Marifil soars on potash play in Argentina

Potash has become the flavor of the month, if not the year, and juniors the world over are scrambling to get a piece of the action.

Marifil Mines (MFM-V) is just the latest penny stock to jump on news that it has picked up some potash property.

The junior’s stock soared 28% to 46 a share on a trading volume of 1.3 million shares following news that it had acquired 100,000 hectares of potash lands in Argentina.

Marifil identified two potash horizons from electric logs from an abandoned oil well drill hole in the Neuquen Basin in Argentina.

The company believes the upper horizon from 1303 metres to 1314 metres is followed by a lower horizon from 1314 metres to 1323 metres. The property is not far from Rio Tinto‘s (RTP-N, RIO-L) Rio Colorado potash mine.

The Neuqun Basin lies in north-western Patagonia in west-central Argentina and the western edge of the basin forms part of the foothills of the Andes. It formed as a rift basin in the early Mesozoic period and contains, mainly marine, Triassic to Aptian sediment. The area has long been tapped for its oil and gas reserves.

Marifil recently acquired 154,000 hectares of land with potash potential, also in the Neuquen Basin, then promptly turned around and sold it to Latin American Potash.

Under that deal, Marifil received US$100,000 in cash, 20% of the shares in Latin American Potash, and a 2% net smelter royalty from any potash production from the property.

Since the signing of that agreement, however, Latin American Potash has been acquired by Allana Resources (AAA-V), a resources company with a focus on potash. The purchase price, subject to regulatory approval, was 33 million shares of Allana and C$130,000. If the acquisition proceeds, Marifil Mines will receive 600,000 shares of Allana, $26,000 in cash, and will keep the 2% net smelter royalty.

Last year Marifil spent about US$1 million on exploration and its joint-venture partners about US$4 million on its properties. This year the company, headquartered in Spokane, Washington, estimates it will spend about the same amount on exploration but its partners will spend more than US$7-$8 million.

Marifil says it hopes to farm out or joint-venture the property.

The junior explorer, incorporated in 2003, has a portfolio of more than 20 precious and base metals properties.