12/17/2012 01:13 EST | Updated 02/16/2013 05:12 EST

Ottawa seeks public comment on proposed potash mine on Saskatchewan reserve

REGINA - Federal regulators want to hear from the public about a plan to build a $2.4-billion potash mine on aboriginal land north of Regina.

The joint proposal is being put forward by Encanto Resources Ltd. and the Muskowekwan First Nation under the name First Potash Ventures.

The Canadian Environmental Assessment Agency says it must decide if a formal review of the mine is needed and people have until Jan. 3 to comment.

Encanto Potash Corp. (TSXV:EPO) CEO James Walchuck said he expects the agency will call for a full environmental assessment and is confident it would meet federal and Saskatchewan government regulatory requirements. He said both levels of government are keen on the project.

"We have wonderful support, both federal and provincial, it is quite amazing," Walchuck said Monday from Vancouver.

"They would really like to see this project go ahead. We haven't seen anything detrimental at all."

Documents filed with the federal government say the project would produce up to 2.8 million tonnes of potash a year for up to 50 years.

The First Nation would be paid potash royalties of up to $80 million per year.

The proposal says construction could begin between 2014 and 2016 and the mine would create up to 1,000 construction and 500 mining jobs. The mine could begin operating as early as mid 2017.

On its website Encanto said partnering with a First Nation located on federally regulated land will provide it with a critical advantage because it will reduce permitting and production timelines.

"We do not need to negotiate with private landowners," says the website.

"Working with the (MFN) Muskowekwan First Nation is a critical advantage when it comes to reducing length of permitting time and potentially the length of time to production as we are required to only deal with two stakeholders (our First Nation partners and Aboriginal Affairs and Northern Development Canada) for permitting."

Muskowekwan Chief Reg Bellerose could not immediately be reached for comment.

The project calls for using hot water or brine solution to mine potash deposits instead of shafts and conventional underground mining. The proposal calls for using up to 200,000 square metres of groundwater per year.

The mine near Lestock, Sask., about 100 km north of Regina, would include a processing plant and a tailings pond to deal with wastewater.

Walchuk said First Potash Ventures is seeking what it calls a strategic partner with deep pockets to bankroll the project, including potential offshore investors.

He said the company is not worried about the recent downturn in potash prices that have prompted some Saskatchewan producers to temporarily curtail production.

"The best time to build a mine is when the cycle is in its worst stage because everything always turns around."

—By John Cotter in Edmonton