Marifil soars on Argentine potash play

Potash has become the flavour 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, MFMLF-O) is just the latest penny stock to perk up 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 1,000 sq. km of potash lands in Argentina.

Marifil identified two potash horizons from electric logs from an abandoned oil well drill hole in Argentina’s Neuquen basin.

The Neuquen basin lies in northwestern 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 1,540 sq. km 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 return 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 Torontobased resources company with a focus on potash. The purchase price, subject to regulatory approval, was 33 million shares of Allana and US$130,000. If the acquisition proceeds, Marifil Mines will receive 600,000 shares of Allana, $26,000 in cash, and will keep the 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, Wash., 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.