The company has entered a joint venture agreement with Kalium Lakes to fast track the Carnegie project in Australia.
Junior mining company BC Iron (ASX:BCI) has added potash to its portfolio after entering a joint venture agreement with Kalium Lakes (ASK:KLL) on Wednesday (March 1).
According to a press release, BC Iron will be able to earn up to a 50-percent stake in Kalium’s Carnegie potash project in Western Australia by funding exploration and development costs over a number of stages up to the completion of a feasibility study.
The West Australian notes that BC Iron will spend up to AU$10.5 million on funding, while Kalium Lakes will be the manager of the joint venture.
Alwyn Vorster, BC Iron’s managing director, said that through the agreement the company has “gained exposure” to a highly prospective project with “long term dynamics.”
“Becoming involved in an agricultural commodity has been a clearly articulated objective of BC Iron,” he continued. “This joint venture agreement with an expert potash company in Kalium provides us with the required exposure at low risk.”
Brett Hazelden, managing director of Kalium Lakes, echoed Vorster’s sentiment.
“This is an excellent outcome for Kalium,” he said. “It delivers funding from a stronger partner in BC Iron to advance Carnegie.”
He added, “[t]his agreement can potentially take Carnegie through to completion of a feasibility study without any significant expenditure contribution by Kalium, while providing a range of future growth options for our company.”
It’s worth noting that the potash sector and the potash price struggled in 2016. At the end of the year, the price was down 16 percent, largely due to oversupply in the market.
That said, many experts are cautiously optimistic about potash’s prospects in 2017. Indeed, the Economic Calendar said recently that the long-term “bull case for potash is hard to refute,” though it remains uncertain as to whether the fertilizer will reach its former highs.
At close of day Wednesday, BC Iron’s share price was up 40.63 percent year-to-date at AU$0.225. Meanwhile, Kalium Lakes’ share price was up 45.45 percent from the start of 2017 at AU$0.32.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.