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Encanto completes purchase of Raytec potash assets
Wed Aug 12, 4:16 PM

http://ca.news.finance.yahoo.com/s/12082009/30/link-f-cnw-encanto-completes-purchase-raytec-potash-assets.html

FUNDING OF $6.5 MILLION CONCURRENT WITH PURCHASE

Trading Symbol: TSXV EPO.V


VANCOUVER, Aug. 12 /CNW/ - Encanto Potash Corp. ("Encanto" or the "Company") is pleased to announce that it has closed its previously announced transactions with Raytec Metals Corp. ("Raytec").

Raytec has transferred all of its interests in its potash properties in Saskatchewan to Encanto's operating subsidiary in exchange for 19,846,525 common shares of Encanto, at a deemed total value of $0.25 per share ($4,961,631 in total). One of the Raytec properties, Permit KP 441, which is part of the Spar Property, is the subject of a technical report (the "Report") prepared by Agapito Associates, Inc., dated July 29, 2009 the authors of which are Dr. Michael Hardy, P.Eng, Dr. Douglas F. Hambley, P.Eng, and Joseph E. Crawford, L.P.G. The Report will be filed on SEDAR concurrently with this news release. The following is a summary of the data in Tables 4 and 5 of the Report outlining the resources in KP 441:

 
                          Mineral Resource in KP 441 
    ------------------------------------------------------------------------- 
  
                         (1)Average       Average 
               Total        Grade       Carnallite      Average     (2)Recov- 
             Thickness       over          over       Insolubles       erable 
                over        Potash        Potash          over          K(2)O 
               Potash        Zone          Zone          Potash       Resource 
     Member   Zone (m)    (% K(2)O)     (% MgCl(2))     Zone (%)        (Mt) 
  
     ------------------------------------------------------------------------- 
                           Inferred Mineral Resource 
     ------------------------------------------------------------------------- 
     Upper 
      Belle 
      Plaine     2.98         14.54          0.28          7.90          4.43 
     Lower 
      Belle 
      Plaine     1.34         30.45          0.23          1.89          7.05 
     Total                    24.31          0.25          4.21         11.48 
     ------------------------------------------------------------------------- 
                          Indicated Mineral Resource 
     ------------------------------------------------------------------------- 
     Lower 
      Patience 
      Lake       3.06         31.02          0.24          3.87          5.09 
     Upper 
      Belle 
      Plaine     2.97         14.73          0.28          7.92          3.44 
     Lower 
      Belle 
      Plaine     1.34         30.16          0.22          1.90          3.51 
     Total                    26.12          0.25          4.45         12.04 
     ------------------------------------------------------------------------- 
     (1) Average grade calculated using re-assayed data where available and 
         historic assay data elsewhere 
     (2) Recoverable in-place K(2)O tonnes assuming a density of 
         2.08 tonnes/m(3) and an overall recovery of 36% (10% geologic anomaly 
         and 40% recovery) 
     ------------------------------------------------------------------------- 
     ------------------------------------------------------------------------- 
     

Raytec will also incur $6,500,000 in expenditures on Encanto's existing potash properties and Raytec's potash properties (collectively, the "Potash Properties") by December 31, 2009, to earn a 51% interest in the Potash Properties. Encanto will have the option to repurchase the 51% Raytec interest in the Potash Properties for 26,000,000 common shares of Encanto. If this Option is exercised, Raytec will own an aggregate of up to 45,846,525 shares of Encanto which will be equal to an estimated 28.57% of the Company's issued shares based on its current issued share capital.

The agreements between the parties contain certain terms including that for so long as Raytec owns or has the right to own not less than 10% of the issued shares of the Company:


(i) Raytec will have the right to nominate up to two directors to the
board of directors of the Company proportional to its interest in
the Company; and

(ii) Raytec will have a pre-emptive right to participate in future
financings of the Company so as to preserve its percentage
interest in the Company.


Accordingly, today Messrs. Brian G. Thurston and Wayne J. Roberts have been appointed to the Board of Directors of Encanto.

Mr. Thurston, HBSc (Geology) is a mining executive with over 16 years of exploration management and operational experience working on projects in North and South America. He is President, CEO and director of Raytec. Previously, he formed part of the initial geological exploration team that evaluated the land holdings of Aurelian Resources Inc. in Ecuador in 2002, and held the position of Country Manager for Aurelian Ecuador S.A. de C.V. in 2004 and 2005.

Wayne J. Roberts, P Geo., has 40 years experience in the mineral exploration sector, holding positions of both directorships and VP exploration for several junior public listed issuers. Mr. Roberts has had a successful track record of building mineral inventory for companies and participated in the discovery of the Marigold mine in Nevada and one of Canada's largest zinc deposits, the Cirque deposit in British Columbia. He is a director of Raytec.

Mr. James Walchuck, President of Encanto Potash states, "We intend to rapidly develop Encanto into the leading junior potash developer in Saskatchewan. The addition of the Raytec properties is a giant step towards that goal as I am very excited about the developmental potential on the Spar property. Furthermore, the funds that Raytec has invested will enable us to immediately advance our highly prospective First Nations' lands".

A finder's fee of 500,000 shares was paid to an arm's length party and Endeavour Financial Ltd. received a cash fee in respect of the transaction.

Ross Moulton, P.Geol., Encanto's Vice President, Exploration and a qualified person under National Instrument 43-101, has approved the technical content of this news release.

About Encanto:

Encanto Potash Corp. is a TSX Venture Exchange-listed Canadian resource company engaged in the exploration and development of potash properties in the Province of Saskatchewan, Canada - the largest producing region for potash in the world. Encanto has agreements with seven First Nations Peoples to assist them in developing potash resources on their lands, which are located within a radius of about 80 kilometres, and cover an aggregate area of over 58,000 hectares in South-Eastern Saskatchewan. In addition, Raytec currently holds over 72,800 hectares of potash permits in Saskatchewan.

To find out more about Encanto Potash Corp., please visit the company website at www.encantopotash.com or review the documents filed on www.sedar.com.


ON BEHALF OF THE BOARD OF DIRECTORS

"James Walchuck"
Per: -----------------
James Walchuck
President and CEO


NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS
THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE


Contacts

James Walchuck
President and CEO
Tel: [phone]

Keith Schaefer
Vanguard Shareholder Solutions
Tel: [phone]
Toll Free: 1-866-918-0824