Western Potash Corp: The little explorer that could…

Wellington West Capital Markets believes investors in junior explorer Western Potash Corp. (WPX-V) are likely to double their money over the next twelve months.

In a research note to clients in late May entitled: “Helping Secure a Seat at Future (Consolidation) Negotiation Table,” analysts Robert Winslow and Eric Winmill said the company with mineral properties in Western Canada should climb from its then trading price of 50 per share to $1.00.

Certainly if location is any guide Western Potash has quite a bit going for it. Its 500-sq-km Milestone property 30 km southeast of Regina lies to the southeast of Mosaic‘s (MOS-N) Belle Plaine mine, one of the largest producing potash solution mines in the world. Milestone is also adjacent to potash permits held by BHP-Billiton (BHP-N), Vale (RIO-N) (it acquired the Regina potash property from Kennecott Canada Exploration) and Potash One (KCL-T).

Seismic data has confirmed the presence of potash prospective salt beds on the eastern portion of the Milestone property, within 15 km of the potash wells drilled by Kennecott last year and covering an area of 185 sq km, according to Western Potash.

In late May the company announced that it had completed its first potash exploration well on the property. The well was drilled to a depth of 1,776 metres and visual interpretation of the gamma ray logs from the zone suggested “moderate to strong potash grade,” the company reported.

The logs also demonstrated a minimum formation temperature of 62 degree Celsius, confirming a strong heat anomaly underlying the property. Samples have been submitted for analysis with results due back in four to six weeks.

Western Potash says the results so far suggest the geological setting and mineralization “are consistent with characteristics of other potash deposits in Saskatchewan.”

The company says it plans to drill two other wells targeting the Prairie Evaporite formation. The drill program is aimed at defining the extent, grade, thickness and type of potash mineralization.

The Milestone deposit is about 1,600 metres below surface and the company argues it is amenable to solution mining techniques.

Wellington analysts Winslow and Winmill pointed out in their research note that proving out Milestone’s prospects gives Western Potash leverage and ensures that the company could be part of potential merger and acquisition talks in the sector.

Phase one of the Milestone project – consisting of three permits covering 50,000 hectares — is well funded, Winslow and Winmill argued.

Should the drill results prove positive, Western Potash says, the company should be able to complete a National Instrument 43-101 resource on the Milestone property before the end of the year.

In addition to Milestone, Western Potash has the Russell-Miniota and Russell-South properties in Manitoba, lying in the southwestern corner of Manitoba along the province’s border with Saskatchewan and about 55 km from Canada’s border with the United States.

During the first quarter of 2009, Western Potash completed an additional four exploratory wells on its Russell-South properties totalling 4,566 metres. The company believes that grades determined by drill testing so far in the Russell South area “compare well with those are being mined at the neighboring Sakstachewan Potash Corp.’s Rocanville mine.”

At presstime, Western Potash was trading at 59 per share. The stock has a 52-week trading range of 15.5-$2.20 per share and has 102.74 million shares outstanding.