SPARK
7 years ago
Encanto hits jackpot with direct-selling offtake agreement with Indian farmers’ coop
TORONTO (miningweekly.com) – The potash market on Thursday reverberated with the news that junior project developer Encanto Potash has struck a definitive offtake agreement with an India-based farmers’ coop for a minimum of five-million tonnes a year for at least 20 years, cutting out the middle man and selling direct to farmers.
The company’s TSX-V-listed stock on Thursday nearly doubled as investors scrambled to get in on the action.
“This is clearly a defining moment for our company and the industry. India imports 100% of its potash and is susceptible to cartel-like practices from producers that can hurt its national food security.
Establishing long term offtake agreements are difficult and require a great amount of time and understanding of a country's food security policies and how they interface with the dynamics of a supply environment controlled by a small number of entities,” Encanto president Stavros Daskos stated Thursday.
The National Federation of Farmers’ Procurement, Processing and Retailing Cooperatives of India Limited (NACOF) is India's national farming cooperative and represents farmers across 25 out of 29 states in the country. The NACOF has a 2016/17 budget of $7.67-billion to spend on its primary goal to enter contracts and collaborate to buy, produce, manufacture and market raw materials, finished products and by-products and enter into joint marketing and exchange agreements with cooperative institutions, public sector undertakings or any other agency in India or abroad.
India-based buyers have been loath to sign offtake agreements with established suppliers in recent years as low potash prices drove spot market buying, amid depressed demand. The Encanto strategy was to focus solely on addressing the current and future needs of India over the next twenty years.
According to the marketing arm of major Saskatchewan potash producers Agrium Inc, The Mosaic Company through subsidiary Mosaic Canada Crop Nutrition and Potash Corporation of Saskatchewan, estimates of opening potash inventory levels in all major export market regions are lower than last year's comparisons, providing a strong base of demand into 2017.
Historically, potash consumption in India had reached about six-million tonnes in 2010/11, and according to the Chemicals and Fertilisers Ministry, the aim is to return to this level as potassium, found in Encanto’s muriate of potash (MOP) product, is required in large amounts to sustain and grow their crop based industry.
The comparatively high retail cost of MOP and other potash-based fertilisers in India prompted many farmers to favour the use of fertilisers biased towards higher nitrogen content, owing to their lower cost, Encanto explained.
NACOF and Encanto believe a secure and stable supply of MOP at reasonable prices will incentivise India’s farmers to progress to a balanced fertilisation programme, where the growth rate in consumption of potash-based fertilisers will be higher than the growth rate of consumption of alternate fertilisers. Part of Encanto’s immediate strategy is to also source potash from existing producers pending the commercialisation of its own flagship Muskowekwan project, underlying nearly 25 000 ha on the Muskowekwan First Nation lands, in Sakatchewan.
According to Encanto, the Indian government has set a target to double the farmer’s income in the next five years, and continues its efforts to educate Indian farmers on the long term benefits and potential increases to crop yield that can be achieved from a balanced and strategic fertilisation programme. Soil health assessments being provided by the Indian government and sustained marketing targeted at farmers will play an important role to help prevent over-use and misuse of urea fertilisers.
The latest agreement adds to the existing two-million-tonne-a-year, 20-year agreement with India’s largest trading company, Minerals and Metals Trading Company (MMTC).
FOOD SECURITY
Encanto, which is developing the Muskowekwan project in partnership with the First Nation, said the NACOF strategy changes the economics of the industry as it is focused on the security of India's food supply and increasing India’s agricultural exports for the next twenty years.
The agreement is the result of 20 months of negotiations between the stakeholders to structure an agreement that meets all of our interests and objectives over the next two decades.
The agreement will also allow the Muskowekwan First Nation to generate its own source revenue and helps the Muskowekwan people with training, jobs and opportunities which enable a path forward towards a better future.
Encanto noted that there remain other possible initiatives with NACOF relating to the procurement and marketing of other Canadian products in India regarding the agricultural, mineral, grain/seed, aqua/horticultural, forestry and food/animal sectors through the company’s intention to form a trading company.
Encanto and its Muskowekwan First Nations partner have developed 162-million tonnes of recoverable potassium chloride in compliant proven and probable reserves, with a total of 35.4-million classified in the measured and indicated (M&I) resource categories. At an extraction rate of 2.8-million tonnes a year, the resource will support a solution mine life of more than 70 years.
India is ramping up its minerals investment offshore, having previously agreed to enter the Canadian uranium market with a C$350-million, 7.1-million pounds uranium supply contract inked with Canadian producer Cameco.
http://www.miningweekly.com/article/encanto-hits-jackpot-with-direct-selling-offtake-agreement-with-indian-farmers-coop-2017-01-19
SPARK
8 years ago
Encanto President Stavros Daskos commented on the transaction, "Various entities in India had been tasked over the years with reviewing dozens of potash property opportunities worldwide as part of their formal policy to secure a long term supply of potash for India. Due to a combination of the size, high grade reserves, the simple geology, low environmental impact, solution mining advantages in terms of employment safety and faster path to production, it was determined that Encanto offers the best potash opportunity for India such that MMTC decided to move forward with a long term supply agreement. This will bring the Company great options, including significant near term revenue and a bright long term future."
"To that end, I would like to personally thank H.E. Nadir Patel the Canadian High Commissioner to India and his Government of Canada staff who provided the invaluable support and guidance that made it possible to bring an agreement of this magnitude to this advanced stage."
"This is an exciting day for the Council and the people of Muskowekwan. Production from the first potash mine on First Nation land is now one important step closer and we welcome both the coming direct job creation, spin off employment opportunities and own source sustainable revenue. The new opportunity of facilitating an immediate supply of potash to India will allow us to accelerate our joint goals with Encanto of enhancing First Nations and Indo Canadian skills training and education in conjunction with preserving our important cultural heritage" stated Muskowekwan First Nation Chief Reginald Bellerose.
SPARK
8 years ago
A Pre-Feasibility Study dated February 28, 2013 referenced below confirms Proven and Probable KCI Reserves on the Muskowekwan Project totalling 162 MMt grading 28%, which supports primary and secondary mining for over 50 years at an assumed annual extraction rate of 2.8 million tonnes.
MMTC, established in 1963, is a Government of India Public Sector Undertaking ("PSU"), India's Largest International Trading Company and one of the two highest foreign exchange earners for the country with a turnover of ~US $10 billion and a current market cap of US $35 billion dollars. MMTC is the first Public Sector Enterprise to be accorded the status of "FIVE STAR EXPORT HOUSE" by the Government of India for long standing contribution to exports and, most importantly, is one of the world's largest buyers of fertilizers. MMTC is owned by the Ministry of Commerce that is also responsible for the Export Credit Guarantee Corporation of India Limited.
The MOU also allows for the immediate supply of potash by Encanto to MMTC, which can be sourced from existing producers while Encanto concurrently continues to develop the Muskowekwan Project. To that effect, Encanto now intends to create a joint trading company in an expanded working relationship with the Muskowekwan First Nation to ensure that the Company can begin to supply potash to satisfy MMTC's needs in the near future as well. The plan is to become an active potash company and to secure substantial near term cash flow; a rarity for a junior potash developer.
In addition, the MOU provides that MMTC will also act as Encanto's worldwide distributor of potash on an exclusive basis, which is expected to provide access to markets and increased pricing well beyond the primary market in India.
SPARK
8 years ago
Following months of continued negotiations subsequent to the signing of the MOU with MMTC previously announced on October 15th, 2015, which outlined the base terms to a long term off-take agreement, Encanto confirms that the MOU is now expanded for an annual supply of a minimum of 2,000,000 metric tonnes of potash (approximately US$600 million at current prices) from the Company's Muskowekwan Project, located in Saskatchewan.
SPARK
12 years ago
Brien Lundin, in the December, 2011, to January, 2012, edition of the Gold Newsletter, says buy Encanto Potash Corp., recently 25 cents. Encanto owns the Muskowekwan potash project in Saskatchewan. To proceed with its plans for the project, the company must complete the treaty land entitlement designation process for it. This requires getting the vote of the Muskowekwan First Nation. On Nov. 26, 2011, 547 Muskowekwans came to the polls, and 80 per cent of them voted in favour of the project. Unfortunately, 547 did not make the quota (half of the Muskowekwan population plus one member) to make the vote valid. The Muskowekwans must vote again in February. Neither Encanto nor Mr. Lundin is worried, because the project does appear to have the support of the locals. In addition, only a simple majority of participating voters will be required for the second vote. Recently, Encanto arranged and completed a $2.97-million private placement with the first nation, at 23 cents. The Muskowekwans now hold 12.94 million shares of Encanto
SPARK
12 years ago
Encanto Potash Corp. Announces $2,000,000 Private Placement Offering Of Flow-through Shares
http://www.digitaljournal.com/pr/529360
Trading Symbol: TSXV EPO
VANCOUVER, Dec. 20, 2011 /CNW/ - Encanto Potash Corp. ("Encanto" or the "Company") (TSXV: EPO) or (OTCQX: ENCTF) is pleased to announce a non brokered private placement offering (the "Offering") of up to 5,000,000 common shares to be issued on a "flow-through" basis at $0.40 per common share (the "Flow-through Shares") for aggregate gross proceeds to the Company of $2,000,000.
The proceeds from the financing will be used to expand the resources on Encanto's potash properties located in southern Saskatchewan through 3D seismic and or drilling programs.
In connection with the Offering, a 5% cash finder's fee of the aggregate gross proceeds arising therefrom will be paid to Industrial Alliance Securities. All securities issued in connection with the Offering will be subject to a hold period of four months from the date of closing. The Offering is subject to the approval of the TSX Venture Exchange.
The Company is also pleased to confirm the appointment of Jamie Schwitzer to the Board of Directors. Mr. Schwitzer serves as the Vice President of Westcap Mgt. Ltd. He holds a Bachelor of Arts and Administration from the University of Regina, Saskatchewan, and maintains a CFA designation.
About Encanto:
Encanto Potash Corp. is a TSX Venture Exchange and OTCQX listed Canadian resource company engaged in the exploration and development of potash properties in the Province of Saskatchewan, Canada, the largest producing region for potash in the world. Encanto's flagship Muskowekwan First Nation property has a recent NI 43-101 resource estimate containing 79.1 million tonnes of KCI grading 29.4% in the Indicated resources category along with 60.5 million tonnes grading 29.7% in the Inferred resource category. These resources, based on the solution mining method, may be increased substantially with the addition of the Treaty Land Entitlement acreage. A Preliminary Economic Assessment (PEA), based solely on the Indicated Resource estimate, was released in August of 2011 and a further release of an expanded NI 43-101 compliant resource estimate is scheduled in 2012.
The technical content of this news release has been reviewed by Ross Moulton, VP of Exploration for Encanto, a qualified person as defined by NI 43-101.
For additional information about Encanto Potash Corp., please visit the Company's website at www.encantopotash.com or review the Company's documents filed on www.sedar.com.
SPARK
12 years ago
Encanto Potash: A Junior in Saskatchewan's Potash Industry
November 24, 2011 @ 9:36 am
By Leia Toovey- Exclusive to Potash Investing News [1] [2]
High-quality, economically mineable potash deposits are geographically concentrated, with Saskatchewan holding about half of world reserves [3] and 35 percent of global capacity.
Until recently, the major potash miners such as Mosaic [4] (NYSE:MOS [5]) and Potash Corporation of Saskatchewan [6](NYSE:POT [7]) have dominated the province's holdings. According to Encanto Potash [8]'s (TSXV:EPO [9]) Gary Deathe an influx of juniors and speculators in Saskatchewan has meant that there are no mineral exploration licenses open for new claims. So, if a company wants to license a claim, the only options are through a merger, acquisition or a purchase of an already claimed license.
The founders of Encanto [8] first became interested in potash in 2008 when the skyrocketing price of potash grabbed their attention. The company decided then to shift its focus from oil [10] and gas [11] to potash exploration. Early in its research, Encanto found out that there were no big land packages available for potash exploration open to claim, therefore, it used its existing relationships with First Nations to gain other First Nations introductions and to form MOU's and joint ventures in potash. Through its partnership with the First Nations, the founders formed Encanto, a new potash exploration company that was able to get land claims in the province, claims that are still open to expansion. The company is currently working with the First Nations to develop these potash resources located on their lands.
Potash production for a junior minor
For a junior, potash production is a very difficult undertaking due to its high capital cost. One estimate puts the cost to develop a conventional 2 million metric ton greenfield mine and mill in Saskatchewan at more than US $4 billion.
For Encanto, Deathe explained that despite being formed in the midst of the financial crisis, the company "has a large, financial backer; however, when the crisis hit [it was] a small company that did not need much capital.” Presently, according to Deathe, “Encanto has been offered financing even when they have not been looking, or really needed it.”
Potash market strong fundamentals
Like so many other potash industry experts have been saying for months, if not years, Deathe was quick to point out the solid economic fundamentals supporting the potash market. "The demand for potash will increase exponentially as the world population grows by an estimated 75 million people a year while potable water and arable land decrease," said Deathe. In addition, the increase in wealth of the emerging economies will put more pressure on output per acre of arable land, because as people see their wealth increase, they demand a more protein rich diet.There is extra incentive to apply potash with high, and stable soft commodity prices.
Deathe also noted that while the other commodities have recently shown some weakness, potash has not. "While the demand forecast for potash is well known, the supply situation is not," added Deathe.
Deathe fully expects Encanto to develop a mine, however, at this point he cannot give a price date of when to expect an operational mine from Encanto. At this time a production decision has not been made, so picking a date of production is a a "crystal ball situation, " says Deathe. He was quick to point out, that Encanto has more incentive than most potash explorers to make it to production, because, their First Nations partners will see the most benefits when they have a producing mine.
SPARK
12 years ago
Encanto Potash Corp. announces First Nations and Metis Fund/Muskowekwan investment in Encanto
http://www.digitaljournal.com/pr/492851
VANCOUVER, Nov. 16, 2011 /CNW/ - Encanto Potash Corp. ("Encanto" or the "Company") (TSXV:EPO) (OTCQX:ENCTF) is pleased to announce that the Muskowekwan First Nation ("MFN") through its development corporation Muskowekwan Resources Limited ("MRL") will be making up to a $3,000,000 Cdn equity investment into the Company. The First Nations and Métis Fund ("FNMF" see www.fnmf.ca) has approved and will be providing the financing to MRL, subject to the completion of the requisite legal documentation.
The equity investment will be effected by a non-brokered private placement of up to 13,043,479 Units (the "Units") at $0.23 per Unit to raise gross proceeds of approximately $3,000,000. Each Unit will consist of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one common share of the Company at an exercise price of $0.35 per common share for a period of three years from the date of closing. The private placement will be subject to TSX Venture Exchange approval and all securities issued in connection with the private placement will be subject to a four month hold period.
The FNMF is the first Aboriginal fund in Canada to make investments in Saskatchewan-based First Nations and Métis businesses. The mandate of the FNMF is to strengthen Aboriginal participation in Saskatchewan's diverse economy and to help create economic development opportunities and jobs for First Nations and Métis people.
The fund is administered and operated by First Nations and Métis Fund Inc., a corporation wholly owned by Crown Investments Corporation (CIC), a financial holding company for Saskatchewan's commercial Crown corporations. Westcap Mgt. Ltd. ("WML") provides professional fund management services and makes recommendations to FNMF on potential transactions. WML, Saskatchewan's largest venture capital and private equity fund manager with over $500 million under management, provides a wide range of investment banking activities to a diversified client base worldwide including institutions, retail investors, governments, and high net worth individuals.
MFN Chief Reginald Bellerose explains: "We approached the Company's management with the idea of MFN, through MRL making a direct investment into Encanto. As a First Nation, we're not only looking forward to the employment, royalties and education opportunities that the joint venture with Encanto offers our people, but feel that at this stage in Encanto's development, the direct investment offers the opportunity to strengthen the strategic partnership between MRL and Encanto as well as the opportunity for appreciation as Encanto moves toward building a solution mine on our lands."
Encanto President and CEO Jim Walchuck comments: "We're extremely pleased to welcome the MFN, through MRL, with a direct investment in the Company. I believe that this strategic investment by the MFN sends a strong reaffirmation of our joint commitment to see this great project through to production."
The technical content of this news release has been reviewed by Ross Moulton, VP of Exploration for Encanto, a qualified person as defined by NI 43-101.
About Encanto:
Encanto Potash Corp. is a TSX Venture Exchange and OTCQX listed Canadian resource company engaged in the exploration and development of potash properties in the Province of Saskatchewan, Canada, the largest producing region for potash in the world. The flagship Muskowekwan First Nation property has a recent NI 43-101 resource estimate containing 79.1 million tonnes of KCI grading 29.4% in the Indicated resources category along with 60.5 million tonnes grading 29.7% in the Inferred resource category (see the Company's news release dated March 18, 2011). These resources, based on the solution mining method, have the potential to substantially increase by adding additional acreage through a Treaty Land Entitlement process, currently underway. A Preliminary Economic Assessment (PEA), based solely on the Indicated Resource estimate, was released in August of 2011 (see the Company's news release of August 18, 2011) and a further release of an expanded resource estimate is scheduled in Q1 of 2012.
SPARK
12 years ago
Some of the Biggest Names in Potash Are Now Lining Up To Speak With Encanto, Following the Completion of Prefeasibility Work at Muskowekwan
By Chris Cann October 19, 2011
http://www.goldeditor.com/wp-content/uploads/editorpdfsimages/11-10-19-EPO-Minesite-Some-Of-The-Biggest-Names-In-Potash-Are-Now-Lining-Up-To-Speak-With-Encanto1.pdf
A place on the Encanto Potash dance card is probably pretty hard to come by these days. The Toronto-listed potash developer recently turned its plans for a massive potash operation at the Muskowekwan property from big talk into a very real possibility.
And so, as is usually the case when a junior is faced with a large-scale development with capital expenditure numbers in the billions of dollars, it’s time to start courting wealthy suitors.
Encanto released the results of pre-feasibility work at Muskowekwan in August. The study looked at two different kinds of operation – conventional mining and solution mining. For those not familiar with the latter, it involves pumping hot liquid into the ground to melt the potash into a solution which is then pumped back to the surface.
Besides the benefit of safety in the solution technique – there is no need for an underground workforce – the overall numbers also look impressive when set against a conventional operation. The required up-front capital for a 2.5 million tonnes per year solution mine comes in at just over US$2.4 billion, while a conventional mine would cost more than US$2.7 billion for a smaller two million tonnes per year operation. What’s more, the mine life runs out to a possible 56 years under the solution mining scenario, and only 39 years using the conventional method. The only win for conventional mining is that the solution option extracts the potash at a lower grade, which pushes the operating costs up slightly. But the outcome is clear. The net asset value using the solution method amounted to US$2.86 billion, while the internal rate of return came in at 26.6 per cent. The net asset value using a conventional mining method is somewhat less, at US$2.35 billion, while conventional mining would generate a lower internal rate of return too. So, a solution mine it will be. Those extraordinary numbers offer some idea of the scale of this project and an insight as to why there is so much interest. But the story doesn’t stop there. Encanto has recently completed drilling over an area adjacent to Muskowekwan land roughly equal to it in size. According to business development consultant Gary Deathe, who has been working closely with Encanto, this is likely to double the resource base at the project. Assays are due back in the not-too-distant-future and Deathe expects an updated resource to be published early in the New Year. The additional acreage is subject to a Treaty Land Entitlement vote that was to take place in late November but this is thought to be a formality. Precisely how a doubling of resources will change the parameters of the operation will depend largely who Encanto ends up bringing into the project. But there are two clear options. One is to increase the throughput and production significantly. The second is simply to extend the mine life out by another 50 years. The fact that Muskowekwan is so flexible gives Encanto plenty of room for manoeuvre in its negotiations.
Deathe would not be drawn on speculation as to who the likely partner will be, but he did confirm the suspicions that
are already out in the market - that interest is intense. The project is of a size and scale that the suitors might come
in all shapes and forms. Encanto’s future partner could be a government body attached to India or China. Or it could
be a corporate buyer like BHP Billiton.
But whoever it is, Deathe said that the project will definitely be developed and won’t simply serve to fatten someone’s
resource base. “The only caveat for us is the partner has to put it into production, not into reserves”, he said. “The
First Nations’ main payout is on production and they’re scheduled to make about C$30 million a year or more on
production. That is our number one goal.”
Deathe doesn’t expect the partnership negotiations to be a drawn out process, given that there are several frontrunners
all keen to lock something in ahead of their competitors. For its part, Encanto has no reason to put the brakes
on.
With that in mind, it’s easy to speculate that full scale feasibility work and a partnership agreement might be
announced in the first half of next year. From that point on, it will take about 30 months to build the operation and
get it started. Add in to that mix a potash price that is on the rise, even as other commodity prices drop away, and
the potential of other projects in the portfolio to add further value, and it seems clear that Encanto is set for a very
interesting 2012.
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