Prospect Global Resources, Sichuan Chemical Sign $2B Potash Deal

Prospect Global Resources PGRX and Sichuan Chemical Industry Holding (Group) Co., Ltd. today jointly announced a more than $2-billion agreement, over a 10-year period, under which Sichuan will purchase at least 500,000 metric tons of potash annually, or 25% of the projected output of Prospect Global's American West Potash field in Holbrook, AZ. The conservative deal valuation reflects current market prices of about $475 per metric ton for a total of 5 million metric tons. The contract is take-or-pay, backed by a letter of credit. The agreement also provides an option for American West to sell and Sichuan Chemical to purchase an additional amount of potash. It is believed to be the largest-ever purchase and sale contract – in price and volume – for a potash mine under development in the United States. It is also believed to be one of the largest potash export contracts in U.S. history. Prospect Global believes that this bankable offtake agreement enhances the attractiveness of the project to lenders. The current timetable calls for the American See full press release