Potash, a critical chemical in crop production, caught the attention of investors this week with news that BHP could reap $US2 billion selling 25 per cent of a Canadian potash mine.

A fertiliser drawn from Potassium-laden minerals, Potash is used to boost plant health and nutrition and increase crop yields.

It’s a popular investment target because of the growing need for farmers to produce more food as the world’s population grows. China is the world’s biggest consumer followed by North America.

Canada is the world’s biggest producer of potash, followed by Russia — but to date, Australia has not been a significant producer.

ASX-listed Australian Potash (ASX:APC) is hoping to change that with its Lake Wells Potash project 400 km north-east of the Eastern Goldfields centre of Kalgoorlie, WA.

The project is rich in a premium fertiliser mineral called Sulphate of Potash (SOP) which is contained within the lake brines. Unlike other types of potash, SOP contains no chloride, which can damage crops, and is a good source of potassium and sulphur.

Earlier this year, APC wrapped up a positive scoping study into Lake Well which outlined an economically robust, long-life project with a 20-year mine life and a low cost $175 million SOP operation.

Annual production from Lake Wells is expected to hit 150,000 tonnes in the first five years before doubling to 300,000 tonnes.

Mineral resource estimate for Lake Wells comprises 14.7 million tonnes of SOP, including 12.7 million tonnes in the “indicated” category.

Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.

Australian Potash has this year signed two deals with major Chinese fertiliser companies for the supply of up to 200,000 tonnes of SOP per year.

Currently APC is working on a feasibility study into the project which is expected to be released early in the new year. Project financing and development is expected to begin later in the year with production targeted in 2020.

“We have defined the largest indicated SOP resource estimated in Australia to date, developed early stage relationships in the largest market for SOP and completed a scoping study with very strong economics,” said APC executive chairman Matt Shackleton.

“The scoping study confirmed a conventional, proven abstraction method to produce a high-quality SOP product in the bottom of the global cost curve.”

Recently, the company raised $3 million through an oversubscribed share placement and is seeking to raise a further $2 million via a share purchase plan to fund the Lake Wells feasibility study and exploration at its Yamarna gold project.

Exploration at Yamarna will follow up on CSA Global’s positive report on the gold prospects for the company’s northern Yamarna greenstone tenements.

Shares in Australian Potash jumped from 7.5c at start of the year to a 52-week high of 16c in April following the release of the Lake Well scoping study.

Since then the stock has cooled, closing on Friday at 10.5c. The company has a market cap of around $28 million.