BY BRUCE JOHNSTONE, THE LEADER-POST JUNE 8, 2010

Chinese investors are keenly interested in acquiring potash production in Saskatchewan and are looking specifically at two Vancouver-based junior companies with potash properties in the Regina area.

Western Potash Corp. and Potash One, both of which have extensive holdings in the Regina area, have been in discussions with several Chinese companies with regard to possible investments or acquisition, according to a Vancouver-based business journalist.

Marc Davis, managing editor of BNW News Wire, an online business news service, says several delegations of Chinese investors have met with Western Potash and Potash One officials in recent weeks.

“Western Potash have been made offers already by the Chinese,” said Davis, a former Vancouver Stock Exchange floor trader who also worked for Dow Jones and the CBC.

Davis said it’s no secret that the Chinese government wants to expand its own potash production and Saskatchewan is the best place to do that.

“There’s quite a bit of competition between the Chinese themselves to lock in future potash supplies,” said Davis in an interview Monday. “There’s been at least a couple of Chinese mining companies, as well what’s known as state-owned enterprises.”

In fact, the recent impasse between the Chinese and Canpotex, the offshore marketing agency for Saskatchewan’s three big potash producers — PotashCorp of Saskatchewan, Mosaic Company and Agrium — has accelerated Chinese interest in acquiring Saskatchewan potash production.

“The Chinese are pretty frustrated,” Davis said. “The Chinese took over a year before they finally signed a long-term contract with Canpotex … So it’s implicit that they’re trying to lock in their own Canadian supplies.”

Roy Schneider, of Saskatchewan Energy and Resources, admitted he wasn’t aware of any discussions, but the possibility that the Chinese may be looking to buy potash production in Saskatchewan isn’t terribly surprising.

“Western Potash is one of a number of companies that are working towards developing a new greenfield mine,” Schneider said. “Most of them are scratching around to find capital. These aren’t cheap undertakings, so it wouldn’t surprise me that they would have discussions of this kind.”

Western Potash, which owns the Milestone property in southern Saskatchewan, did an independent estimate of its potash resource.

The report, released last week, indicated 41 million tonnes of measured resource (containing potash), 133 million tonnes of indicated resource and 560 million tonnes of inferred resource.

Patricio Varas, president and CEO of Western Potash, said the company was “pleased with the report, which demonstrates that our resource can support annual potash production rate of three million tonnes for well over 40 years.”

The Milestone property, which encompasses about 500 square kilometres, is located about 30 km southeast of Regina and 60 km southeast of the Mosaic Belle Plaine solution potash mine.

Potash One, another Vancouver-based junior mining company, is developing the Legacy Project, which reportedly has 29 million tonnes of recoverable resource, 222 million tonnes of indicated mineral resource, and 853 million tonnes of inferred mineral resource.

The Legacy Project is adjacent to the Mosaic Belle Plaine solution mine, the largest producing solution potash mine in the world.

Read more: http://www.leaderpost.com/business/Chinese+show+interest/3125206/story.html#ixzz11Pi57DZA

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