UPDATE 1-Agrium eying 150 pct potash expansion, sees M&A

(Adds details; in U.S. dollars, unless noted)

TORONTO, June 12 (Reuters) - Agrium Inc's (AGU.TO: Quote, Profile, Research, Stock Buzz) potash output could rise by 150 percent to 5 million tonnes by the middle of the next decade, while small-size acquisitions are also likely down the road, company officials said on Thursday.

"We could go very well from a 2 million tonne producer to a 5 million tonne producer," Ron Wilkinson, head of the company's wholesale division, told investors at a presentation in Montreal.

The Calgary, Alberta-based company is looking at a $500 million expansion of its current Potash mine in Saskatchewan and is also planning on building a new mine, but has yet to decide exactly where it would build it.

The new mine would have capacity of about 2 million tonnes a year, with capital costs expected around $2.5 billion. Production would begin in 2014 or 2015 and hit its full stride by 2017, Agrium said.

Agrium, the smallest of the three main potash producers active in Canada, has benefited from a sharp rise in prices brought on by skyrocketing agricultural demand. Potash is used as a crop nutrient.

Agrium acquired agricultural retailer UAP Holding Corp in May for $2.7 billion, and bolt-on acquisitions are likely down the road, Chief Financial Officer Bruce Waterman said.

With strong cash flows -- cumulative flows were $1.1 billion in 2005-2007 -- Agrium would also consider giving cash back to shareholders if acquisitions or other investments don't pan out, he said.

The company's shares were down 30 Canadian cents at C$101.70 on the Toronto Stock Exchange. ($1=$1.02 Canadian) (Reporting by Cameron French; editing by Rob Wilson)