Friedland gets friendly with Potash One

The astronomical cost of bringing a potash mine into production will keep many juniors from developing their projects but as Potash One (KCL-T) finishes up two prefeasibility studies on its Legacy project, the company has high hopes that making a key connection with the infamous financier and miner Robert Friedland will give the company an edge.

Friedland, who heads up Ivanhoe Mines (IVN-T, IVN-Q) and Ivanhoe Energy (IE-T, IVAN-Q), has agreed to become chairman of the Potash One board and will guide the company in choosing strategic partners to bankroll its projects.

In addition, Friedland’s Singapore-based venture capital company, Ivanhoe Capital, will work under a non-exclusive contract to introduce Asia-based investors to Potash One. Those investors could be sovereign wealth funds or state-owned enterprises.

Calling Friedland “One of the world’s most influential mining financiers and visionaries,” Potash One president and CEO, Paul Matysek, said Friedland’s experience in the international capital markets will help the company fast track development for its Legacy project, a 394-sq. km parcel of land located 80 km northwest of Regina, Sask. Experts have estimated the project will cost about $1 billion to develop.

Friedland reportedly reviewed the industry and found that the Legacy project was of importance to the industry.

Potash One plans to use in-situ recovery technology to produce potash, an important fertilizer ingredient.

In June, Potash One expects to release two feasibility studies on Legacy; which is located right next to Mosaic’s Belle Plaine mine, the largest potash solution mine in the world.

Solution mining is when water is used to dissolve a mineral from a geological ore zone into solution through directional or vertical boreholes ore abandoned underground mine workings. The solution is pumped to where the potash is crystallized and purified into the finished product. Solution mines are cheaper to build than conventional potash mines which require a shaft, making Legacy that much more attractive to investors.

One feasibility study will look at building a 2.5 million tonne-per-year operation while another will look at a scaled-down 800,000 tonne-per-year version.

While the company expects to put out a resource update by the end of the month, Legacy’s current resources stand at 36.8 million tonnes of potassium oxide indicated and 360.4 million tonnes of potassium under the inferred category. (Potash is potassium chloride)

Potash One also has several conventional exploration projects through a takeover of Potash North Resources earlier this year (Friedland and Lukas Lundin were major shareholders). The deal topped up Potash One’s treasury to $50 million. The company expects to spend about $15 million on Legacy this year, as it will start a feasibility study once the prefeasibility is complete. Little work is planned for the company’s other properties.