Fertilizer prices lure Great Western Minerals

Hoping to cash in on spiking fertilizer prices, Great Western Minerals Group (GWG-V, GWMGF-O) is evaluating whether to develop phosphate as a byproduct at its Hoidas Lake rare earth elements property in northern Saskatchewan.

One of the main rare earth-bearing ore minerals is the phosphate mineral apatite, the principal ore of phosphorous used in fertilizer. Certain phosphate-based products, such as diammonium phosphate, have sold for more than US$1,000 per tonne. In the first quarter of last year, prices averaged about US$250 a ton.

“We actually looked at this a few years ago when we were first looking at Hoidas Lake but at the time phosphateprices were in the US$200- to US$300-per-tonne range, so it wouldn’t have been economic,” says Great Western Minerals’ executive chairman, Gary Billingsley. “But that situation has changed dramatically with both phosphate and potash, so it has become an economic consideration now.”

Phosphate values at Hoidas Lake range from a minimum grade of 0.05% to a maximum grade of 40.9%, with a mean or average value of 17.7%, according to a National Instrument 43-101-compliant resource estimate released last year.

Great Western is now completing a preliminary economic assessment report on Hoidas Lake and hopes to have the final process design in place by late summer. By the end of the fall, it hopes to run about 15 tonnes of material it has prepared through its pilot plant.

“If we can make concentrate that is valuable enough to ship down to Saskatoon for processing, that’s a huge step for us,” Billingsley says.

The concentrate would then be processed for both phosphate and rare earth elements.

Great Western plans to further evaluate the phosphate content of its Hoidas Lake project, 50 km northeast of Uranium City, from the drill results of its winter program and from its upcoming summer drill program.

Over the last year, fertilizer producers have become the darlings of Wall Street. Minnesota-based Mosaic (MOS-N), the world’s largest phosphate producer, has seen its stock surge to US$118 per share today from an average of U$32 last year. CF Industries Holdings (CF-N), another phosphate producer, has watched its fortunes soar to about US$126 from US$43 per share last year.

With fears of world food shortages and sky-high energy prices, fertilizer prices are likely to climb even further.

China recently announced that it would hike tariffs on exports of fertilizers and raw materials by 100- 135% between April 20 and Sept. 20. Xinhua, the Chinese news agency, quoting the Ministry of Finance, reported that it is the second time this year that China has raised the duty on fertilizer exports.

China is the world’s largest exporter of urea, a nitrogen product. With fertilizer in such high demand globally, China wants to keep more of it for domestic use.

Prices for potash and other fertilizers were flat for 15 years and rose gradually this decade before spiking sharply starting in late 2006.

Great Western is currently trading at about 20 a share. It has a 52- week trading range of 17.5-42 and has 112.3 million shares outstanding.

In addition to its exploration projects, Great Western is developing a vertically integrated business model through its Michigan-based subsidiary, Great Western Technologies, which produces specialty alloys for use in the battery, magnet and aerospace industries. These alloys include those containing copper, aluminum, nickel, cobalt and rare earth elements.