By Rick Mills    www.aheadoftheherd.com

I think there is a good chance that we’ve seen the bottom in the junior potash market.

The senior producers have seen their stocks jump 15%-20% recently, as it was reported that market-savvy investor George Soros (the man that broke the British pound) is stepping back into the potash sector. Mr. Soros boosted his funds position in Potash Corp by 50%; some $240 mm. Potash Corp is North America’s largest potash producer.

What isn’t known is if he did that because he believes in the long-term future of potash, or if he smells a take-over about to happen - Bank of America is on the record stating that BHP Billiton could buy POT.

Also in the rumor mill is that Warren Buffet is buying German potash producer K+S Aktiengesellschaft. 

Between the BHP rumor, and the confirmed Soros purchases, many of the major producers have seen their stocks levitate near or at year highs, despite the price of potash being 50% lower than a year ago.

CIBC agricultural analyst Jacob Bout has said that he doesn’t expect a pickup in potash prices until 2011 - but potash stocks should start to price in that move 6 months in advance - by mid 2010. 

So let the bottom fishing begin! Below are some junior potash companies that appear poised to move up the food chain.

Encanto Potash (EPO-TSXv)  has been able to snare a quality portfolio of properties late in the Saskatchewan potash land rush, making some well-positioned deals with several First Nations groups located right in the middle of the potash fairway.

Drilling is now underway, but historical oil and gas drilling logs clearly show potash beds present (the formations of the potash beds in the Saskatchewan Potash Basin are known for their consistency over many kilometers).

Amazon Mining (AMZ-TSXv) has a potash asset in Brazil, at surface, that is so large it’s simply hard to believe. Imagine a deposit 100 km long! But it has different chemistry than conventional potash so would need a different process. New processes always make the market nervous, and it’s a serious initial barrier to increased valuation. But with the prize so enormous, and in a country that wants and needs the potash, Amazon will definitely attract attention and capital.

Western Potash Corp. (WPX-TSXv) was formed when the opportunity to acquire key prospective ground adjacent to known Potash deposits in the province of Manitoba, Canada, presented itself.

The Company has acquired 2 potash exploration permits in Southwest Manitoba located along the Saskatchewan border. The property covers 545 km² and adjoins two potash deposits that are estimated to host over 1 billion tonnes of potash. In addition, recent 2D seismic data has confirmed the continuation and presence of the salt beds that host mineralization throughout the Company’s property.

Allana Resources (AAA-TSXv) has three potash concessions (Dallol Potash Project) located in Ethiopia’s northeastern Danakil Depression totaling about 150 square kilometers. The Dallol Potash Project area is approximately 100 km from the Red Sea coast 

Allana has completed a NI 43-101 compliant technical report for the three concessions highlighting several unique advantages of this project:

- An Inferred Mineral Resource of 105,200,000 tonnes of potash mineralization (Sylvite and Kainite) with a composite grade of 20.8% KCl

- Near-surface (shallow-depth) potash mineralization (within 50 meters of surface)

- Potential for solution or open-pit potash mining

Potash North Resource Corp. (PON: TSXv) is leveraging its strong financial backing to expedite the exploration and potential development of a potash mine in the world’s most prolific potash region in Saskatchewan, Canada. The Potash North permit areas are contiguous to the world’s largest potash mines.

The exact continuance of the potash formation is presently unknown; however the recently released NI 43-101 Report states that the encouraging assays warrant an aggressive exploration program.

But what’s the goal for our above listed juniors? Well the next stage, if shareholders are lucky enough, is finding and defining a resource and grade - becoming a development stage company like the two listed below: Potash One and Athabasca Potash.

Potash One KCL-TSX

Share Structure and Cash

Shares Outstanding: 77,132,424

Fully Diluted: 102,234,486

Share Price: $2.35

Market Cap: $180 million

Cash: $40 million

Potash One is the acknowledged leader among the junior potash companies; they might own the first potash mine built in Saskatchewan in 40 years.

Potash One just announced it has started a feasibility study on its Legacy Project. Potash One has a NI 43-101 compliant Measured and Indicated Mineral Resource of 251 million tonnes of KCl grading 26% and an Inferred Mineral Resource of 852 million tonnes of KCl grading 23.8%.

Athabasca Potash API-TSX

Share Structure and Cash

Shares Outstanding: 37,070,041

Fully Diluted: 40,566,273

Share Price: $5.75

Market Cap: $213 million

Cash: $20 million

Like Potash One, Athabasca is a development stage company.

Athabasca Potash’s Burr deposit contains a Measured Mineral Resource of 125,800,000 tonnes at a grade of 21.27% K2O, an Indicated Mineral Resource of 299,000,000 tonnes at a grade of 23.07 % K2O, and an Inferred Mineral Resource of 186,900,000 tonnes at a grade of 23.55% K2O

A prefeasibility study is expected to be completed in the third quarter of 2009.

Conclusion

The potash story is just starting, unlike other resource plays there is no cycle, demand is always going to be there and its rising year over year. The total number of listed potash companies is extremely small and the best areas are already staked.

Rick Mills may be contacted at rick (at) aheadoftheherd.com.  His web site is " rel="nofollow" target="_new">www.aheadoftheherd.com