Western Potash Corp. is expecting its deal to sell 20 per cent of the junior mining company to a Chinese joint venture company for $32 million should close later this week.
Earlier this month, Vancouver-based Western announced that China BlueChemical Ltd. and Benewood Holdings Corp. Ltd., through a joint venture company, CBC (Canada) Holding Corp., have agreed to acquire 45 million Western shares for 71 cents per common share. The issue price represents a 15-per-cent premium over the 20-day volume-weighted moving average of Western shares, which are traded on TSX under the symbol WPX.
China Blue is a majority-owned subsidiary of China National Offshore Oil Corp. (CNOOC), the largest off-shore oil and gas producer in China, which recently acquired Nexen Inc. for $15 billion. Benewood is a wholly owned subsidiary of GUOXIN International Investment Corporation Limited, a financial investment company registered in Hong Kong.
"This investment is a testament to CBCHC's confidence in the positive business climate in Saskatchewan, the exceptional nature of the Milestone deposit and Western's team,'' Patri-cio Varas, CEO of Western, stated in the June 2 news release. "Our strategic alliance with China Blue and Guoxin will provide Western with access to project financing, technical expertise in large-scale project construction and marketing channels for future potash sales. "
A feasibility study for the Milestone project was completed in December 2012, confirming the ore body could support potash solution mining for more than 40 years at full production of 2.8 million tonnes per year. Western also signed an agreement with the City of Regina last year securing the long-term source of process water for the proposed potash solution mine, about 30 km southeast of Regina.
The proposed $2.8-billion project could employ up to 1,500 during construction phases and 300 to 350 permanent jobs at the mine.