GSFC to acquire 19.98 % in Canadian potash Karnalyte for Rs250 crore

Gujarat State Fertilizers and Chemicals Limited (GSFC) is buying a 19.98 per cent stake in Canadian potash mining company Karnalyte Resources Inc (KRN) for Rs250 crore (C$45 million).

The state-owned company will pay $8.15 per share, a 20-per cent premium to the volume weighted average price of Karnalyte's common shares traded on the Toronto Stock Exchange for the 20 trading days ended 20 December 2012.

The strategic investment will give GSFC an assured supply of 350,000 tonnes of potash a year from from the Calagary-based company's Wynyard Carnallite project for 20 years from the start of commercial production in Phase 1, increasing to 600,000 tonnes a year with the commencement of Phase 2.

''At present, India is fully dependent on imports of potash. This is a significant partnership by an Indian fertilizer manufacturing company with a potash mining company abroad to procure high quality potash for the Indian market.  Karnalyte is ahead of other junior potash mining companies in Canada in terms of expected commissioning of the Project. For GSFC, an assured supply will help in expanding its portfolio of fertilizers," said Atanu Chakraborty, managing director of GSFC.

"GSFC's strategic investment and entering into the off-take agreement will support Karnalyte's growth strategy of constructing its potash production facility and commercializing a superior potash product," said Robin Phinney, president and CEO of KRN.

"This investment by GSFC is a significant milestone for Karnalyte and establishes Karnalyte as a leader among the new class of potash developers. We are confident that GSFC's strategic investment and committed off-take agreement will be instrumental in the future success of the Project," he added.