Despite the apparent economic downturn in the province, a Saskatoon-based potash company hopes to begin mining in Saskatchewan as early as this fall.

On Monday, Karnalyte Resources Inc. announced an agreement with an India-based fertilizer company, Gujarat State Fertilizers and Chemicals Ltd., to finance the construction of a potash mine and a mineral mine in Wynyard, Sask.

Karnalyte founder and president Robin Phinney said this is the company's most significant milestone, with a fully-financed deal to build the potash mine in Saskatchewan.

"The agreement in principle provides a comprehensive financing package to fully fund Karnalyte's 625,000 tonne potash mine [Phase 1], while enabling shareholders to maximize their investment in Karnalyte's secondary minerals and unexplored lands," Phinney said, referring to the first phase of the project.

Large swath of land unexplored

The deal includes Kanrnalyte's 241 square kilometres of unexplored land near Wynyard.

In 2012 Karnalyte received a positive feasibility study giving the green light for a magnesium production facility with an annual capacity of 100,000 tonnes per year of magnesium chloride and about 104,000 tonnes per year of hydromagnesite. Hydromagnesite a form of basic magnesium carbonite at 99 per cent purity.

Karnalyte owns all the land the facility would be housed on, a total of 85,126 acres located in the heart of the 'potash belt' in Wynyard.

The Wynyard mining operation is expected to be rolled out in three phases increasing by 750,000 tonnes per year in the second phase, and growing to 2.125 million tonnes per year in the third phase.

As a condition of the project financing in the the $700 million (USD) agreement, Karnalyte gives up 51 per cent voting power to GFSC. Financing is expected to be in place by Sept. 30, 2016.

The Karnalyte Property is located 0.5 km to the south of Highway 16 near the town of Wynyard.

Corrections

  • This story previously stated Karnalyte Resources Inc. is a Calgary-based company. In fact, the company's headquarters are in Saskatoon.
    Mar 15, 2016 9:22 AM CT