Encanto completes purchase of Raytec potash assets



    
    FUNDING OF $6.5 MILLION CONCURRENT WITH PURCHASE

    Trading Symbol: TSXV  EPO.V
    

    VANCOUVER, Aug. 12 /CNW/ - Encanto Potash Corp. ("Encanto" or the
"Company") is pleased to announce that it has closed its previously announced
transactions with Raytec Metals Corp. ("Raytec").
    Raytec has transferred all of its interests in its potash properties in
Saskatchewan to Encanto's operating subsidiary in exchange for 19,846,525
common shares of Encanto, at a deemed total value of $0.25 per share
($4,961,631 in total). One of the Raytec properties, Permit KP 441, which is
part of the Spar Property, is the subject of a technical report (the "Report")
prepared by Agapito Associates, Inc., dated July 29, 2009 the authors of which
are Dr. Michael Hardy, P.Eng, Dr. Douglas F. Hambley, P.Eng, and Joseph E.
Crawford, L.P.G. The Report will be filed on SEDAR concurrently with this news
release. The following is a summary of the data in Tables 4 and 5 of the
Report outlining the resources in KP 441:

    
                         Mineral Resource in KP 441

    -------------------------------------------------------------------------

                        (1)Average       Average
              Total        Grade       Carnallite      Average     (2)Recov-
            Thickness       over          over       Insolubles       erable
               over        Potash        Potash          over          K(2)O
              Potash        Zone          Zone          Potash       Resource
    Member   Zone (m)    (% K(2)O)     (% MgCl(2))     Zone (%)        (Mt)

    -------------------------------------------------------------------------
                          Inferred Mineral Resource
    -------------------------------------------------------------------------
    Upper
     Belle
     Plaine     2.98         14.54          0.28          7.90          4.43
    Lower
     Belle
     Plaine     1.34         30.45          0.23          1.89          7.05
    Total                    24.31          0.25          4.21         11.48
    -------------------------------------------------------------------------
                         Indicated Mineral Resource
    -------------------------------------------------------------------------
    Lower
     Patience
     Lake       3.06         31.02          0.24          3.87          5.09
    Upper
     Belle
     Plaine     2.97         14.73          0.28          7.92          3.44
    Lower
     Belle
     Plaine     1.34         30.16          0.22          1.90          3.51
    Total                    26.12          0.25          4.45         12.04
    -------------------------------------------------------------------------
    (1) Average grade calculated using re-assayed data where available and
        historic assay data elsewhere
    (2) Recoverable in-place K(2)O tonnes assuming a density of
        2.08 tonnes/m(3) and an overall recovery of 36% (10% geologic anomaly
        and 40% recovery)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Raytec will also incur $6,500,000 in expenditures on Encanto's existing
potash properties and Raytec's potash properties (collectively, the "Potash
Properties") by December 31, 2009, to earn a 51% interest in the Potash
Properties. Encanto will have the option to repurchase the 51% Raytec interest
in the Potash Properties for 26,000,000 common shares of Encanto. If this
Option is exercised, Raytec will own an aggregate of up to 45,846,525 shares
of Encanto which will be equal to an estimated 28.57% of the Company's issued
shares based on its current issued share capital.
    The agreements between the parties contain certain terms including that
for so long as Raytec owns or has the right to own not less than 10% of the
issued shares of the Company:

    
    (i)    Raytec will have the right to nominate up to two directors to the
           board of directors of the Company proportional to its interest in
           the Company; and

    (ii)   Raytec will have a pre-emptive right to participate in future
           financings of the Company so as to preserve its percentage
           interest in the Company.
    

    Accordingly, today Messrs. Brian G. Thurston and Wayne J. Roberts have
been appointed to the Board of Directors of Encanto.
    Mr. Thurston, HBSc (Geology) is a mining executive with over 16 years of
exploration management and operational experience working on projects in North
and South America. He is President, CEO and director of Raytec. Previously, he
formed part of the initial geological exploration team that evaluated the land
holdings of Aurelian Resources Inc. in Ecuador in 2002, and held the position
of Country Manager for Aurelian Ecuador S.A. de C.V. in 2004 and 2005.
    Wayne J. Roberts, P Geo., has 40 years experience in the mineral
exploration sector, holding positions of both directorships and VP exploration
for several junior public listed issuers. Mr. Roberts has had a successful
track record of building mineral inventory for companies and participated in
the discovery of the Marigold mine in Nevada and one of Canada's largest zinc
deposits, the Cirque deposit in British Columbia. He is a director of Raytec.
    Mr. James Walchuck, President of Encanto Potash states, "We intend to
rapidly develop Encanto into the leading junior potash developer in
Saskatchewan. The addition of the Raytec properties is a giant step towards
that goal as I am very excited about the developmental potential on the Spar
property. Furthermore, the funds that Raytec has invested will enable us to
immediately advance our highly prospective First Nations' lands".
    A finder's fee of 500,000 shares was paid to an arm's length party and
Endeavour Financial Ltd. received a cash fee in respect of the transaction.
    Ross Moulton, P.Geol., Encanto's Vice President, Exploration and a
qualified person under National Instrument 43-101, has approved the technical
content of this news release.

    About Encanto:

    Encanto Potash Corp. is a TSX Venture Exchange-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 has agreements with seven First Nations Peoples to assist
them in developing potash resources on their lands, which are located within a
radius of about 80 kilometres, and cover an aggregate area of over 58,000
hectares in South-Eastern Saskatchewan. In addition, Raytec currently holds
over 72,800 hectares of potash permits in Saskatchewan.
    To find out more about Encanto Potash Corp., please visit the company
website at www.encantopotash.com or review the documents filed on
www.sedar.com.

    
    ON BEHALF OF THE BOARD OF DIRECTORS

           "James Walchuck"
    Per:   -----------------
           James Walchuck
           President and CEO


    NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS
    THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE
    




For further information:

For further information: James Walchuck, President and CEO, Tel: (604)
683-2402; Keith Schaefer, Vanguard Shareholder Solutions, Tel: (604) 608-0824,
Toll Free: 1-866-918-0824


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