Western Potash (WPX.V) listed on the Toronto Stock Exchange in May 2008, raising more than $C45 million, including $23 million in the initial public offering, having acquired 555 square kilometres of prospective potash ground in the province of Manitoba.

While the first winds of warning blew across the United States in July 2007 with the collapse of confidence in securitised mortgages, the full force of the global financial crisis didn’t hit until September 2008 – just four months after Western Potash’s successful IPO.

Armed with a healthy war chest, the company acquired a number of key prospective potash deposits, including three permits in southeastern Saskatchewan comprising some 124,000 acres (500sq.km), at a time when some companies were finding finance very difficult to access.

Today the company is in the enviable position of having a highly promising solution mining project at its Milestone property, located south of the city of Regina, and the Belle Plaine Potash Mine.

Western Potash president Patricio Varas said the company was focused on identifying similar mineralisation to Mosaic’s Belle Plaine mine.

“That mine is not far from us,” he told RESOURCESTOCKS.

“They have mined for the last 45 years in an area that only covers 12 square miles and we are concentrating on an area of about 72 square miles.”

Belle Plaine is a potash solution mine.

Potash in Saskatchewan has been mined since 1959 and two different techniques are used.

Underground extraction mines are usually limited to depths of about 1000m and are principally located in the province’s “conventional mining belt” while solution mining is conducted at depths of 1500m or more. Higher temperatures around 60C improve the dissolution process for solution mining, reducing the heat input required for both the injected brines as well as the distillation process, significantly reducing production costs.

The Milestone project is characterised by a high minimum formation temperature of about 65.5C. Western Potash is currently drilling wide space wells on the Milestone property to establish which area has the better grade and better thicknesses. When this issue went to press, the company had completed three wells and Varas believed that gamma ray log readings of the last well drilled were the best to date.

“What we are now doing is permitting for a number of holes around that particular area and then the goal is to drill those holes and follow up with 3D seismic to upgrade the resource to an indicated reserve,” he said.

“For potash you don’t have to drill the high number of holes that you do for copper or gold projects.

With potash, each hole can define a radius of about 1.6 kilometres of mineralisation if it is backed up by 3D seismic and the holes, or wells, can be 3-4 kilometres apart.

“In effect some mines have only had a handful of drillholes before they actually started mining.”

The company is planning to drill four more wells before the end of September to establish a resource estimate, but faces some delays with negotiations for surface access rights and the autumn harvest, and believes seismic won’t start until October.

“If everything went well we were hoping to have a resource calculation by the end of the year, but I think that is now a little unrealistic,” Varas explained.

“It is more likely to be in the first quarter of 2010.”

While underground mining and solution mining are totally different, one of the important aspects of solution mining is that you can mine as much as you like, tailoring production to a budget. Belle Plaine, the biggest solution mine in the world, produces around 2.0-2.8 million tons of potash per annum, but it isn’t necessary to start at that level; a profitable operation can begin producing 200,000-500,000 tons a year.

Sinking an underground mining shaft can take up to two years, and capital costs for these projects are fixed so the company cannot scale the costs to production.

“Once we have established a resource calculation, consideration will then be given to either a feasibility study or order of magnitude, and then that will be time for us to either look for additional financing or a partner who likes our project,” Varas added.