Chance discovery, strong markets spur new exploration company
Patrick Laracy, CEO of Vulcan Minerals — File Photo
A chance potash and salt discovery while hunting for oil and gas on Newfoundland’s west coast is destined to become a new exploration target for Vulcan Minerals Inc.
The St. John’s company took the first steps this week — announcing plans to create a new, publicly traded company focused exclusively on potash and salt exploration.
Potash is a crop fertilizer and rock salt is used for de-icing roads. Vulcan’s goal is to turn its early-stage discovery into a larger, commercial find worthy of an underground mine.
First, Vulcan must work through several months of regulatory hurdles to create a publicly traded company. Then, it goes to the market to raise exploration dollars.
If all goes well, the company could start drilling this fall.
“We’d like to shoot for that,” said Pat Laracy, president and CEO of Vulcan. “Initially, I would estimate a four-well program.”
Laracy expects Vulcan will retain 20 per cent of the new, unnamed company.
Vulcan has hired geologist David Carter to assess its resource potential and lend his expertise to the company.
Carter, a consultant with Halifax-based Hy-Grade Geoscience, has also worked with Potash Corp. of Saskatchewan, one of the largest producers of potash in the world.
“He’s doing a resource assessment for us and he’s agreed to stay on on a retainer basis to provide us with the expertise in this area,” said Laracy.
Vulcan has staked 1,100 mineral claims spanning 300 square kilometres along the Bay St. George coastline south of Stephenville and extending as far as the highlands near Robinsons.
“We’ve staked a large area based on our geological experience in this region where we think the highest potential for a deposit exists,” said Laracy.
“We encountered potash through the course of our drilling … that was interesting and intriguing.”
The company’s potash and salt discovery dates back to 2002, when it drilled the Capt. Cook well.
For more than a decade, Vulcan has been hunting for oil and gas on the island’s west coast, a petroleum frontier where the company has made two natural gas discoveries in recent years.
A combination of higher prices and anticipated long-term demand for agricultural fertilizer piqued Vulcan’s interest in potash.
“Potash, because it’s an agricultural product, is going to have legs going into the future — the demand for fertilizer is expected to grow significantly,” said Laracy.
Another factor in Vulcan’s decision is a $1.67-billion expansion of Potash Corp. of Saskatchewan’s New Brunswick mine.
Potash Corp. produces 20 per cent of the world’s potash supply, and its key markets include India, China, the rest of Asia, Latin America and North America.
Laracy figures Vulcan’s spinoff company will have a good starting point for its exploration efforts — its west coast discoveries share similar geology with Potash Corp.’s mine in Sussex, N.B.
“We’re in the same sedimentary basin. … We’re in the same geological environment, the same age of rocks.
“It’s logical to assume that we have a similar potential to find a scale of potash that will be commercial.”
Exploration drilling will help prove its potash and salt resources. If those efforts succeed, Vulcan’s spinoff probably won’t be the company that develops a mine.
Laracy expects a larger company would buy it out.
“We know they’re out there. We’ve got to do the hard lifting. They don’t mind buying it once you prove it, but you’ve got to prove it first.”