2012 The Pink Gold Rush Gold Pink The Innovation in Mining in Innovation

DRILLING FOR TALENT FOR DRILLING

A WORLD AHEAD and the world is watching experiencing explosive growthexperiencing explosive – ’s mining sector is Saskatchewan’s Transformed from decades past, from decades Transformed 30 Saskatchewan Mining Journal 2012 The Pink Gold Rush by Lyle Hewitt

We haven’t yet gotten to the point where we are seeing crusty old prospectors panhan- dling for but we are not far off. Saskatchewan and other potash-rich parts of the planet are in the midst of a pink gold rush that is nearly as heady and freewheeling as anything from the fabled Klondike days. Conventional mines. Solution mines. Old mines expanded. New mines where no one previously thought to look before. Potash mines of every shape and size are being mapped out all over the province – although many of those, at present, exist only in the hopes and dreams of their promoters. According to potash marketing consortium , in the last few years there have been over 60 announcements of new potash projects around the world, many of them in Saskatchewan. Many of these are obvious stock plays – exploration permits kept in motion until they can be flipped at a profit to an investor with deeper pockets. In other cases, the developers are at least able to make a credible case for building a mine. In Saskatchewan, just as anywhere, building a mine is an expensive, risky but poten- tially extremely profitable venture. It involves billions of dollars of investment and hundreds – in some cases thousands – of skilled jobs. If even a fraction of these prospects come to fruition, they could significantly reshape not only the Saskatchewan resource sector, but the province as a whole. A Hungry Planet The factor driving the potash mania lies literally right under your nose: your mouth – and the mouths of everyone else on an increasingly hungry planet. According to UN estimates, the world population is expected to rise to 9.2 billion by 2050. This will not only mean more mouths to feed but it will also create an inverse relationship with the agricultural industry. The larger the population, the less land will be available for agricultural production. This will require a dramatic increase in high-intensity farming that will require more and more potash-based . And yet population numbers alone do not fully Opposite: describe the scope of the coming food revolution. The rising middle class in high- Construction at PotashCorp’s Allan project is expected to population countries like China and India are increasingly demanding, and able to finish in late 2012 with full ramp- afford, more meat and dairy in their diets. Fuel companies are looking to include more up completed by 2014. plant-based ethanol in fuel mixes. Photo provided by PotashCorp

Saskatchewan Mining Journal 2012 31 We are going to need a lot of , and we are going to need it soon. Fortunately for Saskatchewan, we have a lot of it. The province is believed to be home to roughly half of the world’s reserves of the mineral and is currently responsible for 30 per cent of its supply. Scientists estimate that Saskatchewan’s potash reserves are adequate to meet world demand for several hundred years. The Kangaroo in the Room Few people can name their province’s official flower. Fewer still could name their jurisdiction’s official mineral but in Saskatchewan’s case, most people would be able to Chip off the ’ol block make a pretty good guess. In this province, potash is not just an economic product; it’s Saskatchewan is the largest potash a political icon, as people across Canada and around the world learned in 2010. producer in the world, typically One of the top business stories of that year was the emotion-charged debate over accounting for 30 per cent of total Australian mining giant BHP Billiton’s bid to acquire the Potash Corporation of production, and hosting nearly one- Saskatchewan. When Premier Wall intervened to convince the federal government to half of the globe’s proven potash block the deal, many worried the move would have a chilling effect on new investment reserves. in the sector. Today, a year and a half later, those fears appear unfounded. Undeterred by the PotashCorp intervention, BHP Billiton has moved in to develop its own properties in the province, with over $1.2 billion committed to date to its Jansen project which is expected to be the largest potash mine in the world when completed in 2015. The company has also continued with major investments in projects at Young and Melville. “To us, the PotashCorp story is yesterday’s news. We have an excellent relationship with the provincial government which has been very helpful with some of our labour supply issues. Of course, we continue to maintain that the deal would have been a net benefit to the province, but we recognize that they had other strategic issues to con- sider,” said Chris Ryder, vice president of external affairs for BHP Billiton’s diamond and specialty products division. Bill Boyd, Saskatchewan’s Minister of Energy and Resources likewise senses no back- lash from the market intervention. “In a strange way, I think it ended up enhancing the province’s appeal to investors. Through the international media attention the story received, it shone a spotlight on the development opportunities in the province. Investors became more aware of the percentage of the commodity that Saskatchewan holds,” Boyd said. Getting Crowded Judging by the sheer number of new potash players in the province, there appears to be some truth to Boyd’s assessment. Although many of these are purely speculative, others are bringing significant investment dollars into the province to explore completely new or “greenfield” mine prospects. At the same time, the established Saskatchewan potash miners – PotashCorp, Mosaic and Agrium – have major “brownfield” (existing facility) expansions underway. But no matter whether building a new mine or refurbishing an existing one, Chip off the ’ol block developers are faced with many challenges. Potash mines are among the largest and Saskatchewan offshore sales of most technologically complex megaprojects on the planet – made all the more com- potash are made through Canpotex, plicated when they have to be built (let’s face it) next door to the middle of nowhere. a marketing company owned by companies in the Saskatchewan Labour Pains potash industry. When looking ahead to current or upcoming challenges in building a mine in Saskatchewan, all of the developers sing a single song called the Labour Supply Blues. BHP Billiton recently announced plans to build a temporary town on the Gordon First Nation, capable of housing the 2,500 or more workers needed to build the Jansen mine. Now they only need to find the people to fill it. “We’ve hired a few hundred people locally or through construction firms. We are working with the Aboriginal community and the other surrounding communities, but we are not going to get to 2,500 that way. We are going to have to work with the provincial government on a more holistic approach to the labour problem that includes expanded training opportunities and targeted immigration policies. Those are things

32 Saskatchewan Mining Journal 2012 we as a company can’t do that we would have look to the government to do,” said Ryder. A display at the Potash Interpretive For PotashCorp, the labour issues have not been so much about finding workers but Centre in Esterhazy showing one rather about managing training. rotor from a four-rotor continuous “We’ve found there is still a lot of capacity in the labour markets in Canada and other mining machine (at left) and the nearby areas. Other parts of Canada and the US are facing downturns so there are actu- circular pattern it creates as it cuts forward into the potash deposit. ally a lot of skilled workers looking for work. When you look at where this province has Photo by Stuart Kasdorf Photographics come from, it is pretty amazing to hear stories about people from places like Ontario, Boston and Detroit eager to come here to work,” says Mike Hogan, PotashCorp’s vice president of potash operations. “What we have found, though, is that we have to manage the job growth. You can’t just complete a major expansion and expect 200 new workers to show up the next day. Instead, we’ll recruit 80 or so people this year, take our time to make sure they are trained properly and introduced to our safety culture, and then next year we will do the same so that when new facilities are ready to open up we’ll have a fully trained work- force ready to go.” The Solution is the Problem Labour costs are a special concern for conventional mines that not only require a lot of people to build them but also need a large contingent of highly skilled workers and heavy machinery to stay in operation. Solution mines have a much easier time of it on this score. Instead of sending work- ers and machinery to dig minerals out of the ground, solution mines simply pump a Chip off the ’ol block mine shaft full of liquid and distil the dissolved mineral when the liquid is pumped to About 45 per cent of Saskatchewan the surface. Few if any workers go underground once the shaft is sunk, meaning much potash exports go to the United lower labour costs. States. Most of the remainder of But there is a trade-off. What solution mines lose in labour worries they gain in exports are sold to markets in the other hurdles. Chief among these is access to water. Finding a large source of water Pacific Rim and Latin America, which close to a potash source can be a tricky coincidence on the dry prairies. As well, have significant growth potential. proponents would face extensive environmental reviews and potential resistance from Less than five per cent of nearby residents worried about their local water supply. Saskatchewan potash is sold in “There is no doubt that water is one of the key issues. Since we are still at the explo- Canada. ration stage, we don’t have an answer for that at the moment. But certainly the success of any solution property depends on the water source,” said North Atlantic Potash CEO David Waugh.

Saskatchewan Mining Journal 2012 33 Some companies have found innovative approaches to the challenge. Western Potash, which is looking to develop a solution mine near Regina, has reached a memorandum of understanding with the city to use its treated effluent in a treated mine. “The effluent was previously dumped in the Wascana River. By reducing the nitrogen load, we are actually going to be improving the health of river. Plus, unlike some of our competitors, we would continue to be able to get water supply even in drought conditions,” said John Costigan, vice president of corporate development for Western Potash. The $3 Billion Question The single question that will most quickly sort the boys from the men from among prospective potash developers is: Where do they expect to get the money? A conventional, hole-in-the-ground potash mine such as BHP Billiton’s Jansen proj- ect can cost over $12 billion. An economy-model solution mine will run you in the neighbourhood of $3 billion. This is not the sort of money you can scare up with a good pitch on Dragon’s Den, or any other venture capital source, for that matter. The established potash miners have proven they have pockets deep enough to han- dle major expansion. BHP Billiton, possibly the largest mining conglomerate on the planet, can likewise easily mobilize the necessary resources. For all of the other developers, their success or failure likely hinges on finding a well- Chip off the ’ol block heeled partner. Their hunt may prove difficult, however. Even some of the largest min- Salt production in Saskatchewan is a ing companies in the world – such as and Russian mining giant JSC Acron – byproduct of potash operations and are sufficiently chastened by the costs and risks of new potash development that they brine wells. Saskatchewan totals prefer to team up on Saskatchewan projects rather than go it alone. about five per cent of Canada’s salt production. Clay production includes Survival of the Fittest swelling bentonite products, light- Given the scary numbers involved in potash mine development, can Saskatchewan real- weight clay aggregate and cement istically expect to see a half-dozen or so new potash mines in operation in the next additives. decade? The provincial government, whose budgets depend a great deal on potash royalties, is certainly very hopeful. “We are optimistic that several of the developments will get off the ground some day, sooner or later. Of course, nothing is guaranteed. It’s a very capital-intensive business with lots of technology involved. But we’re optimistic that we’ll see continued exploration and growth.” Inside the industry, the prevailing attitude can best be described as ‘hope for the best, prepare for the worst.’ Developers themselves believe that, as brownfield expansions start to come online around 2015 and new potash supply is pumped out, markets will react predictably with a dip in the price. “There are a lot of projects being talked about around the world right now but, over the next 10 years, not many of those are going to happen. There will definitely be a bounce in the markets around 2015, but the industry will recover and get stronger as the demand for potash gets higher in the long term,” said David Waugh, CEO of North Atlantic Potash, the Canadian division of JSC Acron. Canpotex takes an even more skeptical view. “In the next five years, I don’t think we will see any greenfield developments, only brownfield. We are not working any greenfield development into our market projections. This is a difficult, complicated, expensive business. I think many of these developers don’t fully understand just how complicated it is,” said Steve Dechka, president and CEO of Canpotex. Who will make it through this trial by fire? Of course, no one disputes that the established miners will likely thrive. Beyond that, the business logic is a fairly simple one, according to Costigan. “This is an expensive business, so success will go to the outfit that can keep its costs the lowest. Solution mines, operations that can keep labour and other costs down, those probably have a better chance. Anyone who can find a better technology or an innovative approach to reduce costs or risks – those will be the companies that will have the edge.” SMJ

34 Saskatchewan Mining Journal 2012 POTASH: CAST OF CHARACTERS by Lyle Hewitt

BIG BROTHER: THE GOVERNMENT OF SASKATCHEWAN extended summer shutdown to complete the Allan debottle- Although no longer directly involved in potash mining, the necking, which add another million tonnes. Our Rocanville government of Saskatchewan nonetheless continues to play a piv- expansion is on track to be complete in 2014 to add a further otal role in the industry. The Wall government’s continuation of 2.7 million tonnes of annual production,” said Mike Hogan, the previous administration’s potash tax holidays and capital PotashCorp’s vice president of potash operations. write-offs has been widely cited as a major contributing factor The projects on PotashCorp’s agenda are not mere fixer- to the current thriving environment. upper projects. The investment levels are staggering by any Industry and government have developed a somewhat standard: Over $550 million for the Allan project, $1.6 billion co-dependent relationship. Potash royalties currently for Cory and $2.8 billion for Rocanville. contribute so heavily to the provincial coffers that the rise and “The scale of these investments in Saskatchewan are pretty fall of the commodity’s price can spell the difference between amazing to consider. We calculated that, last year, we spent an surplus and deficit in provincial budgets. average of over a thousand dollars for every man, woman and It’s not surprising, then, that the government goes to con- child in the province,” Hogan said. siderable lengths to meet the industry’s needs. With potash and other resource sectors in mind, the government has made a full-court press to improve availability of skilled labour. THE GOOD OLD BOYS: MOSAIC AND AGRIUM “We’re taking a multi-level approach to attract and retain They dodged the bullet of nationalization in the 1970s and skilled labour. We are working with the industry to anticipate today, Saskatchewan’s other established potash miners stand at their needs. We’re expanding the training seats in as many the front of the line to reap the rewards of the new potash era. places and with as many groups as possible including with First As part of the old guard of Canadian potash production, Nations. We are also expanding opportunities in immigration; Agrium and Mosaic enjoy a host of advantages due to their long as you’ve seen, the premier himself is leading delegations to investment in the industry. As founding members (along with attract people to Saskatchewan,” said Saskatchewan Energy and PotashCorp) of the Canpotex marketing consortium, they Resources Minister Bill Boyd. enjoy exclusive access to a range of marketing tools and trans- Boyd is likewise confident that the province will be able to portation infrastructure. As owners of well-established prop- keep up with the rapidly growing energy supply demands of erties, they are also able to bring new production to market by the industry. improving technology on their existing sites and by building “SaskPower is constantly evaluating the current and future “brownfield” expansions to existing mines which avoids the needs and matching generation capacity with the prospective cost to entry faced by the proposed new “greenfield” mines. demand. It’s an analysis they have done for a long time. They Mosaic’s brownfield expansion program began in 2006 with are very good at it and I’m confident they will continue to meet an incremental 1.1 million tonnes added at Esterhazy. Two all the province’s needs in the future.” more phased expansions at Esterhazy are expected to add While the province is highly optimistic about the potash another 1.8 million tonnes between 2013 and 2016. Over three industry’s future, Boyd emphasizes that the government retains million tonnes are scheduled to come online at Colonsay and a healthy level of caution. Belle Plaine between 2011 and 2020. “We know that what goes up must come down. When it Agrium is planning a one-million-tonne expansion at its comes to market forecasts, we certainly don’t always get it right, Vanscoy mine, scheduled to begin later this year and wrap up in but we always try to use conservative fiscal estimates in 2014. The $1.5 billion investment will boost the mine’s capacity by making our royalty projections.” 50 per cent.

THE GRANDDADDY: THE POTASH CORPORATION OF SASKATCHEWAN THE CHALLENGER: BHP BILLITON PotashCorp has long been able to boast of being the world’s While PotashCorp is the world’s largest potash company, it is a largest potash company, responsible for roughly 20 per cent of piker next to Australian giant BHP Billiton whose estimated the world supply. Even with the rush of new competitors and $71 billion annual revenues could swallow whole countries. projects entering the market in the last few years, PotashCorp When BHP Billiton first appeared on the Saskatchewan is not about to give up its title easily. scene in 2010, many in the province were quick to cast them in “2011 was a year of continued expansion for us. We are the role of Snidely Whiplash, out to steal the family homestead. pretty much done our Cory expansion which adds a million Since then, the company has been determined to win friends by tonnes to our annual capacity. This summer, we will have an demonstrating its commitment to invest in Saskatchewan on

Saskatchewan Mining Journal 2012 35 Potash in Saskatchewan Map data is current as of October 2011

POTASH DISPOSITION HOLDER POTASH MINE LOCATIONS 101119529 Saskatchewan Ltd. 100% 1. Mosaic Potash Belle Plaine Agrium Products Inc. 100% 2. Mosaic Potash Colonsay Agrium Triton Partnership 100% 3. Mosaic Potash Esterhazy Canada Partnership Ltd. K-1 and K-2 Mines Agrikalium Mining Corporation 100% 4. PCS Potash - Allan Division Athabasca Resources Partnership 100% 5. PCS Potash - Cory Division BHP Billiton Diamonds Inc. 75% / Prairie Potash Corp. 25% 6. PCS Potash - Lanigan Division BHP Billiton Canada Inc. 100% 7. PCS Potash - Patience Lake Division Canada Potash Corp. 100% 8. PCS Potash - Rocanville Division Encanto Resources Ltd. 100% 9. Vanscory Potash mine K+S Potash Canada General Pertnership 100% Karnalyte Resources Inc. 100% PROSPECTIVE POTASH PROJECTS M & J Potash Corporation 100% 1. Agrium Triton Partnership Project Sanya Resource Corporation 100% 2. Boulder Project Mosaic Canada ULC 100% 3. Bredenbury Project Mosaic Potash Colonsay ULC 100% 4. Burr Project Mosaic Potash Esterhazy Limited Partnership 5. Canada Jiuyi Project Mosaic Potash Esterhazy Limited Partnership North Atlantic Potash Inc. 100% 6. Jansen Project North Atlantic Potash Inc. 60% / 7. Legacy Project Rio Tinto Potash Management Inc. 40% 8. Melville Project Pending 9. Milestone Project Potash Corporation of Saskatchewan Inc. 100% 10. Muskowekwan Project Taiji Resources Ltd. 100% 11. Ochapowace Project Map provided by: Universe Investment Holding Limited 100% 12. Regina Project Vale Potash Canada Limited 100% 13. Spar Project Western Potash Corp. 100% 14. Wynyard Project Yancoal Canada Resources Co. Ltd. 100% 15. Young Project many levels. This has included moving the company’s entire incorporate in our planning and consider as we plan for the Diamond and Specialty Products Division (which includes future. We continue to welcome feedback from all of our stake- potash) from Vancouver to , bringing roughly 200 holders, including the general public and Aboriginal commu- corporate-office level jobs to the Bridge City. nities throughout all stages of the Kronau Project,” said Vale Overall, the company has a 14,500 square kilometre land project manager Will Longworth. position in Saskatchewan. The company’s best known invest- ment is the Jansen project, planned as a conventional mine with a potential output of eight million tonnes a year. BHP Billiton THE RUSSIANS: NORTH ATLANTIC POTASH has invested over a billion dollars in the pre-commitment phase Pundits and industry players alike have talked at length about of the mine which, if it receives final approval this year, could the scary barriers to starting a new potash mine. But David cost over $12 billion. BHP Billiton expects the mine to be in Waugh, CEO of North Atlantic Potash, doesn’t scare easily. production by 2015. “One way or another, we are going to build a mine if the The project has its skeptics. PotashCorp CEO Bill Doyle has resource is there. We bring a lot to the table. We are not a small speculated that the mine is not feasible and that the project has company. We have investors from around the world that been launched simply to drive down the stock price of his approach us,” said Waugh. company. Australian stock watchers recently speculated that North Atlantic is a branch of JSC Acron, a Russian multi- BHP Billiton may be preparing to delay or dump the project national that is one of the leaders in fertilizer production. It is due to its expense. currently exploring more than 2.7 million acres and 26 Saskatchewan native Chris Ryder, BHP Billiton’s vice president exploration permits for potash in Saskatchewan. The company of external affairs, dismisses both rumours. has been active in building alliances and marshalling its “The stories out of Australia were a classic example of a resources towards its goals of building both a solution and a rumour feeding on itself. A commentator speculated that BHP conventional potash mine. Billiton might be thinking about this and then everyone else Part of this strategy involved selling eight of its potash started to repeat that as though it were a fact.” permitted areas to Yancoal Canada Resources Co., Ltd. of As for the market competition, Ryder simply points to the China for $110 million. fact of the world’s ever-growing population and food demands. “Having this operating capital in place means that we will “I think there will be plenty of global demand to use up all not have to go back to our parent company for funding for at the new supply from ourselves and our competitors. I think least the first two years of our exploration projects.” there is plenty of room for everyone out there.” Another of the company’s moves has been to lock down a The company has a number of other potential projects, joint venture partner with the skill and resources to carry out including the Melville, Young and Boulder projects. Ryder a major mine development. North Atlantic recently struck a believes the Young project has the potential to match Jansen in partnership with Rio Tinto. The famed British-Australian size. mining firm now holds a 40 per cent share of eight of North Atlantic’s permitted areas with an option to buy another 40 per cent if a producing solution mine is built. North Atlantic retains THE BRAZILIANS: VALE 100 per cent control of its Foam Lake area permits where it Here is a sure sign of the state of Saskatchewan’s potash hopes to build a conventional mine. industry: Google a list of the top five biggest mining companies in the world. All of them are, in one way or another, looking at projects in Saskatchewan. THE GERMANS: K+S GROUP Unlike its competitors at BHP Billiton, Brazilian mining German fertilizer king K+S Group first made headlines in giant Vale, considered the second-largest in the world, has been Saskatchewan with its friendly takeover of Moose Jaw-area taking a slow and steady approach in Saskatchewan. Vale has explorer Potash One. Today, the company is seeking – along been in Saskatchewan since 2009. Vale Potash Canada Limited’s with many others – to claim bragging rights for building the first corporate office currently has 10 full-time employees located “greenfield” (new development) mine in Saskatchewan in 40 in Regina and a small exploration team based in Emerald Park. years. Its major potash prospect, the Kronau Project – a proposed K+S’ focus is on a potential solution mine to be built at the solution mine approximately 20 kilometres southeast of Regina Legacy project where it plans to put shovels into the dirt later - is still in the pre-feasibility stage. Although the project is still this year. under review by the company’s board, the local office has “Preliminary earth and roadwork was started in 2011 to proceeded with the provincial government’s environmental facilitate site access and prepare for major earth work. Detailed assessment process. engineering has begun with AMEC Americas. Major site earth- “In March 2011 and again in October 2011, we hosted works construction is being planned for later this year, marking community information sessions that explained our project the beginning of true construction at the site,” said K+S proposal. We received valuable input that we were able to corporate spokesman Michael Wudonig.

Saskatchewan Mining Journal 2012 37 The company expects to invest $3.25 billion in order to bring innovative technologies is further proof of its seriousness to the mine into production by 2015. They project the mine will move forward with the project and gives it an edge over other hit the two-million-tonne-per-year mark by 2017. junior developers in seeking strategic partners. “This is an expensive business, so success will go to the out- fit that can keep its costs the lowest.” THE FIRST NATIONS: ENCANTO POTASH Western has secured over 2,550 acres at its preferred plant Several Saskatchewan First Nations have mused publicly about site location. The company hopes that a solution mine on the developing their potash potential, but one of the more advanced site could produce up to 2.8 million tonnes per year. projects is Encanto Potash. Encanto is focused on exploring for potash on three southeastern Saskatchewan projects, working with the Muskowekwan, Ochapowace and Chacachas First Nations. THE SALESMEN: CANPOTEX The company is also exploring on a number of Crown land Even though Canpotex has just turned 40, it is definitely not properties, referred to as its SPAR project. experiencing a mid-life crisis. The sales consortium that The company’s Muskowekwan exploration project is still at markets all product extracted by Canada’s existing potash the pre-feasibility phase which it is hoping to complete this year. miners (namely PotashCorp, Agrium and Mosaic) has been As a small company, financing is a challenge for the project but scrambling in recent years to meet the escalating demand for president and CEO Jim Walchuck is undeterred. its services. “We believe it’s coming along, but of course there are no “We have been steadily launching ships as part of our own guarantees. The First Nations who are our joint venture partners fleet. We have a new railcar facility with 5,000 railcars designed recently made a private placement of $3 million to show how specifically for potash in response to expansion from our share- much they believed in the project. We are well funded until the holders. We are also looking to expand our terminal capacity, end of next year and, based on meetings we’ve had, I believe including a potential new Prince Rupert terminal,” said Steve we’ll be able to put together the funds we need.” Dechka, president and CEO of Canpotex. The company’s long-term objective is to build a mine Dechka has been pleased to see the potash market mature so producing 2 to 2.5 million tonnes per year. Walchuck projects that the consortium is moving more product to Asian markets. that a mine could be up and running by 2016 “at the earliest.” “Last year, we had a record year with major sales to China and India as well as to our other customers. Our contract last January with China saw increases in both quantity and price.” THE INNOVATORS: WESTERN POTASH Although potash sales had a strong start last year, they In an industry that uses the phrase “billion dollars” relatively dipped in the last two quarters over apprehension about the casually, junior developers often face a tough time convincing European situation. people that they are not just a stock play. John Costigan, vice “I’m expecting this year to be the reverse: we’ll start the year president of corporate development for Western Potash, could not a little slower and then see higher sales in the last half of the year.” be more firm on this topic. With the flurry of new projects proposed for development “People often ask me ‘why not just sell it?’ That’s what a lot outside of Canpotex’s circle, you might think the company of junior developers do – just bring an exploration project along would be worried about its market share, but Dechka is uncon- to a certain point until they find a buyer. Those deals never cerned. In their market forecasts, Canpotex largely dismisses amounted to more than 10 per cent of the net tangible value. all of the projects in the works by new developers. We don’t think that’s the best approach for shareholders. We “Even if you started today, there is no way you could get any believe in putting a mine in production is the best path for our sort of mine in production in five years, so we are not project- shareholders in the long term,” Costigan said. ing any new or greenfield mines, only brownfield or existing mine The company even went so far as to issue a press release to expansions.” clarify that it was looking for strategic partners and not inter- If and when a greenfield development comes into produc- ested in any negotiations for the outright sale of the company. tion, Dechka does not feel that it would be Canpotex’s role to Western is now working on a final feasibility study at its recruit new members. Milestone Project, a proposed solution mine near Regina. The “If a new producer wanted to become a member, it would be company hopes to complete the study in late 2012. up to them to approach us – or, more accurately, to approach The company’s chief claim to fame is its clever approach to our members. They would be the ones who would make the obtaining water supply for the potential mine. Western has decision. They have made significant investments in our infra- signed an MOU with the City of Regina to use treated effluent structure that I’m sure they would not just want to give away.” that was previously dumped in the Wascana River. This Nonetheless, Dechka feels it would be in a new player’s approach is not only very environmentally friendly (it actually interests to try to negotiate for membership. reduces negative effects on the river), but it would also give “This is not an easy business and it is a very relationship- the mine more security of water supply in times of drought. based business. We believe that over the last 40 years we have Costigan maintains that the company’s investment in built the best relationships in the world.” SMJ

38 Saskatchewan Mining Journal 2012