Vale divesting out of Saskatchewan Potash project. Possibly...

Vale divesting out of Saskatchewan Potash project. Possibly positive for ELM as they look closer to home for future Potash supplies.

(WPX-TSX) Market Perform(S); Price - $0.64; Target - $1.45

Impact: Potentially Negative

Vale (VALE-NYSE, US$18.02, Market Perform, covered by Tony Robson) announced it will postpone its Kronau solution mine greenfield potash project in Saskatchewan, located
immediately adjacent to the north to WPX's Milestone solution mining project. This is potentially negative for WPX, as one potential exit strategy could have been Vale becoming more serious about Kronau, and then acquiring its neighbour to the immediate south, WPX, to acquire more resource. Truthfully, we have never counted on Vale to seriously pursue Kronau, as it is one of three solution mining potash projects it is considering. The large-scale PRC project in Argentina recently got approved by Vale and continues to be constructed, while the earlier-stage Carnalita carnallite solution mining project in Brazil continues to be progressed, though has yet to be approved.

We never expected a non-South American potash project such as Kronau to be approved considering Vale's strategic and domestic interests.

Joel Jackson, P.Eng., CFA (416) 359-4250