Let us move finally to the last commodity and we start again with the supply and demand situation. What we have here is basically arable land per person which is going down as we all know with more people and population growth. What we also know is that the world needs the three groups of fertilizers, phosphate, ammonia nitrate and potash for agriculture. We also know that potash is used more intensively as countries go into the medium level of development. In higher income countries like the States or in Europe, 50 per cent or more of the fertilizer will be potash. In developing countries that number can go down to 10 or 15 per cent so there is big room to grow i.e. in China and India. Brazil uses like 40 or 50 per cent of the potash. It’s very strong in agriculture. Future demands are very real and there is strong evidence of future demand for potash. Supply is basically coming from two places in the world. Russia and Saskatchewan. The big green dot is the size of production. So you are having about 50 per cent of production in Saskatchewan and you are having maybe 30, 35 per cent in Russia. Then you have some small basins in Germany and you have localised production in Brazil. Maybe a little bit in Argentina. But in terms of Tier 1 production, you are really talking about two basins in the world. The market size is 52 million tons. So you will see why we like this market. Its bulk mining. The value is in the resource, not in the process. But probably the three big characteristics that we look for are : capital intensive - to develop the mines you probably need more than one billion dollars- , high technology and scarce resource. Slide 35 When you put those three conditions you start looking not surprisingly at a commodity with a very good industry structure. Limited players, six players account for 75 per cent of the world production. And again why is that ? Well, to start talking about a relatively small mine, a two million ton mine, you are talking about $1.5 billion investment and you are talking about eight years to develop. So it is time consuming and for a company that is a start-up company or a one commodity company, the risk of building this would be substantially high. Maybe this explains the age profile of existing mines. The last shaft of potash was sunk 20 years ago. The last shaft in Saskatchewan was 30 years ago. The average life is about 25 years. I’m sorry not the average: 85 per cent is more than 25 years old. So even though the market fundamentals are very good, it is difficult on one side to get into the market. It is difficult to get substantial land acreage and also there was an issue that affected the industry in the last 10 or 15 years with Russia. The collapse of the former Soviet Union really led to a substantial decrease of potash supply in 1995 and 1996. Now it is recuperating. But what we see in the next five or six years is a very tight market that will again start becoming very interesting. Slide 36 In this map everything that is not yellow is from where current production is coming from. . Starting from your right, you will see PCS, which is the largest producer in the world, and then you have Mosaic and you have Agrium in purple and everything in yellow that surrounds it is the land acreage that we currently hold. We came into this through a joint venture with a small junior, Anglo, and we are quite happy with the 4,000 square kilometres of land which we currently hold. This is obviously the sweet spot of the basin and this is Potash territory. What we need to do is identify what is the best position for the next new mine in Saskatchewan and that’s what we are currently doing. Slide 37 So what is the process that we are undertaking ? First we had 260 oil holes of information, core samples that we interpreted and we have selected about six preliminary, potential mine sites. The next step is doing 2D seismic, a concept study, 3D seismic. In particular about 300 square kilometres of 3D seismic are critical to calculate the size of the seal. If you have read lately, there has been substantial flooding both in Russia and in Canada. Basically the art in potash mines is having a mine with the greatest seal around it which avoids the flooding. So that is going to be the challenge in 3D seismic. Then you would go into drilling and pre-feasibility study. We hope by some time in 2010, solidly into pre-feasibility study. We’re leveraging this on petroleum. Petroleum has been a big help on that. We have a team already in Vancouver and work is proceeding.
Slide 38 We also have land in Manitoba. It is like the end of the basin sweet spots, but there is a possibility of a smaller mine with solution mining, and also of leveraging and partnering with other landholders in the region. So that is an alternative we have in Manitoba.
