Research #1

Thick beds of rock salt have been found in the Sakon Nakhon and Khorat basins in northeastern Thailand. These deposits occur in the Cretaceous Maha Sarakam Formation. Substantial reserves of potash and salt in these deposits resulted in the establishment of potash projects. The Thai Government has invited the Asian member countries and local enterprises to explore and exploit this resource. (Source)

On July 12, Vatic Ventures Corp. has filed with the TSX Venture Exchange the preliminary documents required for the approval of the acquisition of 80% of Saksrithai Development Co. Ltd. As a result of filing the preliminary documents together with its annual financial statements with various applicable securities commissions, the company’s cease trade order has been revoked and its shares have been reinstated for trading effective July 14. Rockstone is starting to follow Vatic’s corporate developments and will report, once materialized, more details on its intent to acquire 80% of the issued and outstanding shares of Saksrithai Development Co. Ltd., a Thailand company holding 2 Special Prospecting Licences (“SPL”) for the exploration of potash in northern Thailand’s prolific Khorat Basin, which contains a relatively large evaporate basin of Cretaceous age. The Dan Khun Thot Project from Thai Kali Ltd. is located adjacent to, and contiguous with Saksrithai’s licence area which Vatic intends to acquire. Dan Khun Thot’s initial mineable reserve has been estimated to be 103 million t at an average potash grade of 21.5% KCl. Both sylvinite (up to 5 m thick) and carnallite (up to 60 m thick) are present in drill holes.

Vatic Ventures Corp. intends to explore and develop a potash project in Thailand’s Khorat Basin, which hosts the world’s largest (known) undeveloped high-grade potash resources. According to a global assessment of potash resources by USGA:

“Global scarcity is not the issue with potash – transportation costs are.”

Potash is an essential plant nutrient, one of the 3 required fertilizers for crops such as rice, wheat and palm oil. Potash is produced from potassium-bearing ores, such as sylvinite and carnallite, by conventional underground mining, solution mining or evaporation from brine lakes. The present annual world production of potash is about 60 million tonnes KCl, with an annual growth rate of about 2.4%. The major producing countries include Canada, Russia, Belarus, and Germany, which combine for 80% of world production. The industry’s 5 top producing companies account for 80% of world production. Excluding the limited production from China’s Qinghai salt lake, the only known potash resources in Asia are located in Thailand’s Khorat Basin.

Growing Asian Potash Demand

• The majority of the growth in potash demand is expected to occur in developing countries, with demand in developed countries remaining relatively flat.

• Asia currently consumes over 40% of global potash production and the Southeast Asia region is expected to see the highest growth rate in potash demand.

• The target markets of Thailand, Indonesia, Malaysia and Vietnam currently consume over 5 million t KCl per year, growing at an estimated rate of about 6 % per year.

• Indonesia and Malaysia are the world’s largest producers of palm oil, while Thailand and Vietnam are among the world’s leading producers of rice.

• The production of rice and palm oil account for some 70% of potash usage in the region.


Strategic Location

• Thailand is strategically located relative to the growing potash markets of Southeast Asia, where the major use of potash is for rice and palm oil cultivation.

• Vatic’s potential marketing strategy may focus on meeting the increasing demand of the ASEAN counties of Thailand, Indonesia, Malaysia and Vietnam.

• These 4 countries consume about 75% of Asian potash imports (excluding China and India) and have a current demand of over 4 million tonnes KCl per year, rising at an estimated 5% annually.

• Proximity to target markets, combined with convenient and flexible transportation options, provide major transportation cost advantages (up to $60/t) over Canadian and European suppliers.

Potash in Thailand

• Thailand’s Khorat Basin represents the world’s largest undeveloped potash deposit, hosting extensive high-grade potash resources.

• The shallow depth to the potash deposits, up to 350 m, results in lower capital and operating costs than most proposed developments.

• Thailand’s proximity to key potash markets results in significantly lower transportation costs to regional markets.

• Thailand enjoys excellent regional infrastructure, including electrical power and transportation, and thus the country enjoys a strategic location with access to key regional markets. (More information)

• In 2014, the Ministry of Industry set up a special steering committee to promote the development of the country’s potash resources. (More information)

The Khorat Evaporite Basin

• The Khorat evaporite basin hosts the world’s largest known, undeveloped potash deposit, containing billions of t of sylvinite and carnallite.
• Located in northeast Thailand and extending into Laos, the basin covers an area of 130,000 km2, at an elevation of approximately 200 m above sea level.

• The potash deposits are, generally, gently dipping and occur at shallow depth (150 to 350 m), providing substantial savings in potential project capital costs.

• High-grade sylvinite and carnallite ores are present and overburden consists of claystone and evaporite beds.

• A number of mainly carnallite-based projects are currently under development in the Khorat Basin, including 3 in Thailand. The Saksrithai Project is contiguous with one of the Thai developments.

Potash Exploration & Development Projects in Thailand

1. Bamnet Narong Project (ASEAN Potash Mining Co.)
• Planned annual production: 1.1 million t
• Estimated potash grade: 18% KCl
• EIA-approved, mining licences granted.

2. Udon Thani Project (Italian Thai Development Co.)
• Planned annual production: 2 million t
• Estimated potash grade: 40% KCl
• EIA and mining licences under application. (More information)

3. Dan Khun Thot Project (Thai Kali Co.)
• Planned annual production: 0.5 million t
• Estimated potash grade: 21% KCl
• EIA approved, mining licences pending.

4. Saksrithai Project (potentially Vatic Ventures Corp.)
• Exploration stage project
• Exclusive exploration licences granted (32 km2)
• Planned start of activities in mid-2016 (after a potential acquisition)

The Saksrithai Potash Project

• The Saksrithai licence area comprises 32 km2 in the Nakhon Ratchasima Province, northeast Thailand, approximately 270 km from Bangkok.

• In early 2015, 2 exclusive exploration licences were issued to Saksrithai Developments Co. Ltd. The licences have an initial term of 5 years, but such licences may not be transferred to a third party.

• Vatic intends to acquire an 80% interest in Saksrithai Developments Co. Ltd., thereby obtaining full security of tenure over the licences and control of the project development.

• The licence area is adjacent to the Dan Khun Thot Project, presently under development by Thai Kali Ltd. Both carnallite (up to 60 m thick) and sylvinite (up to 5 m thick) present in drill holes.

Vatic’s Potential Exploration

• An initial resource evaluation phase may commence in mid-2016 (among others subject to a successful acquisition) comprising of a seismic survey, geological survey and interpretation, initial diamond-drilling program (~10 holes), baseline environmental studies and local community programs.

• A potential phase-1 budget is estimated at $1.5 million over 12 months, aimed at quantifying a potash resource, potentially leading to a pre-feasibility study.

• Phase-2 may include additional drilling programs, mining and processing, transportation and marketing studies, potentially leading to a bankable feasibility study and defined potash reserves.

• Access to regional geological data and drilling results from an adjacent project may enable an accelerated exploration schedule and lead to reduced costs.

The Dan Khun Thot Project

• The Dan Khun Thot Project from Thai Kali Ltd. is located adjacent to, and contiguous with Saksrithai’s licence area which Vatic intends to acquire.

• The initial production level is planned to be 500,000 t KCl per year.

• The initial mineable reserve is estimated to be 103.4 million t at an average potash grade of 21.5% KCl (13.13% K2O) using a cut-off grade of 16% KCl.

• Both sylvinite (up to 5 m thick) and carnallite (up to 60 m thick) are present in the drill holes.

• The maximum potash grade encountered was 35.2% KCl (21.5% K2O).

According to the company’s press-release “Vatic Ventures to acquire 80% of Thai potash company” (June 7, 2016):

“Vatic Ventures Corp. has entered into an assignment and purchase agreement to acquire 80 per cent of the issued and outstanding shares of Saksrithai Development Co. Ltd., a Thailand company which holds two special prospecting licences (SPLs) for the exploration of potash.

The two licences, which are contiguous, are located in the northern Thailand province of Nakkon Ratchasinna and comprise an area of approximately 32 square kilometres. The property is located in the western part of the Khorat basin in the Khorat plateau which contains a large evaporate basin of Cretaceous age.

Pursuant to the agreement, the company is acquiring the rights of Red Branch Investments Ltd., a Hong Kong incorporated company, to acquire the shares pursuant to a memorandum of understanding entered into among the holders of the shares of Saksrithai, Saksrithai and Red Branch dated Feb. 26, 2016, which is in the process of being superseded by a share purchase agreement. In accordance with the terms of the underlying acquisition agreement, as assigned to the company, the company has the right to purchase the shares by paying the Saksrithai shareholders eight million baht (approximately $220,000 (U.S.)). The underlying acquisition agreement also provides that, subsequent to Red Branch or its assigns purchasing the shares, Red Branch or its assigns will finance a 50-million-baht (approximately $1.4-million (U.S.)) firststage exploration and development program, which will include sufficient financing to satisfy work and expenditure commitments under the SPLs, to pay the Thailand project expenses, and for general and administrative expenses in Thailand and Canada. In the event that the full amount of 50 million baht is not expended, the Saksrithai shareholders will be entitled to a cash payment of 20 per cent of the unspent balance. As consideration for the agreement, the company will issue 5.2 million common shares to Red Branch plus a 1-per-cent net smelter return royalty on the property. The NSR can be purchased by the company at any time for $1-million (U.S.).

Upon closing of the transaction, Dr. Gerry Wright, the principal of Red Branch, will be joining the board of directors of the company. Dr. Wright is a professional engineer and holds a doctorate in engineering from Queen’s University, Belfast. He has over 30 years of experience in the minerals exploration and development industry in Asia, North America, Europe and Africa, serving as a senior officer and director of a number of public and private companies. He has extensive experience and knowledge of the potash resources underlying Thailand’s Khorat plateau and the regional potash industry. As chief executive officer of Asia Pacific Resources Ltd., he was directly responsible for acquisition, financing and development of Asia’s most significant potash discovery.

The company also announces a unit private placement financing of up to $1-million consisting of up to 10 million units, with each unit comprising one common share and one share purchase warrant exercisable for two years at a price of 15 cents. Up to $100,000 of the financing will be distributed pursuant to B.C. Instrument 45-536 and used for the proposed acquisition, with the remainder to be distributed under other exemptions and used for the proposed acquisition and working capital purposes. There is no material fact that has not been generally disclosed.”




Company Details

Vatic Ventures Corp.
Suite 200 - 1008 Homer Street
Vancouver, B.C. V6B 2X1 Canada
Phone: +1 604 221 8936

Shares Issued & Outstanding: 17,140,000 (approximately)

Canadian Symbol (TSX.V): VCV.H
Current Price: $0.12 CAD (July 15, 2016)
Market Capitalization: $2 million CAD

German Symbol / WKN: V8V1 / A2AFZ3
Current Price: €0.004 EUR (July 10, 2016)
Market Capitalization: €0.01 million EUR

Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.

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Name: Vatic Ventures Corp.
Canada Symbol: VCV.H
Germany Symbol / WKN: V8V1 / A2AFZ3
Shares Issued & Outstanding: ~17,140,000
Phone: +1 604 221 8936

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