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By Leia Michele Toovey- Exclusive to Potash Investing News

Rumours of BHP Billiton’s interest in acquiring a major potash company just won’t go away, as JP Morgan picked up on the theme on Tuesday. Speculation mounted that the world’s largest miner was preparing for a large acquisition after the company raised more than US $6 billion through the sale of bonds.  The company failed to confirm the reason for the fundraising, and this sent many reporters and miners on a fantasy trail, voicing their predictions about what possible large acquisition the company could be prepping for. Potash Corporation of Saskatchewan was at the top of reporter’s speculation lists.

Potash Corporation of Saskatchewan was a popular speculation because BHP has already looked into a deal with the Canadian potash giant. Other speculations included a possible bid for Australian oil and gas explorer Woodside Petroleum or an offer for OZ Minerals, which owns a copper and gold mine based in South Australia. BHP’s CEO Marius Kloppers has already voiced that the company would use the poor economic climate to look into possible acquisitions.  With a relatively strong balance sheet, the company could easily acquire established mining properties to boost its portfolio.

Analysts strongly disagree with the Potash Corp rumour. BHP certainly has plans to expand its fertilizer production, as it already owns Canadian potash properties and bid unsuccessfully for a Russian project. But top-ranked analyst Sam Kanes at Scotia Capital said the odds of a BHP bid for Potash, Canada’s largest mining company, are “remote.” Scotia Capital said any offer for Saskatoon-based Potash would have to be friendly, to ensure government approval for the deal.

The potash sector has been quiet when it comes to M&A activities, despite the frenzy of activity across the other commodities.  In fact, activity was non-existent until a few months back when Potash One Inc.’s (TSX: KCL) proposed a business combination with Potash North Resource Corporation (TSX .V: PON) came to light.

Company News

Despite posting a net income loss of more than $530,000 in fiscal 2008, last year was a positive one for Athabasca Potash Inc. (API), “We think it’s been a wonderful year,” said Dawn Zhou, API’s president and CEO. “We have completed our geological explorations, which show a sufficient mineral resource estimate to support our pre-feasibility study and feasibility study for building a mine at the Burr project, and that’s very substantial.” Zhou said while the company is growing, it continues to look for ways to finance a new potash mine — a project that would run into the billion-dollar range if it reaches the construction stage. API would be interested in either or a partnership, or conventional financing.

API recently filed its audited financial statements and annual information Form for the year ended December 31, 2008.  As of December 31, 2008, API’s cash and cash equivalents balance decreased to $31,577,777 during the year ended December 31, 2008. At December 31, 2008, the company had a working capital balance of $30,368,175, a decrease of $12,478,176 from $42,846,351 at December 31, 2007. The Company raised capital for gross proceeds of $7,154,391 during 2008. This capital was derived from the exercises of the over-allotment, stock options and broker warrants related to the IPO completed in December 2007.

API recorded a net loss of $534,683 ($0.015 per share) compared to a net loss of $2,696,523 ($0.155 per share) for the same period in 2007. API’s source of income is the result of investing excess cash reserves in short-term deposits and farm rents on surface lands owned. For the year ending December 31, 2008, the company reported interest revenue of $1,478,800 compared to $293,380 and rents of $108,843 for the year ending December 31, 2008 compared to nil in the prior year. Operating costs increased to $2,717,055 (before stock based compensation in the amount of $598,293) for the year ended December 31, 2008, compared to $551,666 for 2007 (before stock based compensation of $2,913,437).

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