MMTC inks supply pact with Canada's Encanto for potash

Metals and Minerals Trading Company of India (MMTC), under the Ministry of Commerce, has signed an agreement with Canada’s Encanto Potash Corp for the procurement of potash. Following months of continued negotiations subsequent to the signing of the MoU with MMTC previously announced on October 15, 2015, which outlined the base terms to a long term off-take agreement, Encanto confirms that the MoU is now expanded for an annual supply of a minimum of 2,000,000 metric tonnes of potash (approximately $ 600 million at current prices) from Encanto’s Muskowekwan project, located in Saskatchewan.

A pre-feasibility study, dated February 28, 2013, confirms proven and probable KCI Reserves on the Muskowekwan Project totalling 162 MMt grading 28 percent, which supports primary and secondary mining for over 50 years at an assumed annual extraction rate of 2.8 million tonnes.

The MoU also allows for the immediate supply of potash by Encanto to MMTC, which can be sourced from existing producers while Encanto concurrently continues to develop the Muskowekwan Project. To that effect, Encanto now intends to create a joint trading company in an expanded working relationship with the Muskowekwan First Nation to ensure that the company can begin to supply potash to satisfy MMTC’s needs in the near future as well. The plan is to become an active potash company and to secure substantial near term cash flow; a rarity for a junior potash developer.

In addition, the MoU provides that MMTC will also act as Encanto’s worldwide distributor of potash on an exclusive basis, which is expected to provide access to markets and increased pricing well beyond the primary market in India.

Stavros Daskos, president, Encanto, commented, “Various entities in India had been tasked over the years with reviewing dozens of potash property opportunities worldwide as part of their formal policy to secure a long term supply of potash for India. Due to a combination of the size, high grade reserves, the simple geology, low environmental impact, solution mining advantages in terms of employment safety and faster path to production, it was determined that Encanto offers the best potash opportunity for India such that MMTC decided to move forward with a long term supply agreement. This will bring the company great options, including significant near term revenue and a bright long term future.”