* Funds to help finance Milestone potash project
* Shares down 10 pct on TSX Venture
TORONTO Nov 29 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
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
Vancouver-based Western Potash said Mackie Research and
Scotia Capital Markets agreed to be co-lead underwriters for
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
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.
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
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
Encanto shares were up 1.2 percent at 44 Canadian cents on
(Reporting by Euan Rocha; editing by Rob Wilson)