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A Saskatoon-based mining company’s plan to build a new potash solution mine near Wynyard appears to be in jeopardy after a financing agreement worth about $700 million fell apart.

When Karnalyte Resources Inc. announced its agreement with the Indian company Gujarat State Fertilizers and Chemicals Ltd. (GSFC) in March, its president, Robin Phinney, said he could have “dirt flying” on Oct. 1.

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This week, the publicly-traded company said in a news release that GSFC had “ceased negotiations” after the two firms were “unable to reach an agreement on certain fundamental terms” of the deal.

The agreement collapsed over concerns about “governance matters” and how other minerals, such as magnesium, in the deposit about 170 kilometres east of Saskatoon will be developed, Karnalyte said in the release.

“While these negotiations have stalled, we remain hopeful that Karnalyte and GSFC can come to acceptable terms on financing and the development of secondary minerals in the near future,” Phinney said in an emailed statement Thursday afternoon.