Potash start-up company Athabasca Potash Inc. (API), Saskatoon, on July 16, provided an update on its discussions with third parties regarding a potential strategic alliance to develop the company’s Burr Project in Saskatchewan as a low cost conventional potash mine.
The company has established a special committee consisting of Messrs. John King Burns (chair), Leo Bingleman, CA and Ms. Dawn Zhou. The committee will consider and evaluate proposals resulting from these discussions. The company has retained CIBC World Markets and Genuity Capital Markets as financial advisors in connection with these discussions.
API said to date it has broadly solicited expressions of interest from qualified third parties in respect to a strategic alliance to develop the project and has held in-depth discussions and meetings with many of these parties to advance a possible alliance. It has executed confidentiality agreements with a number of these parties and provided them with access to an extensive electronic data room and the opportunity to conduct a thorough due diligence process on the project.
In response to initial indications of interest received from these parties, the company has expanded the scope of transactions it is considering, from joint ventures and other forms of direct participation in the development and financing of the project, to include potential mergers or potential acquisitions of all or a portion of the company or its business.
API said it will carefully consider its discussions with various parties, and the board of directors will make its recommendations to shareholders in due course upon receipt of a binding offer.
“We are committed to delivering value to our shareholders in the most efficient way possible,” said Burns, committee chairman. “With the definition of a measured and indicated mineral resource of 425 million mt at the Burr Project and the advancement of work on our upcoming pre-feasibility study, API believes it is well-positioned to actively seek out a strategic alliance with an established, global industry player to support development of the Burr Project. During our efforts to advance an alliance, however, it also became clear that we might need to consider a broader range of transactional structures that were being presented to us and which might provide value to our shareholders.”
“API has a number of potential opportunities arising during its search for a potential strategic alliance which need to be advanced. I am fully committed to working in the best interest of API and its shareholders,” said Ms. Zhou, the founder of API and architect of the Burr Project, and a director and the former president and CEO of the company.
The company cautions shareholders that there is no assurance whether the company will receive a definitive proposal with respect to a potential transaction or strategic alliance as a result of this initiative. Also, even if a definitive proposal is received, there is no assurance that the special committee or API’s board will recommend such a proposal or that such a proposal will be implemented.
The company anticipates it will make no further announcements regarding its strategic review process unless and until a definitive agreement is reached, or a determination is made not to pursue a transaction or a strategic alliance.
In conjunction with its strategic review process, the company also continues to advance its search for a full-time CEO with senior executive experience. API has retained a professional executive search firm to assist in this search and several prospective candidates have been identified to date.
The targeted mining members of the project, including both the Upper Patience Lake (UPL) and Lower Patience Lake (LPL) Sub-Members, contain Measured Mineral Resources of 125,800,000 mt at a grade of 21.27 percent potassium oxide (K2O), Indicated Mineral Resources of
299,000,000 mt at a grade of 23.07 percent K2O, and Inferred Mineral Resources of 186,900,000 mt at a grade of 23.55 percent K2O. Mineral resources do not have demonstrated economic viability.