09/30/2011 05:48 EDT | Updated 11/30/2011 05:12 EST

North Atlantic Potash sells potash holdings for $110 million to Yancoal

SASKATOON - North Atlantic Potash Inc., the Canadian subsidiary of Russia's JSC Acron, has completed the sale of eight of its potash permitted areas north of Regina.

The sale, to the Yancoal Canada Resources Co. Ltd. of China, allows North Atlantic Potash to focus its activity on key areas of interest within its remaining potash permits in Saskatchewan.

The deal is worth $110 million.

Arie Zuckerman, president of North Atlantic Potash, says in a statement released early Friday morning that the company moved quickly to prioritize and maximize the potential of its potash permits in Saskatchewan.

David Waugh, North Atlantic's CEO, adds the sale's proceeds will allow the company to substantially increase its exploration program in the province and it's preparing for a drilling campaign in November.

On Tuesday, it was announced that North Atlantic Potash and global mining giant Rio Tinto PLC were entering into a joint venture which could lead to the construction of the next big potash mine in Saskatchewan.

Financial terms of that deal weren't revealed.

But the transaction is part of a broader trend of potash producers joining forces on new projects as global fertilizer demand rises in tandem with an ever-increasing demand for food in emerging economies.

The Saskatchewan deal gives Rio Tinto a stake in the world's most prolific potash producing region, while North Atlantic will benefit from Rio Tinto's rich cash resources and longstanding mining experience in Canada and around the world.

North Atlantic Potash holds nearly 1.1 million hectares and 26 exploration permits in the Saskatchewan potash belt.

North Atlantic is part of JSC Acron, a major fertilizer producer based in Russia, with 13,000 employees and sales last year of US$1.6 billion.

JSC Acron produces ammonia, nitrogen and complex mineral fertilizers, as well as organic and non-organic compounds.

It has three plants and a global distribution network.