Indian-based Gujarat State Fertilizers and Chemicals (GSFC) has agreed to finance the first phase of Karnalyte Resources' Canadian potash mine for $700m.
Karnalyte's 625,000 tonnes per year (tpy) potash mine is located at Wynyard in Saskatchewan.
Karnalyte Resources founder and president Robin Phinney said: "I am proud to announce that Karnalyte is about to achieve its most significant milestone yet: a fully financed structure to build our potash mine in Saskatchewan.
"We are extremely pleased to have entered into the agreement in principle with GSFC, which is expected to enable Karnalyte to develop its significant potash resource."
Karnalyte received a positive feasibility study from Foster Wheeler Canada and Ercosplan in 2011 for its plans to construct a solution mining facility at Wynyard.
The facility is planned to be constructed in three phases, with phase one expected to produce about 625,000 tpy.
During phase two, the capacity will increase by 750,000 tpy and would total 2.125 million tpy with the addition of phase three.
GSFC senior vice-president and CFO Vishvesh Nanavaty said: "This ground-breaking deal structure demonstrates GSFC's long-term commitment and desire to secure supplies of key natural resources through investment structures, which are aligned with the values of Canadian shareholders.
"I believe this financing will serve as a template for future investment by Indian companies in Canada and will strengthen relations between our two countries for years to come."
GSFC invested approximately $44.7m in Karnalyte in 2013, and as a result owns a 19.98% ownership stake in Karnalyte.
The partnership between Karnalyte and GSFC is expected to provide the latter with a secure supply of potash in the future.