TORONTO (miningweekly.com) – Analysts observing the Saskatchewan potash industry seem to agree that junior project developer Karnalyte Resources is most likely to secure financing for the first phase of its C$626-million Wynyard potash project this year.

In announcing its 2012 year-end results, Karnalyte on Tuesday reflected on the past year’s achievements in moving the 625 000 t/y first-phase of the project up the value curve, saying it now was the most advanced junior potash developer.

During 2012, Karnalyte focused on initial site preparation and detailed engineering activities, as well as preparing the Wynyard carnallite project's environmental-impact statement (EIS) for submission to the Saskatchewan Ministry of Environment (MoE).

Most critical of the subsequent milestones were receiving EIS approval from the Saskatchewan MoE in February, entering into a strategic partnership and offtake agreement with Indian firm Gujurat State Fertilizers & Chemicals (GSFC) and closing the associated GSFC private placement for $44.7-million.

In February, BMO Capital Markets analyst Joel Jackson said that, against a backdrop of depressed mining stocks, challenging equity markets and investor concern that there is a general rising surplus in global potash production, Karnalyte was the most advanced potash junior and most likely to secure mine financing.

On Tuesday, Salman Partners analyst Andrea Rubakovic maintained a ‘buy’ rating on the company’s stock and a $14 price target. While the company’s 9c loss per share was slightly higher than consensuses calling for a 6c loss, she said she was more concerned with the company’s cash position, which stood at $25.1-million at December 31, 2012, and that the healthy cash balance should be sufficient to support the company’s activities in preparation for full construction, scheduled to begin later this year.

“In our view, this project in the Saskatchewan basin is one of the most likely to be financed through to production,” she said in a note to clients.

Fraser Mackenzie analyst Wojtek Nowak said he expected the company would split the balance of the required capital evenly between debt and equity.

“With $25-million in cash as of year-end plus the $45-million from GSFC, we estimate about $230-million of equity to be funded. GSFC could account for another $45-million (maintaining a 20% share), while the remaining $185-million could come from another strategic partner and/or outside investors,” he said in an investment research note.

“Overall, we view the funding requirements as manageable relative to other peers who do not have a strategic partner or have larger upfront capex needs.”

Nowak maintained his ‘top pick’ rating and a $16 price target.

Karnalyte said its short-term objectives were to continue to focus on advancing site preparation and detailed engineering activities to enable the start of full construction activities at the site, pursuing additional strategic partnerships, and hiring personnel required to construct the plant and mine.

The company’s stock on Tuesday changed hands for C$7.90 apiece on the Toronto bourse.