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Potash Corp. of Saskatchewan is seeking an SEC injunction to halt BHP Billiton’s efforts to acquire the Canadian potash company.
By Leia Michele Toovey- Exclusive to Potash Investing News
BHP Billiton has been exploring all necessary avenues when it comes to the potential buy-out of Potash Corp. The Anglo-American mining giant has until Nov 18th to appeal to Potash Corp’s shareholders. BHP’s biggest hurdle may very well be convincing politicians and regulators about the merits of the deal, especially amid concern that the takeover will upset the status quo in Potash Corp’s home province of Saskatchewan. “This is going to come down to the government of Saskatchewan one way or another,” said a leading Canadian investment banker. “And it will also come down to perceptions of history and the sense that Canada has given up stakes in the past in companies that today would also have $40 billion-plus market capitalizations.”
The politics are not lost on BHP chief executive Marius Kloppers, who wore the green jersey of the Saskatchewan Roughriders football team when he visited the province on Monday, promising a head-office presence and more mining jobs. BHP has also made a filing to the Committee on Foreign Investment in the United States; a warning to the Chinese no doubt that Washington is also going to look at this deal.
Meanwhile, state-owned Chinese fertilizer distributor Sinochem has hired Deutsche Bank and Citigroup to advise it on an acquisition of a stake in Potash Corp. of Saskatchewan. The two investment banks have been asked to analyze how Sinochem could impede BHP’s $39 billion bid for Potash. In addition, to prevent against a conflict of interest, Citigroup has asked to step down as joint corporate broker for BHP in the Potash bid, a role that requires it to liaise with BHP investors and muster support for the deal. Sinochem has also asked for the advice of a third bank, rumored to be the Industrial and Commercial Bank of China.
Company News
Western Potash Corp (TSX: WPX) has received a positive scoping study from AMEC Americas Limited on its wholly-owned Milestone property in southern Saskatchewan. The Milestone property hosts a potash resource that consists of 41 million tonnes of measured resource (contained KCl), 133 million tonnes of indicated resource, and 560 million tonnes of inferred resource. The scoping study was based on, and supported by, the NI43-101 Technical Report. This study confirms that the Milestone resource shows significant positive economics and that the asset is of sufficient size and grade to support solution mining for more than forty years at a production rate of 2.5Mt/yr. The annual production rate can be expanded to a higher annual production rate, achievable through a higher level of capital expenditure. The scoping study recommends immediate commencement of a pre-feasibility study. Management is now studying the possibility of consolidating the pre- and final feasibility processes, and producing and publishing only a final feasibility suitable for reaching a production decision and for attracting project debt finance.
Allana Potash Corp (TSXV:AAA) announced this week that drill hole DK-10-04, located in the center of the evaporite basin intersected a thick horizon (24.8 meters) of potash mineralization at the depth of 700 meters. The drill hole returned 17.9 % KCl over 1.3 meters, and 10.4 meters of 10.5 % KCl, within an interval of 24.8 meters of 8 % KCl. The drill hole was located in an unexplored part of the evaporite basin, an area which is almost 100 square km and has seen virtually no exploration work. This drill hole is significant because it provides encouraging results relating to the extension of mineralization in the area. The zone remains open in all directions and two drills are now exploring the strike extensions south and up-dip extensions southwest of hole 04. Several additional prospective zones of potash mineralization in hole DK-10-04, identified during detailed logging, are currently being sampled and shipped for analysis. Select samples are undergoing XRD analysis to determine the potash and salt mineralogy.