Potash in the Holbrook Basin. A presentation by Lee Allison, Arizona Geological Survey, February 1,2013

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1 Potash in the Holbrook Basin A presentation by Lee Allison, Arizona Geological Survey, February 1,2013

2 Potash in the Holbrook Basin Lee Allison, Arizona Geological Survey

3 *Holbrook basin potash Major U.S. resource 6-20% grade 100 s MTs recoverable Avg 1,200 ft depth Near Interstate and rail 28% under National Park Low per ton capitalization costs

4 *Potash in Fertilizer

5 *Potash *Potassium carbonate (K2CO3) produced by leaching wood ashes and evaporating the solution in large iron pots, leaving a white residue called "pot ash *Potassium chloride (KCl), potassium sulfate (K2SO4), potassium magnesium sulfate (K2SO4 2MgSO4), langbeinite (K2Mg2(SO4)3) or potassium nitrate

6 US consumption 85% imported

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11 Potash-bearing Evaporite Basins

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13 almost 40 new mines or capacity expansions are planned to be completed worldwide by The majority of the projects were located in Argentina, Belarus, Brazil, Canada, Chile, China, Congo (Brazzaville), Eritrea, Ethiopia, Laos, Mexico, Peru, Kazakhstan, Russia, Turkmenistan, the United Kingdom, and Uzbekistan USGS, MCS 2013

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15 Brownfield Potash Expansion Profile Potash Corp 2012

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17 *Potash in the U.S. *9 9.5 million tonnes consumed annually *5-6 million tonnes for corn, soybeans *85% imported *Utah, New Mexico, Michigan production *USGS resource estimate 7 billion tonnes *Holbrook basin, AZ 600M to 2B tonnes

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19 USGS Mineral Commodity Summary 2013 Price, dollars per metric ton of K2O, average, muriate, f.o.b. mine $750 Import Sources ( ): Canada, 84%; Russia, 11%; and other, 5%. The leading U.S. producer reported significant progress in the conversion of an underground mine in New Mexico to a solution mine. The new mine was scheduled to begin production in late 2013 and gradually ramp up production through 2015 to nearly full capacity of 200,000 tons per year. A Canadian company began a feasibility study for the development of a new potash mine in Lea County, NM, 97 kilometers from Carlsbad, NM. The mine was expected to produce SOP and SOPM only and would have an annual production capacity of 700,000 tons per year of SOP and SOPM combined. The company expected to begin production by 2016.

20 Holbrook basin potash discovered in 1960s Forgotten until 2000

21 Arkla Exploration & Duval Corp - >100 drill holes, s

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23 3,500 sq miles of salt 600 sq miles of potash Holbrook salt basin

24 Edge of salt Potash thickness

25 Geologic cross-section

26 Depth to potash by basin Michigan Williston Basin Paradox Basin, Utah Holbrook Basin, Arizona Carlsbad, NM Depth (meters)

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30 Since core holes drilled Passport Potash

31 Park boundary State & private lands Park lands

32 Exploration confirming volumes, grade, distribution

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34 American West Resources Potash flat, consistent, non-faulted Ore grades at upper end 2 Mt/yr, 50 years 400 permanent employees $ M annual operating budget Added with the shallow depth to ore, mild processing climate, great infrastructure and nearness to yearround ag markets and exports, this would be a competitive, low cost venture.

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37 Capital Cost per Tonne for New Mines Potash Corp

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40 State Trust lands PFNP

41 BLM lands

42 Hopi private lands

43 Twin Buttes Ranch

44 Fitzgerald Trust lands

45 Paulsell Ranch

46 American West Potash & HNZ Potash

47 All lands

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56 Risks Changes in the price, demand, or supply of potash Disruptions or limits to production, including operational difficulties or operational variances due to geological or geotechnical variances Interruptions in rail or truck transportation services, or fluctuations in the costs of these services Labor costs or difficulties in hiring and retaining qualified employees and contractors, including workers with mining, mineral processing, or construction expertise Costs of, and ability to successfully construct, commission and execute, strategic projects Adverse weather events Changes in the prices of raw materials, including chemicals, natural gas, and power Impacts of federal, state, or local government regulations, including environmental and mining regulations, and government policy changes Ability to obtain government permits relating to the construction and operation of assets Changes in reserve estimates Competition in the fertilizer industry Declines in U.S. or world agricultural production Declines in the use of potash products by oil and gas companies in their drilling operations Changes in economic conditions Ability to comply with covenants in debt-related agreements Disruption in the credit markets Ability to secure additional potash leases needed to carry out mining

57 LEAN process: Real time application completeness reviews Checklists to clearly establish application information requirements Increased communication during the technical review (more meetings, fewer letters back-and-forth) Early involvement of senior ADEQ/Applicant management if application processing is languishing Publication of the improved process (flow chart, check lists)

58 Potash mining and Petrified Forest National Park

59 December 3, 2004: President George W. Bush expanded boundaries for Petrified Forest National Park, more than doubling the size of the park, from 93,533 acres to 218,533 acres.

60 In 1976, Congress enacted the Mining in the Parks Act (16 U.S.C et seq.) which closed all units of the National Park System to the location of new mining claims. Oil and gas development occurs in 13 units with active and potential coal and hardrock mining, coalbed methane, and oil and gas development adjacent to 53 units. Further, at least 22 NPS units contain significant geothermal resources. An estimated 3,100 abandoned mineral sites can be found in the National Park System, in all 7 regions of the system, and in 45 states. This number translates to 8,400 mined features, 700 oil and gas wells, 1,000 quarries, and 33,000 disturbed acres. NPS-Geologic Resources Division

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62 British Geological Survey: Boulby is the most important non-petroleum mining operation in the UK.

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