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Sage Potash expands into lithium exploration within the Paradox Basin in Utah, USA

It would be great to find a small but growing company that has potash fertilizer for food and lithium for batteries. For example, global leading potash and lithium producer Sociedad Quimica y Minera de Chile S.A (NYSE: SQM) now has a market cap of US$22.3 billion.

Today’s company has a potash resource and lithium potential, two of the most important materials in the modern world. Potash (plant or wood ash) is a critically important form of fertilizer used for global food production, and lithium has become the key green metal for the global energy transition.

Sage Potash Corp.

Sage Potash Corp. (TSXV: SAGE | OTCQB: SGPTF) (“Sage Potash”) is a Canadian company primarily focused on potash, but recently also turned their attention to lithium. Sage Potash holds private mineral leases located in the Paradox Basin in Utah, USA, that grant the Company exclusive rights to extract potash, lithium, and other saline minerals and resources. The Paradox Basin is known to host extensive undeveloped world class potash resources. Sage Potash’s new subsidiary is Sage Lithium Corp.

Sage Potash Corp’s portfolio of mineral leases within the southern part of the Paradox Basin in Southeast Utah, USA (small green, blue and brown shading)

Source: Sage Potash Corp. website

Sage Lithium Corp. (100% owned subsidiary of Sage Potash)

As announced on June 26, 2023, Sage Potash has formed a standalone 100% owned US subsidiary called Sage Lithium Corp. (“Sage Lithium”) for the purpose of exploring Sage Potash’s mineral leases for lithium and other soluble saline minerals. The announcement stated:

“Due to multi-commodity brines with high Li-K-Br analyses reported from historic oil and gas wells in the area, the Company is encouraged to explore additional potential revenue sources known to occur within the Paradox Basin. The primary objective of Sage Lithium will be to conduct testing for lithium and other soluble saline minerals within the existing brine hosting strata covered by Sage Potash’s private mineral lease portfolio. Sage Lithium will be operating in conjunction with its parent company, Sage Potash…….This strategic decision is grounded in the Company’s assessment of historical records derived from oil, gas and potash wells drilled in the Paradox Formation. The Company believes these records indicate a strong possibility of intersecting super-saturated brines (composed of up to 40% minerals and 60% water) containing a diverse range of valuable minerals, including lithium, bromine and potassium, in the Paradox Formation.”

The goal is to prove up a lithium (“Li”) and boron (“Br”) resource similar to nearby Anson Resources Limited (ASX: ASN | OTCQB: ANSNF) (530 MT indicated resource grading 123 ppm Li and 3,474 ppm Br) in the northern part of the Paradox Basin.

Sage Lithium intends to drill two exploration wells and concurrently sample, test, and analyze strata that are amenable to brine extraction for lithium, bromine and other soluble saline minerals.

Sage Potash’s land portfolio (potash resource and lithium potential)

Sage Potash’s land portfolio consists of nearly 90,000 acres of State and Private Mineral leases and BLM Prospecting Permit Applications. The portfolio lies within the Paradox Basin of Southeast Utah, USA.

Sage Potash already has a good sized resource on their property for their potash project (Sage Plain Project).

The Sage Plain Project Mineral Resource is:

  • Inferred Resource for Upper Potash Bed, Cycle 18: 159.3 MMT, grading 26.96 % K2O/42.67 % KCl
  • Inferred Resource for Lower Potash Bed, Cycle 18: 120.2 MMT, grading 22.60 % K2O/35.77% KCl

The next steps for Sage Potash with regards to their potash resource include preliminary engineering towards releasing a PEA, Feasibility Study, and pilot production.

Closing remarks

Sage Potash is still at the early stage with a lot of work ahead to develop their potash resource and explore for lithium and boron at their mineral leases located in the Paradox Basin, Utah, USA. If they can replicate the success of Anson Resources (market cap A$196 million) or even some of the success of SQM (market cap US$22.3 billion) investors will potentially be well rewarded. The usual mining risks apply, including exploration risk, funding and permitting risk in the USA. The Company is currently looking to raise C$1.5 million which should potentially be an easy ask given the potash, lithium, and boron potential; as well as the recent OTC listing.

Sage Potash Corp. trades on a market cap of only C$18 million. Exciting times for the Company and one to watch in 2023.




Sage Potash Seeks to Address Supply Chain Security and Sustainability with Domestic US Production

In my opinion, there are two key themes to consider when it comes to investing in natural resources (over and above profitability of course). The most prominent theme at present is the whole supply chain/security of supply issue that we see unfolding globally, most notably when it comes to electric vehicles as the Western world seems determined to reduce dependency on China.

The other theme that isn’t nearly as prevalent right now, but I suspect will increase in priority over the coming months and years, is how you mine and process your resource. As more and more emphasis is placed on reducing carbon emissions, I firmly believe a premium will start to be placed on the miner or refiner with a lower carbon footprint. Whether that comes from the application of a meaningful carbon tax, carbon credits, or in the fuel business there are RINs (renewable identification numbers), some sort of scorecard to rank which is the more environmentally friendly source.

Sage Potash to focus on US production in the Paradox Basin, Utah

One of the newest publicly traded ventures to embody the above themes is Sage Potash Corp. (TSXV: SAGE). Sage, having just started trading on March 20, 2023, is a Canadian company developing the Sage Plain Property in Utah and intends through sustainable solution mining techniques to become a prominent domestic U.S. potash producer within the Paradox Basin.

The Paradox Basin in Utah is known to host extensive underdeveloped world-class potash resources (approximately 2 billion tons, according to the US Geological Survey). The Paradox Basin benefits from close proximity to modern infrastructure, low-cost power and electricity, and a skilled workforce in a politically stable and mining-friendly state.

Sage is looking to compete with Nutrien Ltd. (TSX: NTR | NYSE: NTR ) and The Mosaic Company (NYSE: MOS) to address supply chain security and introduce sustainable mining practices with domestic US production of potash.

US domestic potash source

But what is the motivation to develop a domestic potash source? For starters, almost 40% of global potash production comes from Russia and Belarus, and that number goes up to 50% if you also include China. Not exactly the “A-List” for U.S. trade at present. However, despite the fact that the U.S. imports 94% of its potash, almost all of it comes from its friendly neighbor to the North (Canada), which is the world’s largest producer of potash.

Everyone trusts Canada, don’t they?  But that’s not the point, potash prices rose as much as 87% in 2021, largely due to sanctions brought about by Putin’s senseless (and thus far relatively unsuccessful) invasion of Ukraine. Price volatility like that increases the need to have greater control over pricing.

Additionally, shipping costs from Saskatchewan (where the bulk of Canada’s potash comes from) and lower barge capacity due to low water levels of the Mississippi River, can still add $150 – $225/ton to potash costs that would not necessarily be incurred by having local production.

It makes for a reasonably compelling case for Sage to enter the market.

IMAGE 1: The US Potash Market and World Production

Source: Sage Potash Corporate Presentation

Low emission, sustainable production

Then there’s investing theme #2 – low emission, sustainable production. The Paradox Basin resource is at an optimal temperature for solution mining, which Sage plans to combine with mechanical evaporation which in turn is “greener” than the more traditional evaporation ponds.

The benefits of mechanical evaporation include reduced water consumption and a reduced land footprint but economical also improves the ability to stage growth through modular units as well as increasing tolerance to climate/weather impacts allowing for year-round production.

Which all dovetails nicely with the #1 investing priority – profitability.  Solution mining and mechanical evaporation should mean lower CAPEX (capital expenses) and lower OPEX (operating expenses) relative to conventional potash operations.

Combine that with lower transportation costs to key markets and most of the boxes are ticked.

Short-term timeline to initial production

Looking forward, the Company’s objectives are to complete a step-out geological hole that will further define the resource estimates and may double as a possible cavern development test well, to advance preliminary engineering towards a Preliminary Economic Assessment (PEA), Feasibility Study, and then pilot production.

If all goes according to plan, pilot plant production could be achieved on a short timeline of 1-2 years with the ability to expand from 50,000 to 150,000 tons per year (TPY) for 20 years.

Sage has partnered with RESPEC Company LLC, a leader in potash solution mining consulting and engineering, to undertake the Phase One Program which consists of a step-out geological hole, the Sage 1 Well, located 700 meters (0.4 miles) from the Johnson 1 Well, plus a water brine supply well and a disposal well. With these results, RESPEC will continue with the preparation of a PEA technical report for the Sage Plain Potash project.

Sage Potash currently trades at a market cap of C$23.7 million.