The joint-venture between the Muskoweksan (musk-AHW'-gahn) First Nation northeast of Regina and Vancouver-based Encanto Potash Corp. (TSXV:EPO) would produce 2.8 million tonnes of potash a year over a 50-year lifespan.
Aboriginal Affairs Minister Bernard Valcourt says Ottawa and the band will begin talks with the Saskatchewan government on regulations for the proposed mine.
Appearing in Saskatoon today, Valcourt said it would be the first potash mine on a reserve in Canada.
Members of the First Nation voted 80 per cent last year in favour of designating land for the project.
But some band residents say environmental concerns have not been addressed.
An environmental impact study is expected to wrap up later this year.