSX Venture Exchange. On its site it said it has focused on exploring for and developing what would be Saskatchewan’s first greenfield potash mine in over 40 years.

“Our Canadian potash position comprises a world-class development with over 7,338 square km of highly prospective exploration permits in the immediate vicinity of existing major Saskatchewan potash mines,” BHP Billiton president Graham Kerr said in a release Monday.

BHP’s worldwide holdings include mining operations in 25 countries, in commodities ranging from coal and oil to uranium and aluminum. It bills itself as the world’s largest diversified natural resources firm.

Anglo has previously described BHP as having “the expertise and capital to see a mining project of this size and complexity through to fruition and the global network to get product to market.”

Anglo CEO Todd Montogomery said the deal, a 34 per cent premium over Anglo’s TSXV closing price on Friday, underscores the success of the joint venture’s exploration and development work to date. The joint venture holds 32 subsurface potash permits (some still pending) on the 1.8 million acres in question.

Anglo, on its web site, said technical reports on a small portion (about 20 km east of the PotashCorp mine at Lanigan) of the landholdings in question suggest a total extractable potash resource (both measured and inferred) of about 1.46 billion tonnes.

The deal still depends on approval from Anglo’s shareholders, which is expected to come at a shareholders’ meeting in July.

Financial reports from Saskatchewan’s main potash companies have in recent months shown profits climbing on the back of unprecedented demand for potash fertilizer, making new investments worthwhile.

For example, Minnesota-based Mosaic in early April laid out plans for $3.15 billion in capacity expansions at three of its potash mining sites in Saskatchewan over the next 12 years.

Canpotex, the export arm of PotashCorp, Mosaic and Agrium, last month scored a deal to sell a million tonnes of potash to a Chinese firm at US$576 per tonne. In early May, Agrium posted a first-quarter increase in potash gross profit of over 230 per cent due to higher selling prices.

A survey by Manitoba’s Keystone Agricultural Producers last month showed the price Manitoba farmers pay for dry 0-0-60 potash rising to $487 per tonne, up 55 per cent compared to the year-earlier period.

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