New junior goes after potash in Manitoba

A new potash explorer, Western Potash (WPX-V), officially listed on the TSX Venture Exchange today after completing an initial public offering for more than $20 million in shares.

During its first day of trading the stock fell 25% on nearly 3.8 million shares, down 31 to close at 91 per share.

The issue price of the IPO was $1.10 per share and was lead by Wellington West Capital and also included Canaccord Capital and Genuity Capital Markets. All of the agents have an option to buy up to 14% of shares at $1.10 each, which must be exercised in whole or in part within 30 days of the closing date. They also received a 6% cash commission of the gross proceeds as well as an option to by more than 1 million shares for $1.10 per share before Nov. 5, 2008.

Western Potash plans to do a multi-phased, drill and seismic exploration program on its Russell Maniota project, a 525-sq-km land package northwest of Brandon, Manitoba, close to the Saskatchewan border.

Acquired last July, Russell Maniota lies 13 km from the Rocanville mine operated by Potash Corporation of Saskatchewan, which produced 1.897 million tonnes of potash in 2006. The mine’s resources total 372 million tonnes grading 22.5% K₂O, equivalent to 147.4 million tonnes of potash, assuming a 100% recovery rate.

The property is also adjacent to exploration land held by B>Agrium (AGU-T, AGU-N) and BHP Billiton (BHP-N, BHP-A).

Both Agrium and BHP have defined resources on the neighbouring properties BHP with 172 million tonnes grading 25.4% K₂O, which is equivalent to 69.3 million tonnes of potash (assuming a 100% recovery), and Agrium, with 750 million tonnes grading 21% K₂O, or 249.7 million tonnes of potash.

Western Potash is still looking to acquire more ground the company has applied for a 2,100-sq.-km property in southwestern Manitoba and another 1,000 sq. km across the border in Saskatchewan.

The company says that gamma logs from historical drill holes coincide with seismic data, indicating the presence of economical potash grades including 8.53 metres grading 18% K₂O and 12. 5 metres grading 20% K₂O.