Passport Potash Holbrook Basin

Transcription

1 Passport Potash Holbrook Basin Project Overview (as of September, 2011)

2 Summary of Operation: Passport Potash, Inc. has secured (via ownership, lease or other agreement) the approval to conduct exploration (due diligence) and ultimate excavation of potash (see below) on approximately 70,000 acres within Navajo and Apache Counties ( Holbrook Basin ). Currently conducting exploration/due diligence only (exploratory drilling). Anticipate beginning mining operations within 2 5 years, depending on financing and exploration results. Passport estimates that there are up to 2.5 billion tons of potash in the Holbrook basin, which could provide for an estimated 80 years of production. Passport cites the availability of infrastructure as a key component to the project s success, with access to BNSF rail lines, Interstate 40, and a major power plant within 25 miles of the project. Mining operations have the potential for 1,000 to 1,500 construction jobs, and 300 to 500 full-time jobs that will provide an annual salary of around $70,000 (according to a quote by a company source, as cited in the Holbrook Tribune). Could provide significant additional economic benefits, such as demand for housing, goods and services. What Potash is, Why It Is Important, Where It Is Produced/Consumed & How It Is Mined: What is Potash: Potash, or carbonate of potash, is the common term used for the fertilizer forms of the element potassium (K). Potash was originally referred to as wood ash. Potassium occurs abundantly in nature, being the 7 th most common element in the earth's crust. Some clay minerals which are associated with heavy soils are rich sources of potassium. Potash bearing rock deposits are derived from the minerals in ancient seas that dried up millions of years ago. Fertilizer potash is mostly derived from these potash rocks. It requires only separation from the salt and other minerals. Potash is produced worldwide at amounts exceeding 50 million tons.

3 Why Potash Is Important: Potash has three main uses: fertilizer, livestock feed supplements, and industrial processes. 95% of the world's potash is used in fertilizers. Potassium, nitrogen and phosphorus are the three most essential nutrients that a plant needs to grow. In fertilizer, potash plays an important role in helping plants to absorb potassium required to thrive, enhancing water retention, increasing crop yields, and increasing plants' disease resistance. In feed supplements, the key function of potash is to contribute to animal growth and milk production. Potassium carbonate is used to produce animal feed supplements, cement, fire extinguishers, food products, photographic chemicals, glass, ceramics, and textiles. It is also used in brewing beer, pharmaceutical preparations, and as a catalyst for synthetic rubber manufacturing. In the United States, these non-fertilizer uses account for about 15% of annual potash consumption. Potassium chloride is important in industrialized economies, where it is used in aluminum recycling, by the chloralkali industry to produce potassium hydroxide, in metal electroplating, oil-well drilling fluid, snow and ice melting, steel heat-treating, and water softening. Potassium hydroxide is used for industrial water treatment and is the precursor of potassium carbonate, several forms of potassium phosphate, many other potassic chemicals, soap manufacturing, etc. There are no known substitutes for potash. Where It Is Produced & Consumed: Potash production is limited to only 12 countries around the world. The vast majority of global production comes from 3 producing nations: Canada, Russia and Belarus. Canada is the world's largest producer with the province of Saskatchewan hosting the country's epicenter of global potash production. Encompassing three of the world's leading producers---mosaic Co., Potash Corp., and Agrium, Saskatchewan offers the resources, infrastructure, government policies and labor force needed to flourish in the industry. Canadian distribution is controlled by Canpotex, an export organization wholly owned by Canada's three major producers. Likewise, Belarusian and Russian distribution is controlled by the Belarusian Potash Company (BPC). Collectively, Canpotex and BPC control over 70% of global potash exports.

4 Potash is used as a major agricultural component in 150 countries. The largest importers of potash are the heavily populated countries of China, India and Brazil. Asian nations produce only 3.1 million tons while consuming 23.1 million tons. The state of potash producing infrastructure is in decline as about 85% of the world's facilities are more than 25 years old. The current potash market is estimated at 50 million tons annually and is projected to grow at a rate of 3-4%. The United States remains one of the largest net consumers producing only 1,200,000 tons/year while consuming 5,200,000 tons/year, requiring the remainder to be imported. The bulk is used in the Midwestern states for corn and soy bean cultivation. Currently, U.S. potash production is limited to Michigan, New Mexico (largest U.S. producer), and Utah, with three producers accounting for 100% of U.S. potash production.

5 The US Geological Survey estimates U.S. potash resources at 6 billion tons, the bulk of which is concentrated in the southwestern U.S., and found at depths greater than 6000 feet. According to The Arizona Geological Survey, the Holbrook basin has the potential to provide a major increase to U.S. supply of this crucial resource. The potash market has experienced rapid growth in the last decade primarily due to an increased demand for food, fiber, feed and the increased use of bio-fuels and alcohol-based fuels. This trend directly correlates to its basic fundamentals: increasing global population, increasing incomes in emerging markets, improving diets (especially in developing countries such as China & India), and decreasing arable land. Production costs typically depend on the grade of the deposit, ore depth, consistency, thickness, continuity and the amount of insoluble material contained in the ore body. Mining costs increase as the potash beds become twisted or folded. How Potash Is Mined: Mining potash can be done in two different ways; in-situ and traditional underground shaft. In-situ or solution mining In-situ or solution mining is a process where multiple wells are drilled. One well is drilled down to the brine horizon and another as a return well. Hot water is then pumped down the first well dissolving the potash and other salts into a brine fluid that is then forced back up the return well into an evaporation pond. Water evaporates and the minerals condense for final processing. Solution mining has a

6 much cheaper initial cost compared with traditional shaft mining and often allows access to deep deposits that may otherwise be cost prohibitive. Traditional or Shaft Mining In traditional mining, a shaft is constructed from the surface so men and equipment can go underground. The miners go down the shaft in a cage and travel through the underground tunnels in special 4-wheel drive vehicles. Electrically powered machines drill and excavate cutting out the ore creating large tunnels. As the ore is excavated it is cut up and broken into smaller pieces. It is then moved by belts to the shafts where it is crushed and lifted to the surface. On the surface the salt is than separated from the potash. A key benefit to the use of traditional or shaft mining is the significantly much higher recovery yield vs. those obtained by solution mining. Holbrook Project: In the 1960 s and 1970 s the Arkla Exploration Company and Duval Corporation drilled more than 100 holes to delineate the potash in the Holbrook Basin. Arkla and Duval reported the presence of Potassium minerals, estimating up to 2.5 billion tons within the Holbrook Basin. The Holbrook Basin project is located approximately 7 miles east of Holbrook Arizona. The project sits atop a large salt basin that is known as the Holbrook Salt Basin. Passport currently controls over 70,000 acres of land in the Holbrook Basin. Two companies in addition to Passport have significant holdings in the Holbrook region: HNZ Holding, a joint venture including Hunt Oil Co., and Prospect Global Resources. Based on the historic drill reports there are up to 2.5 billion tons of potash in the Holbrook Salt Basin, according to the Arizona Geological survey. This could provide for an estimated 80 years of production. The depth of the potash is shallow by industry standards, between 800 and 1200 feet. The ranges of thickness in potash vary from one side of the basin to the other with thickness ranges up to 40 feet. Passport has stated that they hope to begin mining operations in 2 5 years, depending on financing and exploration results.

7 Mining operations have the potential for 1,000 to 1,500 construction jobs, and 300 to 500 full-time jobs that will provide an annual salary of around $70,000 (according to a quote by a company source, as cited in the Holbrook Tribune). Could provide significant additional economic benefits, such as demand for housing, goods and services. Weather has little bearing on the success of the mining operations. Company Info Passport Potash: Passport Potash, Inc., is a TSX (Toronto Stock Exchange)-listed resource company engaged in the exploration and development of advanced potash properties. Passport has land holdings encompassing over 70,000 acres within the Holbrook Basin. Passport cites the availability of infrastructure as a key component to the project s success, with access to BNSF rail lines, Interstate 40, and a major power plant within 25 miles of the project. Passport Potash cites an experienced leadership team, with a combined 200+ years of mining experience. Based in Canada, with an office in Apache Junction, Arizona.

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