The purchase of potash through a local off-take agreement will reduce the cost to transport potash from the Phase I project to market
Image: Milestone Project Site. Photo: courtesy of Western Resources Corp.
Western Resources wholly-owned subsidiary Western Potash has executed a binding offtake agreement with Archer Daniels Midland (ADM) for the production of potash from the Milestone Phase I plant.
The Milestone Project property is situated around 30km southeast of Regina in Saskatchewan, a Canadian province. The Milestone Phase I plant will hold the capacity to produce 146,000 tonnes of potash per annum.
The purchase of potash through a local off-take agreement
ADM, which has expertise in agricultural sourcing, processing and transportation, will use its transportation and sales efficiency to establish a direct sale channel to market in North America.
The purchase of potash via local off-take agreement will help reduce the firm’s cost to ship potash from the Phase I project to market, in addition to expanding ADM’s diverse agricultural portfolio.
Major terms of the current deal includes binding commitment to take 100% of the produced potash from the Phase I project, free-on-board (FOB) mine site and transported from the site by truck to the nearby Port Lajord Terminal, which is 13km from the project site.
The terms also include a structure to incentivise the best final sale price for both parties.
The team has completed drilling of three vertical production wells on the Milestone phase 1 project and intersected high-grade potash in all wells, as per the downhole logs.
In addition, the project has drilled and connected first injection wells, helping to achieve on target intersection of the potash bed. It is claimed to be the first intentionally connected potash well drilled in Saskatchewan.
The company has achieved significant progress in the construction of the project, including the development of building foundations, arrival of equipment and materials. The plans are underway for building construction before the end of the year.
Western Potash aims to complete Phase I construction in mid-2020 with potash production to begin later next year.
The company’s water well operation has started on 30th August and began filling the crystallization pond.
By October this year, the cold mining to saturate the crystallisation pond with salt will be commenced. It will be followed by hot mining of potash in early 2020.
Western Potash president and CEO Fritz Venter said: “The offtake agreement for the purchase of our Phase I Project potash with a reputable partner such as ADM gives us great confidence in the final sale of our potash.”