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MINING REPORTER

Mining promoter Robert Friedland is jumping into the agriculture sector, taking over as chairman of a junior miner trying to build Saskatchewan's first new potash mine in decades.

The charismatic financier, best known for leading the multibillion-dollar sale of the Voisey's Bay nickel deposit in Labrador and the massive Oyu Tolgoi copper and gold discovery in Mongolia, was appointed chairman of Potash One Inc. KCL-T yesterday.

The Vancouver-based company, which is developing the Legacy project in Saskatchewan, will award Mr. Friedland "millions" in options, president and chief executive officer Paul Matysek said in an interview yesterday.

In addition to his chairman duties, Mr. Friedland will try to woo Asia-based investors to help finance Potash One, which is expected to need more than $1-billion to build the Legacy mine.

"If you are looking for elephants, you want to work with elephant hunters," Mr. Matysek said.

While Mr. Matysek has enjoyed significant success as a mining executive - he was the founder of Energy Metals Corp., which was sold for $1.8-billion at the height of the uranium bubble in 2007 - he said Mr. Friedland operates on a higher plane.

"He can get my company into places where I can't go, through his contacts and his successes. [The cost of]putting a potash deposit into production is into the billions so you need an extra special set of unique skills," he said.

Potash One shares soared as much as 25 per cent yesterday and ended the day with a 17-per-cent gain.

Mr. Friedland is already believed to be an investor in Potash One. He was a shareholder of Potash North Resource Corp., which completed a merger with Potash One last month. Mr. Friedland is understood to own less than 10 per cent of the company but the exact size of his stake has yet to be disclosed.

Demand for potash, which is used to make fertilizer, has remained strong despite the global recession.

As countries like India and China increase meat consumption, the amount of fertilizer needed by farmers to increase crop yields has soared.

The current price of potash is about $700 (U.S.) a tonne compared to $100 a tonne five years ago.

Potash One hopes to shake up Canada's staid agricultural sector, dominated by a handful of companies that include Potash Corp. of Saskatchewan, Agrium Inc. and Mosaic Co.

The three producers, which all mine potassium minerals (commonly called potash) in Saskatchewan, negotiate contract prices with customers as a unified export company called Canpotex Ltd.

But the stranglehold the three firms have on production of Canadian potash could soon be loosened. BHP Billiton Ltd., the world's largest mining company, is developing a potash project in Saskatchewan after paying $284-million (U.S.) in cash for Anglo Potash Ltd. last year to gain full control of the deposit.

Potash One is hoping to be the first among a handful of juniors to achieve production. The Legacy project contains indicated resources of 40.8 million tonnes of K{-2}O (a measurement of potassium content) and inferred resources of 391.5 million tonnes. The company expects to provide an updated resource estimate soon.

Saskatchewan hasn't seen a new potash mine for nearly 40 years, in part because of a decades-long slump in prices and the fact that deep potash mines are extremely expensive to build.

Mr. Matysek said Potash One hopes to strike a so-called off-take agreement with a customer in China or India that would provide a guaranteed supply of product in return for financing to build the mine.

POTASH ONE (KCL)

Close: $2.49, up 37¢

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