* Western Potash down 22 pct; Karnalyte drops 26 pct
* Potash Corp
CEO sees no new mines in next 5 years
By Rod Nickel
June 28 (Reuters) - Shares of two junior Canadian potash companies lost roughly a quarter of their value in early trading on Thursday, after the world's biggest producer of the crop nutrient, Potash Corporation of Saskatchewan Inc, said it did not expect any new mines to start production in the next five years.
Shares of Western Potash Corp plunged nearly 23 percent and Karnalyte Resources Inc lost 26 percent of its value in Toronto.
Both companies are seeking investors to build potash mines in the Western Canadian province of Saskatchewan. 'Junior' is an industry term that generally refers to a potash exploration and development company that does not yet have a mine in production.
Potash Corp CEO Bill Doyle said on Wednesday that he did not expect any new potash mines to start by 2017.
Doyle's comments may have hurt the junior companies' shares, but they are similar to statements he has made previously, suggesting there may be other factors in the drop, said analyst Robert Winslow of National Bank Financial, who has an 'underperform' call on Western.
In a webcast on Wednesday, Doyle singled out a print advertisement from one potash company, which he did not name.
'There was ... a paid ad by one of these promoters, and they showed the fellow sponsoring the project at the mine site,' Doyle said. 'He was standing in a field of grain. There's no mine, no construction, there's not even any equipment, and he says he's going to be on by 2015.'
The company Doyle was referring to is Western Potash, Winslow said.
Along with junior miners who are in the planning stages, BHP Billiton Ltd and K+S AG have started work on potash mines in Saskatchewan.
Western Potash shares were down 22 percent at 89 Canadian cents, touching their lowest price since May 22. Karnalyte fell 26 percent to C$5.01, touching an all-time low.
Shares of Encanto Potash Corp, another junior potash miner, fared better, but fell 5.5 percent to 26 Canadian cents.
(Reporting by Rod Nickel in Winnipeg, Manitoba; editing by Matthew Lewis) Keywords: POTASH SHARES/
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