TSX: WPX FSE: AHE
VANCOUVER, Jan. 11, 2016 /CNW/ - Western Potash Corp. (WPX: TSX) (FSE: AHE) (the "Western", "the Company") is pleased to provide the following update to shareholders.
2015 was a transformational year for Western. Shareholders would be aware of the negative tone of much of the news in the potash industry, highlighted by a declining price for the commodity and signs of an over supplied market. Investors have now experienced several years of difficult markets for most companies in the mining industry with those in the potash and other fertilizer businesses being no exception. It is not news that one of the major challenges has been the scarcity of capital for the development of projects, where only the most exceptional projects have attracted significant amounts of capital. In the face of this challenging environment and following a detailed due diligence process, Western was pleased to announce a strategic investment of CAD $80 Million from the Chinese private equity firm Tairui Innovation Capital Management Ltd., closing in September of 2015. Along with the cash injection, Western was pleased to receive the additions at the board level of Geoffrey Chang in the position of Chairman of the Board, and Bill Xue as a Director. Both individuals bring significant experience in the financing, development and operation of resource projects. For Western, the financing represents confirmation of the extraordinary attributes of the Milestone Potash Project in a financing environment where the race for development funding is highly competitive.
Western made the decision to re-scope the Milestone Project in 2015 with the aim of investigating alternative methods of mining the deposit. While traditional solution mining methods in Saskatchewan have been successful for many years, the Company understood that to follow such a path would require a multi-billion dollar project finance package. With the belief that a scalable approach was required, the Company re-engaged its engineering consultants and delivered the "Scoping Study for a Pilot Plant Scale Selective Solution Mining Operation" in July of 2015. A scalable model will provide the Company with the ability to develop the project in stages, starting with the pilot plant but without the need for an initial capital requirement in the billions. Project economics are attractive in the current potash price environment with initial start-up capital estimated to be in the range of the CAD $80 Million invested by Tairui. Western management and its engineers made use of the decades of potash mining expertise available in Saskatchewan and considered technological advancements currently in use in potash and salt mining operations around the globe including the use of horizontal drilling. Predominantly used in the oil and gas industry, horizontal drilling is used effectively to mine potash in the Western United States. Equally important for the Company is the reduction in capital intensity per tonne of potash production at Milestone. In a low price environment, the study outlines a low operating cost project on an industry wide relative basis with comparatively attractive capital requirement levels versus other potash projects as the Milestone pilot plant scales up from a projected annual production of 146,000 tonnes. Solution mining operations provide the advantage of lower capital expenditure requirements compared to typical conventional potash mines.
Having confirmed Environmental Assessment Approval, the Company is currently engaged in a series of technical meetings with consulting engineers with the aim of being construction ready in 2016.
Western registered a project company, the Milestone Potash Corp. in Saskatchewan as a wholly owned subsidiary of Western Potash Corp. as the company transitions its focus to construction of the pilot plant project.
In addition to ongoing community engagement initiatives, in November of last year the Company met with representatives of the Saskatchewan Ministry of the Economy in Regina. Discussions were focused around an update of Western's progress, as well as job creation in Saskatchewan and ongoing adjustments to taxation for potash production in the province.
During the latter half of the year, a settlement was reached with UBS Securities Canada Inc. in the matter of a dispute over financial advisory fees resulting from the engagement of UBS in 2013.
The Company instituted a Normal Course Issuer Bid share buyback program in late October of 2015. Management feels that overall market dynamics as well as potash industry fundamentals have contributed to downward pressure in the share price of Western Potash. Meanwhile the positive Company fundamentals are not reflected in the price of the shares. To date a total of 1,353,000 shares have been purchased at an average cost of $0.21 per share. The shares are currently held in the Company's brokerage account.
Since inception and through the recent transformation, Western senior management has remained fundamentally intact. This continuity helps maintain a knowledge base and level of consistency and familiarity with the project, the stakeholders and the province of Saskatchewan. The Company prides itself on this level of commitment to its people and its shareholders.
Shareholders are invited to visit the Company website at www.westernpotash.com for more information on the Milestone project, newly posted photographs, as well as, more information on the Company's major shareholders.
ON BEHALF OF THE BOARD OF DIRECTORS
Cautions Regarding Forward-Looking Statements
Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the filing and results of the Technical Report. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information that is set out herein, except in accordance with applicable securities laws.
SOURCE Western Potash Corp.
For further information: For more information on the contents of this release please contact Angela Aydon, Corporate Communications Manager, at 604-689-9378.