Kap reaches deal with Canadian potash producers

A consortium of Canadian potash producers has agreed to participate in the Yolanda Natural Nitrates project in Chile, owned by Kap Resources (VSE).

The consortium, which includes Potash Corp. of Saskatchewan (TSE), Cominco Fertilizers (TSE), International Minerals & Chemicals and Kalium Canada, will supply potash to, and acquire an equity interest in, the Yolanda project. Potassium and potassium chloride will be purchased from the consortium and used by Yolanda to produce an expected 250,000 tonnes of potassium nitrate annually, at full production. Potash Corp. of Saskatchewan will then act as the exclusive sales agent outside of Chile for all potassium nitrate produced by the project.

In addition to producing potassium nitrate, Yolanda will produce sodium nitrate and iodine.

The consortium will invest an aggregate of US$2.5 million to buy more than 2.4 million common shares and will receive warrants to acquire an additional and equal number of shares for $1.40 each. If the warrants are exercised, the total commitment will be $5 million and will represent about 19% of Kap’s outstanding shares. Kap expects to begin production by late 1996.