Western Potash Corp., Vancouver, said on May 17 that it has entered into a cost-reimbursable construction services agreement with Stuart Olson Prairie Construction Inc., a wholly-owned subsidiary of Ontario-based Bird Construction Inc., as general contractor to continue the bulk of the remaining construction work for the Milestone Phase I Project in Saskatchewan. Project construction was put on hold in May 2020, when the process plant was approximately 50% complete.
The agreement resolves all prior outstanding issues between Western and Bird and establishes a new time- and material-based contract governing completion of the remaining project work. The scope of work will be focused on process plant section completion, including certain steel and pipework, completion of major equipment installation, electrical and control system completion, building, and site work.
Bird will begin mobilization in early June, with an anticipated maximum workforce of around 100 people expected at the site. Construction is expected to be completed by second-quarter 2023, followed by a three-month general commissioning, with production to start up in third-quarter 2023.
Pursuant to the agreement and in exchange for the cancellation of amounts owing to Bird, Western has made a cash payment of $14 million to Bird and will cause the company to issue 10,000,000 warrants to Bird as part of the settlement for debt previously owed to Bird. This will allow Bird, after exercise, to acquire up to 10,000,000 common shares of the company, which as of the date of the release represents 5.34% of the company’s issued and outstanding common shares, and will represent up to 5.07% of the company’s issued and outstanding common shares on a post-transaction basis.
Western also announced that Alex Watson and Randy Lange have both joined Western and will lead its construction management team as, respectively, Project Sponsor and site Construction Manager.
In other news, Western reported on May 16 that it has closed the first tranche, in the amount of C$45 million, of its loan transaction with Appian Capital Advisory LLP, the terms of which were previously announced in April (GM April 29, p. 29). The first tranche will be used for the immediate restart of Milestone construction and continue with its optimized mining development plan. The funding will also be applied in the settlement of all outstanding legal claims against Western and the removal of all liens related to those claims.