Western Potash (TSE:WPX) said Tuesday it has adopted a three-year, shareholder rights plan agreement with Computershare Trust Company of Canada.
The company said the agreement, dated March 26, 2012, has been accepted by the Toronto Stock Exchange and was ratified by the shareholders of Western Potash at its AGM held on March 26.
Shares of the company rallied 4.00 percent on the back of the news, trading at $1.04 late Tuesday.
Western Potash noted that the objective of its board in adopting the plan is to "achieve full and fair value" for the company's shareholders in the event of an unsolicited take-over bid.
The plan is intended to give the board and the company's shareholders a reasonable amount of time to fully consider a bid if one is made, and to protect the shareholders from "unfair, abusive or coercive take-over strategies."
Western Potash said that by virtue of the plan's implementation, anyone seeking to obtain control of the company will be encouraged to negotiate with the board prior to attempting a take-over, or to proceed by way of a "permitted bid".
The company stressed that it is not aware of any pending or threatened take-over bid.
Western Potash is a mineral exploration company engaged in the evaluation, exploration and development of potash mineral properties in western Canada.
The company said it intends to develop a world-class potash deposit in an ecologically sustainable, economically efficient and socially responsible manner.
In February, Western Potash hired Richard Lock as its project director, to help the company develop its wholly-owned Milestone potash project in Saskatchewan.
Late last year, the company announced several operational updates, including an updated resource estimate for the Milestone property.
The company said the updated resource estimate slightly increased the Milestone recoverable potash resource to 66.6 million tonnes in the measured category, 186.9 million tonnes of indicated resource, and 708.2 million inferred tonnes.
In October 2011, the junior miner said an independent prefeasibility study (NYSE:PFS) confirmed its 100 percent-owned Milestone potash property showed "significant positive economics".
The study, carried out by AMEC Americas, showed that the asset was of sufficient size and grade to support mining for more than forty years at a production rate of 2.8 million tonnes per year. The annual production rate can also be expanded through a higher level of capital expenditure.
An assessment of project economics, assuming a discount rate of 10 percent, showed the resulting project net present value is C$4.14 billion, while the internal rate of return is 22.7 percent.
The initial capital expenditure estimate for the plant is $2.76 billion, including allowances for port infrastructure, a water supply pipeline, and off site railway. Unit operating costs were estimated to be $62.35 per tonne at full production capacity.
The environmental impact study (NYSEARCA:EIS) for the project remains on schedule and on budget, with an anticipated submission date in the third quarter of 2012.
The Milestone property, comprising 500 square kilometres, is located 30 kilometres southeast of Regina, and southeast of Mosaic's Belle Plaine Mine, one of the largest producing potash solution mines in the world.