American Potash Corp. through its wholly owned subsidiary, American Potash LLC, holds an option to acquire 100% interest in 22 federal potash Prospecting Permits under application (41, 642 acres) and holds 100% interest in 11 state potash leases totaling 2, 850 hectares (7, 050 acres) all combined to make up the Green River Potash Project (“Project”) in Utah.
The Project is situated in the renowned Paradox Basin, host to the same geological setting as the nearby currently-active longest-operating United States’ solar solution mining potash operation, Intrepid Potash’s Moab plant. There, the sedimentary evaporite bed known as Cycle 5, which underlies and extends throughout the Property, contains the principal potash mineralization that has been mined since 1964 and is the Company’s prime exploration target.
The Moab solar solution plant utilizes low-cost, energy-efficient solution mining and solar evaporation potash recovery. The area’s very arid climate, with 300+ days of sunshine per year, combined with excellent infrastructure and year-round access, provides ideal conditions and a highly attractive setting for this style of operation.
Paradox Basin Formation
The Project is located within a geologic province known as the Paradox Salt Basin that extends approximately 160 km (100 miles) in width and 320 km (200 miles) in length in a northwest-southeast direction spanning southeastern Utah and southwestern Colorado. During middle Pennsylvanian age (310-330 Ma) subsidence, the Paradox Basin formed as a restricted shallow marine environment and was filled with 1500-1800 m (5000-6000 ft) of cyclical evaporite sequences with potash noted in 17 of the 29 evaporite cycles (Hite 1960, 1983). Intrepid’s local operation is currently extracting the potash from Cycles 5 and 9.
Paradox Basin – Project Location Map
Green River Potash Project Location
The Project is located in Grand County, Utah, 20-30 kilometers west of Moab and 10-20 kilometers northwest of Intrepid Potash’s evaporation pond solution mining operation.
The Project area has excellent infrastructure close to townsite, rail, highway, power and water.
Agapito Associates Inc., a well-respected international engineering firm with recognized local technical expertise in potash exploration, development and solution mining, was commissioned by the Company to provide an independent QP review and NI 43-101 Technical Report of the Green River Potash project area.
A total of 33 local and regional historic oil and gas wells were utilized in estimating an Exploration Target** underlying the Project area between 600 million and 1 billion tonnes of sylvinite with an average grade ranging between 19 and 29% eKCl*; as reported in the Agapito Technical Report**. The majority of these historic wells penetrated the potash beds of interest as indicated by a combination of lithology and down hole geophysical surveys including gamma ray, neutron density, neutron, resistivity and sonic log data. Gamma ray response levels provided the principal basis to infer the location, identification and estimation of potash beds’ grade and thickness in oil and gas wells.
**The Agapito Report quantifies the Project’s potash exploration potential in the form of an NI 43-101 Exploration Target. The Exploration Target estimate was prepared in accordance to the NI 43-101 guidelines of the Canadian securities regulators. It should be noted that Exploration Targets are conceptual in nature and there has been insufficient exploration to define them as Mineral Resources, and, while reasonable potential may exist, it is uncertain whether further exploration will result in the determination of a Mineral Resource under NI 43-101. The Exploration Target stated in the Agapito Report is not being reported as part of any Mineral Resource or Mineral Reserve.
*The prefix ‘e’ in eKCl indicates that the grade was estimated utilizing the response from down-hole gamma ray log surveys and was not measured from chemical analysis of the core.
Preliminary analysis of down-hole electric log data suggests that Potash Cycle 5 is a regionally extensive sylvinite bed in the northern Paradox Basin demonstrating continuous thicknesses and improving in thickness and grade across the Property to the northeast. The best zone of mineralization appears centralized to the northeast quadrant of the Property where inferred potash-bearing Cycle 5 ranges from about 3 to 6 m thick and grades 22 to 25% eKCl*
The Agapito Report classifies Cycle 5 as a NI 43-101 Exploration Target projected to contain between 600 million and 1 billion tonnes of sylvinite with an average grade ranging between 19 and 29% eKCl, assuming a bed thickness cut-off of 2.0 m and a composite grade cut-off of 15.8% eKCl. Cycle 5 ranges between 1, 200 and 1, 900 m depth on the Property.
Table 1: Summary of the Cycle 5 Exploration Target†
|Average Grade (%eKCl)||19 – 29|
|Average Thickness (m)||2.5 – 5.0|
|Tonnage (Mt)||600 – 1000|
†Target cut-offs 15.8% eKCl bed composite grade and 2.0m bed thickness.
Readers should note that:
Exploration Targets are conceptual in nature and there has been insufficient exploration to define them as Mineral Resources, and, while reasonable potential may exist, it is uncertain whether further exploration will result in the determination of a Mineral Resource or support a PEA report under NI 43-101. The Potash Exploration Targets are not being reported as part of any Mineral Resource or Mineral Reserve.
The 12 new federal potash prospecting permit applications, analogous to and encompassing the same area as the original 12 prospecting permits recently denied for reinstatement as announced on September 21, 2015, underlie and make up a substantive part of the Project. The Company believes that there are strong grounds to anticipate the granting of the potash prospecting permits, however the Company can provide no guarantee or assurance as to whether the outcome will transpire as anticipated.