VANCOUVER — With potash fever continuing unabated, news of a potash resource estimate recently catapulted Raytec Metals’ (RAY-V, RAYMF-O) share price up 128%.
The resource at the 356-sq.-km KP441 property, about 200 km east of Regina, Sask., sent Raytec’s stock to $1.82 from 80 over two days. The company followed the resource up by announcing a $17-million private placement.
Agapito Associates based the estimate on two historic drill holes 3.2 km apart, combining new and old assay results to arrive at 148 million indicated tonnes grading 23.4% K2O, and 229 million inferred tonnes grading 20.4% K2O.
Based on an overall recovery of 36%, Raytec says that KP441 hosts 12 million recoverable tonnes of K2O. The report relied on the structure of nearby deposits at the Potash Belle Plain and Mosaic potash mines to arrive at the size of the resource.
Canaccord Capital led the $17-million private placement with Raytec issuing 10 million units at $1.20 per unit — consisting of one warrant and one share — and 3.6 million flow-through shares at $1.40. Each warrant allows its holder to purchase an additional share at $1.60 for two years after closing.
The placement included an over-allotment option consisting of 4.2 million units and 2.1 million flow-through shares for up to $8 million.
Potash has recently fuelled a spate of news releases from companies seeking to cash in on strong potash prices, which have soared 180% year-over-year as demand has increased.
Last week, Potash North Resource’s (PON-V, PTNHF-O) stock price leapt 650% on its first day of trading based on its applications for Saskatchewan potash permits (T. N. M. June 16-22/08). The company has since announced that it arranged a $25-million private placement led by Canaccord — and all without a resource estimate.
Speaking at an Association for Mineral Exploration B. C. speaker’s series in Vancouver this month, Scotia Economics vice-president of economics Patricia Mohr said the price of potash has been driven by a rejuvenation of demand for fertilizers. She said burgeoning demand for biofuel crops sugar cane, palm oil and corn — which are heavily dependent on fertilizers — is at the bottom of the push.
Mohr expects potash, which in April and May sold for US$500-600 per tonne at the Port of Vancouver, will average US$700 per tonne by the end of the year. Bloomberg news agency reported June 10 the first shipments of US$1,000-per-tonne potash with Uralkali (URKA-L) securing contracts to Brazil. “This isn’t the end,” Mohr said.
Raytec’s goal is to expand current resources through seismic exploration and drilling of the property, said president Brian Thurston in a statement. It expects to receive a permit for the property in July.
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