Western Resources Corp., Vancouver, said on Feb. 16 that it has signed a subscription agreement with Vantage Chance Ltd. in which Vantage has committed to make a strategic equity investment of C$80 million in Western Potash Holdings Corp. (WPHC), a newly-formed company which, upon completion of a reorganization, will own 100 percent of junior company Western Potash Corp. and its Milestone Potash Project in Saskatchewan. Vantage is a private investment company registered in the British Virgin Islands.
“The last two years have been very challenging for Western, as we attempted to complete Phase I of our Milestone Potash Project, with limited access to capital due to a variety of factors, including COVID-19,” said Bill Xue, Western’s President and CEO. “We expect that the investment by Vantage will allow us to complete the project and allow it to recognize its full potential, including use of the innovative technology we have developed alongside.
“When successfully completed, we expect the project will significantly change potash mining in Canada, as the project is planned to be the first potash mine in the world to leave no salt tailings at surface level, reduce water consumption by up to 50 percent, and significantly improve energy efficiency,” he continued. “We look forward to working closely with our new partner as we continue to develop and expand Milestone.”
Western Potash has been around since at least 2008, when it completed an initial public offering and was eyeing a possible potash mine in Manitoba (GM May 12, 2008). However, it soon was granted a potash permit in Saskatchewan (GM June 9, 2008) and eventually announced the Milestone Project.
As of May 2020, Western reported that Milestone Phase 1 was already 83 percent complete in the overall status, and had completed engineering, procurement, and construction of infrastructure, crystallization pond, electrical distribution systems, brine heating, and pumping systems to support operation of commercial solution mining.
In 2019, Western reported that Archer Daniels Midland Co. (ADM) had entered into a binding offtake agreement for 100 percent of the potash production (146,000 mt/y) from Milestone Phase 1 (GM Sept. 27, 2019).
In the current deal, WPHC was incorporated under British Columbia’s Business Corporations Act on Jan. 13, 2022, by Western for the purpose of structuring the transaction. Upon approval by Western’s shareholders, and prior to the completion of the transactions contemplated in the agreement, Western will transfer its 100 percent equity interest in WPC (134,017,653 common shares) to WPHC in exchange for an equivalent number of WPHC common shares, which will represent 100 percent of the issued and outstanding shares of WPHC (the reorganization).
Under the agreement, Vantage will invest C$80 million in WPHC and receive in exchange an aggregate of 157,325,071 WPHC common shares. As a result, Vantage will hold 54 percent of the issued and outstanding common shares of WPHC. Western will hold the remaining 46 percent of the issued and outstanding WPHC common shares.
Completion of the investment transactions is subject to customary closing conditions, including approval by Western’s shareholders at Western’s upcoming Annual and Special Shareholders Meeting scheduled for March 28, 2022, and obtaining certain regulatory approvals. Closing is expected to occur on or around May 31, 2022. The investment proceeds raised from the transaction will be used in the completion of the Milestone Potash Project construction.