Sage Potash Corp. (SAGE:TSX; SGPTF:OTC) has achieved an essential milestone on the way to meeting its operational goals. The company has received the green light from Utah's Department of Natural Resources Division of Water Rights, giving Sage Potash permission to use 0.207 cubic feet per second (CFS) (150 acre-feet of brackish water annually). This approval is effective until July 31, 2043. This water will come from the proposed access well intended for the Sage Plain potash project. 88,000 acres of mineral leases and permit applications make up the Sage Potash project. The project contains two potash beds, with an inferred resource of 279.5 million tons of high-grade potash.
Sage Potash is a Canada-based company focused on developing a U.S.-based domestic potash supply through sustainable solution mining techniques. Its flagship project is the Sage Plain Potash Property in the Paradox Basin, which is known to host extensive, underdeveloped, world-class potash resources.
Water rights are critical to the potash industry, especially in water-challenged areas, such as the western United States. Water rights give the company the right to extract water for potash production, an essential resource during the extraction process. Sage Potash claims that its operations will not impact traditional sources of irrigation, agricultural, or potable water. The company will use brackish water, which is unsuitable for conventional use.
Technical Analyst Clive Maund has rated Sage Potash as a "Buy" for investors and commented that "the fundamentals of the company are favorable.
Sage Potash states it is ahead of the average development schedule for potash projects. According to a representative of the company, "It can take 15 years to get to where we are, and it literally has taken us close to 10 or 12 years to get to where we are because nothing happens without the initial discovery hole."
Peter Hogendoorn, the CEO of Sage Potash, commented on this milestone, saying, "In any resource project, one of the biggest risks to advancement beyond exploration is permitting. Receiving water/brine access rights is a key step in derisking the Sage Plain project since there can be no production without water. We are advancing numerous permit applications and are extremely pleased with the support we are receiving from the various Utah state agencies involved."
Demand Rises as Supply Lines Disrupted
Like many other industries, potash has been dramatically affected by the conflict in Ukraine. Russia and Belarus account for over one-third of the world's potash supply, and sanctions related to the conflict have disrupted the supply chain.
Given that potash is one of a triad of minerals (phosphate, nitrogen, and potash, also known as NPK) essential for agricultural production, this has driven up demand. Prices for potash have increased since the start of the conflict, peaking in April of 2022 at US$1200.
According to Josh Linville, a director at the fertilizer company StoneX, "European production has come back online. Largely, they're still sort of offline, but most of it is back. A lot of these fears that drove prices up were found to be unfounded, and now we're starting to correct lower."
The market for potash is expected to expand significantly, driven primarily by agriculture, by 4.48% by 2028. Regardless of unstable supply, data suggest that demand will increase.
Ready to Move Forward With Several Catalysts
Technical Analyst Clive Maund has rated Sage Potash as a "Buy" for investors and commented that "the fundamentals of the company are favorable and on the 5 [of July] news came out that it had started trading on the OTTCQBA Venture Market and in addition, the company announced that its common shares are now eligible to be electronically cleared and settled in the United States through the Depository Trust Company (DTC)."
According to Sage Potash, it has several catalysts on the horizon, including a 3-well drilling program designed for the dual purpose of additional data to advance to a Measured and Indicated Resource while also providing the initial underground infrastructure to begin pilot production expected in mid-2024.
The company is currently awaiting multiple permit approvals for two exploration wells, which will also serve as a test cavern development well, a waste disposal well, and a water access well.
Engineering is progressing toward pilot production together with the data from the cavern well to complete the production permit for a Large Mine Operation. This application, along with the necessary studies, has been in process since March 2023.
Streetwise Ownership Overview*
Ownership and Share Structure
Management and insiders own 60.4%. Including options, Peter Hogendoorn controls 6.48% with 2.00 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.
The company has CA$1 million in the bank and is trying to raise CA$4 million to CA$6 million. Sage Potash recently closed a small CA$1.5M financing and is expected to raise additional capital once drill permits are approved.
There are 54.14 million shares outstanding and 50.51 million free-float traded shares. The company has a market cap of CA$11.03 million. It trades in the 52-week period between CA$0.27 and CA$0.80.
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- 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.
- 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.
- Amanda Duvall rote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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