Karnalyte Resources has terminated negotiations with Indian company Gujarat State Fertilizers and Chemicals (GSFC) regarding its $700m financing for the company’s potash mine in Saskatchewan, Canada.

In March, Karnalyte signed an agreement with GSFC to finance construction of the first phase of the 625,000t per year (tpy) potash mine.

The agreement also included the spin-out of the company’s secondary mineral assets and unexplored lands into one or more separate entities.

Karnalyte and GSFC were unable to reach an agreement on certain fundamental terms of the deal, which included the proposed terms of governance and the development of secondary mineral projects, such as magnesium.

“Karnalyte and GSFC were unable to reach an agreement on certain fundamental terms of the deal.”

In 2011, Karnalyte received a positive feasibility study from Foster Wheeler Canada and Ercosplan for its plans to construct the mining facility, which would produce a granular potash product.

The facility is planned to be constructed in three phases, with phase one expected to provide the mine with a capacity of around 625,000 tpy.

During the second phase, the capacity will be increased by 750,000 tpy, while the third phase will bring it to a total of 2.125 million tpy.

In 2013, GSFC invested about $44.7m in Karnalyte in return for a 19.98% ownership stake in the company.

Karnalyte develops high-quality potash and magnesium products, and also aims to create a carnallite-sylvite mineral deposit via a mining process.

The company owns a 100% interest in subsurface permit KP 360A and subsurface mineral lease KLSA-010 in Saskatchewan.