Encanto Potash up on offtake deal with Indian co-op
Shares of Encanto Potash Corp. (CVE:EPO) were up almost 5% Thursday morning following the Canadian miner announcement of an offtake agreement for five million tonnes per year for a minimum of 20 years with an Indian co-op, which represents farmers in 25 states across the Asian nation.
Agreement paves the way for Encanto to move from a previously announced memorandum of understanding to a commercial marketing and distribution contract.
The stock was up 4.55% in early trading in Toronto and has almost doubled its price since January last year, boosted partly by a key deal with the Muskowekwan First Nation, from Saskatchewan, to jointly build a $3 billion potash project, about 100 km northeast of Regina.
The agreement with India’s National Federation of Farmers’ Procurement, Processing and Retailing Co-operatives of India (NACOF) paves the way for Encanto to move from a previously announced memorandum of understanding to a commercial marketing and distribution contract with Metal Mineral Trading Co. of India (MTTC), a state-owed trading agency and one of the world’s largest buyers of potash. Through such deal, Encanto’s proposed mine would provide a minimum of two million metric tonnes of potash annually to MMTC.
The proposed mine at Muskowekwan First Nation lands is considered the first of its kind as the band will have a 100% stake on it as well as full control of the operation. When completed, it will be the first potash mine in Saskatchewan on First Nations land.
According to a 2013 pre-feasibility study, the project holds indicated proven and probable reserves of 162 million tonnes, which could supply a 2.8-million tonne per year mine for 50-plus years. The proposed mine would employ 1,000 people during construction and 500 permanent jobs when complete.