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* Funds to help finance Milestone potash project
* Shares down 10 pct on TSX Venture
TORONTO, Nov 29 (Reuters) - Western Potash Corp WPX.V said on Monday it plans to raise about C$40 million ($39.2 million) in an equity offering to help finance its Milestone potash project in the western Canadian province of Saskatchewan.
The Canadian exploration company also said it would apply to list its common shares on the Toronto Stock Exchange within 30 days after the offering closes, which is expected around Dec. 14.
Vancouver-based Western Potash said Mackie Research and Scotia Capital Markets agreed to be co-lead underwriters for the offering.
While about C$20 million will be raised via a bought deal offering, the underwriters will separately attempt to raise the remainder on a best-efforts basis, the company said.
In a bought deal an underwriter, or syndicate buys shares from an issuer before selling them on to the public, thereby reducing the risk and uncertainty for the issuer.
The underwriters agreed to buy 18.1 million units from Western Potash at a price of C$1.10 each.
Each unit will consist of one common share and one-half of a purchase warrant. Each whole warrant will entitle the holder to buy one common share at an exercise price of C$1.75 at any time for up to 30 months after the close of the offering, the company said.
The underwriters have also been granted an option to increase the size of the offering by up to 15 percent, the company said in a statement.
Shares of Western Potash, were down 10 percent at C$1.09 on the TSX Venture Exchange on Monday morning, but are up more than 150 percent this year.
The shares rose more than 30 percent last week alone, when German potash miner K+S SDFG.DE announced plans to buy Canadian potash explorer Potash One KCL.TO for C$434 million. [ID:nLDE6AL1DM]
Stocks are up in most Canadian potash exploration companies this year, following the ill-fated $39 billion bid by Anglo-Australian mining giant BHP Billiton (BHP.AX) (BLT.L) for Potash Corp (POT.TO), the world's largest producer of the crop nutrient.
Earlier this year, BHP acquired Canada's Athabasca Potash for C$341 million, expanding its asset base in the potash rich province of Saskatchewan.
The frenzy of deals in the sector is being driven by growing global concerns around food production and an expected jump in demand for fertilizer. While much of the deal activity has centered around potash, there has also been a flurry of M&A activity around companies that produce phosphate- and nitrogen-based crop nutrients.
Encanto Potash (EPO.V), which is working on developing the Muskowekwan potash project in Saskatchewan, also announced on Monday that it plans to raise about C$5.5 million through an equity offering. Shares of Encanto are up more than 70 percent year-to-date.
Encanto shares were up 1.2 percent at 44 Canadian cents on Monday morning.
$1=$1.02 Canadian Reporting by Euan Rocha; editing by Rob Wilson