Junior producer Western Potash Corp., Vancouver, said on Sept. 26 it has entered into a binding offtake agreement with Archer Daniels Midland Co. (ADM) for 100 percent of the potash production (146,000 mt/y) from the Milestone Phase I plant in Saskatchewan. Western Potash, a unit of Western Resources Corp., Vancouver, began drilling on the project in July (GM July 19, p. 1), and expects production to begin in late 2020.
“We are very pleased with the progress achieved on the Milestone Project to-date,” said Western Potash President and CEO Fritz Venter. “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. The recent successful construction, drilling, and start of operations to fill the crystal pond proves the project is on track to start production by late 2020. We look forward to the continued safe, on-budget and schedule completion of the project.”
Key terms of the offtake agreement include:
- Binding commitment to take 100 percent of the produced potash from the Phase I project;
- Free-on-board (FOB) mine site and transport from the site by truck to the nearby Port Lajord Terminal in Saskatchewan, only 13 kilometers from the project site;
- A structure to incentivize the best final sale price for both parties.
ADM has been expanding its fertilizer presence in Canada in recent years, most recently inking a fertilizer handling and storage agreement (5,000 mt warehouse) at Yorkton, Sask. (GM June 22, 2018). In 2017 it signed a long-term agreement at Port Lajord to lease a 20,000 mt warehouse (GM June 23, 2017).
In the meantime, Western Potash said it has successfully completed drilling of three vertical production wells that intersected high grade potash in all wells, according to the downhole logs. The project has also drilled and connected first injection wells, having achieved on-target intersection of the potash bed. It said this is the first intentionally connected potash well drilled in Saskatchewan, and is a major achievement in the development of the horizontal selective solution mining technique.
Construction continues to advance in line with the project schedule. Extensive progress has been achieved, including construction of building foundations, arrival of equipment and materials, and planning for building construction before the end of the year. The project goal remains to complete Phase I construction in mid-2020 with potash production to commence later next year.
Operation of the Western Potash water well commenced on Aug. 30 and began filling the crystallization pond. This water well utilizes brackish ground water from approximately 850m below the surface that is not suitable for either potable or agricultural use. The pond will be gradually filled over the next three months. The cold mining to saturate the crystallization pond with salt will commence by October 2019, followed by hot mining of potash in early 2020.