Muskowekwan To Develop First Potash Mine On Treaty Land

By Lloyd Dolha

The Muskowekwan First Nation (MFN) of southern Saskatchewan has entered into a potentially lucrative joint venture agreement to develop a potash mine with Encanto Potash Corporation, a Vancouver-based mining company. “With all that’s going on in the potash industry in Saskatchewan right now, this agreement is unique,” said Muskowekwan Chief Reginald Bellerose. “While there is a lot of interest in potash, this agreement will work towards the first potash mine located on a Saskatchewan First Nation.” The mine will be developed on the Saulteax First Nations lands, encompassing some 43,000 acres of the First Nation’s 58,241 acres of treaty reserve land located about 75 miles northeast of Regina.

“We are very pleased to have achieved this landmark step in our relationship with the Muskowekwan First Nation,” said Encanto president and CEO Jim Walchuck. “The agreement provides certainty of title while concurrently affording an equitable far-reaching agreement for the Muskowekwan First Nation.” As part of the agreement, the First Nation will receive an intial fee of $1 million, of which they have already received and initial payment of $200,000. The remainding $800,000 will be paid to the Muskowekwan upon completion of a formal lease arrangement and a community referendum on the project.

Muckowekwan Chief and CEO of Muskowekwan Resources Ltd., Reg Bellerose said the community is committed to becoming more self-reliant and determined to reduce reliance on government funding by developing own-source revenue. He said the agreement with Encanto provides the opportunity to do that over the long-term, providing training, employment, and business opportunities for its roughly 16,000 members. It also ensures that future developments do not compromise their culture, existing rights, and environment. “This is a formula our First Nation can accept and obviously so can industry,” said Bellerose. “Today is a good day.”

Chief Bellerose said the $800,000 payment will likely go to the development of some kind of community centre for the benefit all its members. He said the Muskowekwan are waiting for an appraisal of exactly how much potash is on their land, but preliminary seismic drilling has indicated positive results. Bellerose said most potash mines produce around two billion tonnes annually worth $450 to $550 per tonne. Of that, the First Nation will receive a 5% Crown royalty to be held in trust, and Muskowekwan Resources Inc. will receive a 3% royalty. “So it’s a staggering amount of money,” said the chief.

Meanwhile, the Aboriginal Potash Group had raised some $25 billion from investors in their bid to takeover PotashCorp, but stepped back since Ottawa killed the US$40 billion hostile bid from Australian-based resource giant BHP Billiton. Ken Thomas, of the Aboriginal Potash Group said they are looking at a range of other options to deploy the funds raised in Canada. Thomas said he has received calls from Hedge Funds in Europe and New York seeking investment opportunities. “We’re doing further research on how much potash we have,” said Thomas, noting estimates project 5 to 6.5 billion tonnes. “What we’re finding is if we have the potash on our land and can prove it, raising the money will be no problem,” said Thomas.