| About Potash | Demand Drivers |

About Potash

Potash is a potassium-rich organic product mined from deposits left behind when ancient sea beds evaporated. Potassium (K), one of the key ingredients in potash, is the seventh most abundant element in the earth's crust. 95% of the global potash supply is used for fertilizer within the agriculture industry. Potash can be put straight into the earth as a raw material or it can be combined mechanically or chemically with other nutrients.

Potash fertilizers enhance water retention, disease resistance, and crop yields as well as increasing animal growth and milk production in feed supplements. There is no commercial substitute for Potash in fertilizer.

Potassium assists the macro regulation of plant physiological function. Without potassium plants will not attain maximum growth and yield. There are no other known nutrients that perform the same function as potassium.

Potash is a granular mineral that appears reddish when it is rich with iron, but is often seen as a shade of white. There are two different principal grades: granular and fine, depending on particle size and distribution.

It can be mined "conventionally" or by means of "solution mining" which involves extraction with brine. The Potash North permit areas would be conducive to conventional mining.

The cost of production is a function of the geological conditions at the mine site. The flat ore bodies that are typical in Saskatchewan's Potash Basin favor conventional mining, and incur much lower extraction costs than those in other parts of the world, where the potash deposits tend to be twisted or folded.

Asia, Russia and Latin America have low nutrient soils which are being further depleted by continuous cropping. China's consumption of potash will need to double to meet international recommended Nitrogen/Phosphate/Potassium (NPK) ratios.

China is expected to continue experiencing a shortfall of supply. Historically China has been able to negotiate hefty discounts through volume purchasing, but Indian importers have jumped ahead of China and set benchmark potash rates at US $625/tonne, forcing the Chinese to match this price to acquire orders for the remaining available potash.

Surging global demand for food ensures that these shortfalls will apply upward pressure on the price of Canadian potash exports.