New Recommendation: Encanto Potash Corp.
(EPO.V)

By Brien Lundin

April 2010
Encanto Potash Corp.
EPO.V
604-683-2402
www.encantopotash.com

My first new recommendation in this issue is also my first-ever recommendation in the potash arena. Before you turn the page on what may seem like an altogether ridiculous idea, let me explain why I've been looking for a potash play for some time.

First, the fundamentals behind potash are powerful. The world's population is growing by 75 million people per year. Those ever-hungry mouths will lead to 60% higher demand for food crops by 2030, according to the United Nations Food and Agriculture Organization. Because we're not creating much in the way of new farmland, arable land per person is declining, which places a huge emphasis on maximizing production from existing farmland. The best way to crank up food production?  Fertilizer. And that's where potash comes in.

Potash is the term used to describe a mix of compounds containing potassium, which is a key ingredient in fertilizer.

If you're a farmer growing corn, soybeans, sugar or rice, then potash is like gold. Potash increases crop yields, and it helps plants develop strong root systems, retain water and build resistance to disease and insects.

Asia, North America and Latin America are the largest potash-consuming regions, while Canada, Russia and Belarus are home to the largest potash producers, accounting for just over two-thirds of world production capacity and more than 80% of estimated reserves.

Becoming a potash producer is no easy trick. Economic deposits are scarce, development costs are sky high and lead times run to seven years or more. Potash is, however, a high margin product with no commercial substitute. Potash prices are closely linked to supply and demand fundamentals.

Prices hit an all-time high of around C$1,000 per tonne in 2008 on the back of strong grain prices and the rush to biofuels. But potash prices and sales tanked in 2009 amid the financial crisis, which also led to a sharp drop in food-crop prices. Farmers, however, didn't believe that potash prices fell nearly enough. So, last year, farmers told potash producers to get stuffed.

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For more information, please contact:

Vanguard Shareholder Solutions
Tel: 604.608.0824
Toll free: 1.866.918.0824

www.encantopotash.com
ir@vanguardsolutions.ca