B.C. Co., Planning Pilot Potash Plant in U.S., With Project-Level Financing

Recently, Sage Potash Corp. (SAGE:TSX; SGPTF:OTC) announced it had engaged Connecticut-based investment bank ACP Capital to help it obtain funding for establishing a potash recovery pilot plant at its Sage Plains project in Utah's Paradox Basin. 

Potash is a mineral used in potassium fertilizer and thus, essential to the agricultural industry, according to the U.S. Geological Survey.

The news release noted that Sage Potash is currently advancing its Sage Potash project. According to the company, it is focused on "resource definition and permitting that will allow for drilling of geological wells that will double as water access, cavern development, and waste disposal wells, all of which will support the establishment of an initial demonstration (pilot potash recovery) plant."

ACP will work hand-in-hand with Sage Potash to garner the funding needed for this, and the company believes that this phase of initial production will both catalyze cash flow and give insight into solution mining production methods. 

"[ACP's] expertise and deep reach to knowledgeable agricultural investors and strategic partners will be key to creating a financial structure that leverages valuation at the project level," said Sage Potash CEO Peter Hogendoorn in the release.

Company Highlights

Sage Potash is working to become a prominent potash producer in the States, the release noted. Its Sage Plains project, in an area known to host world-class potash resources according to the Utah Geological Survey, would help build a domestic supply chain and help the U.S. become potash self-sufficient. This is important because the country only produces 5% of its potash, importing the other 95%, primarily from Canada, data from Statista showed.

The Vancouver, British Columbia-based developer of a potash extracting operation has "potentially the largest deposit closest to production in the U.S.," according to an Investing News Network overview of the company.

The article indicated that to move Sage Plains forward, Sage Potash partnered with RESPEC, the engineering firm that planned and executed various projects worldwide, including K+S' potash solution mine and BHP's Jansen potash mine.

When up and running, Sage intends to mine for potash using sustainable methods that impact the environment less than previously employed techniques, the overview explained. The company will extract potash-rich brine in situ for mechanical evaporation and granulation. To this end, Sage, in conjunction with RESPEC, is advancing permitting and engineering for the initial production of 150,000 tons of potash annually.  However, the pilot plant will not produce more than 50,000 TPY  and will contribute to final feasibility studies.

The Vancouver, British Columbia-based developer of a potash extracting operation has "potentially the largest deposit closest to production in the U.S.," according to an Investing News Network overview of the company.

The Investing News Network piece also indicated Sage has a savvy management team with collective experience in the resource sector and in corporate management and finance. Hogendoorn, for instance, has 30 years of experience in financing public and private junior mining and tech companies and has been involved in acquiring and improving assets.

Pat Avery, the CEO of Sage Potash's U.S. operations, is also the director of Fertoz, an Australian phosphate company, and the owner of LDR Solution, a consulting firm for mining, chemical, fertilizer, project management, and private equity companies.

A Mining Technology article published in June 2023 pointed out that Sage Potash's newly formed subsidiary Sage Lithium Corp. will eventually test for lithium and other minerals on Sage Potash's Utah land, spanning almost 90,000 acres. Historical oil and gas wells there are said to have shown high concentrations of potassium, lithium, and bromine.

Potash Hits Bottom

As far as the potash sector, the market should rally now that it has reached its nadir, said BMO Capital Markets equity research analyst Joel Jackson in an interview with BNN Bloomberg last week.

"The bottom is in for potash prices, and we're going to see good volume from here," he said.

One signal the market hit bottom, cited the analyst, is the deal earlier in the year between Capotex, a Canadian potash exporter, and China for an amount below expectations and below Brazilian potash prices. Other signs, Jackson noted, include continually dropping spot prices, buying by all markets, and demand catch-ups taking place.

The Catalysts

Having secured water rights last month, Sage Potash may proceed to drill at Sage Plains, according to management. Upcoming stock catalysts include receipt of the necessary drill permit, followed by drilling of a second exploration well.

Subsequent anticipated events are the preparation of a mineral resource estimate and the completion of a preliminary economic assessment.

Technical Analyst Clive Maund asserted in a July 2023 report that Sage Potash's fundamentals were good, and its stock price was in a favorable "extending base pattern."

"We, therefore, stay long, and the stock is rated a Buy again here," he wrote.

Overall, the experts indicated, now is an optimal time to invest in potash, and up and coming U.S. producer Sage Potash offers a way to capitalize on the anticipated sector upswing and to support future development of a domestic supply.

Ownership and Share Structure

Management and insiders own 60.4%.  Including options, Peter Hogendoorn controls 6.48% with 2 million shares and 2,300,000 options. Combined, management and insiders control 40,903,343 of 66,382,406 fully diluted.

According to Sage Potash, approximately 17 million shares are held by strategic investors, of which 11.9 million are held by two brokers at Haywood Securities.

Financing for the pilot plant project is anticipated to be done at the project level, which will cause much lower dilution than out-of-treasury shares. Sage Potash recently closed a small CA$1.5M financing and is expected to raise additional capital once drill permits are approved.

According to Market Watch, there are currently 50.21 million shares outstanding, and an estimated float of 10-12 million shares. The company has a market cap of CA$9.04 million and trades in the 52-week range between CA$0.16 and CA$0.80.

Important Disclosures:

1. Sage Potash Corp. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000. 
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Sage Potash Corp. 
3. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

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