Trigon Ochoa 43-101 PEA a-opt

Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project

Lea County, Southeast New Mexico

PREPARED FOR

Dated August 19, 2009

Prepared by Sean C. Muller, C.P.G., R.G. Robert Galyen, C.P.G., R.G.

Chemrox Technologies

William J. Crowl, R.G. Donald E. Hulse, P.E.

Terre A. Lane, Member, AusIMM Richard D. Moritz, Member, MMSA

Gustavson Associates, LLC

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Prepared by: Chemrox Technologies and Gustavson Associates August 19, 2009

LIST OF CONTENTS

1. SUMMARY ............................................................................................................................................. 1

2. INTRODUCTION .................................................................................................................................. 8

3. RELIANCE ON OTHER EXPERTS ................................................................................................. 13

4. PROPERTY DESCRIPTION & LOCATION................................................................................... 15

4.1 PROSPECTING PERMITS ............................................................................................................... 23 4.1.1 Federal Land Holdings ................................................................................................ 24 4.1.2 Other Land Requirements ............................................................................................ 24 4.1.3 Royalties ...................................................................................................................... 24 4.1.4 Environmental Considerations .................................................................................... 25 4.1.5 Retention and Obligations of the Permits .................................................................... 25 4.1.6 Bonding and other Financial Obligations ................................................................... 26 4.1.7 Boundaries and Survey Requirements ......................................................................... 26

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ............................................................................................................................... 27

6. HISTORY ............................................................................................................................................. 30

7. GEOLOGICAL SETTING .................................................................................................................. 31

7.1 REGIONAL GEOLOGY .................................................................................................................. 31 7.2 LOCAL GEOLOGY ....................................................................................................................... 36 7.3 IDENTIFICATION OF POLYHALITE IN GEOPHYSICAL WELL LOGS ............................................... 37 7.4 DATA INTERPRETATION .............................................................................................................. 38

8. DEPOSIT TYPES ................................................................................................................................. 45

9. MINERALIZATION ........................................................................................................................... 46

10. EXPLORATION .................................................................................................................................. 48

11. DRILLING ............................................................................................................................................ 51

12. SAMPLING METHOD AND APPROACH ...................................................................................... 52

13. SAMPLE PREPARATION, ANALYSES AND SECURITY ........................................................... 54

14. DATA VERIFICATION ...................................................................................................................... 56

15. ADJACENT PROPERTIES ................................................................................................................ 58

16. MINERAL PROCESSING AND METALLURGICAL TESTING ................................................. 59

17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ............................................ 62

17.1 PETRA MODEL CALCULATIONS .................................................................................................. 62 17.2 VALIDATION OF PETRA MODEL USING SURPAC ......................................................................... 66 17.3 DEVELOPMENT OF AN INDEPENDENT RESOURCE ESTIMATE ....................................................... 66

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18. OTHER RELEVANT DATA AND INFORMATION ...................................................................... 72

18.1 BACKGROUND TO THE POTASH INDUSTRY ................................................................................. 72 18.1.1 Fertilizer Products ....................................................................................................... 73 18.1.2 Polyhalite as a Direct Fertilizer and K2SO4 Feed Stock ............................................. 75

19. ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES ........................................ 77

19.1 PRELIMINARY ECONOMIC ASSESSMENT ..................................................................................... 77 19.2 MINING ....................................................................................................................................... 78

19.2.1 Mining Method Selection ............................................................................................. 78 19.2.2 Mine Design ................................................................................................................. 78 19.2.3 Mine Development Design ........................................................................................... 79 19.2.4 Mobile Equipment........................................................................................................ 79 19.2.5 Development and Production Schedules ..................................................................... 79 19.2.6 Mining Support Services .............................................................................................. 80

19.3 MINING RECOVERY .................................................................................................................... 80 19.4 PROCESS DESCRIPTION ............................................................................................................... 81 19.5 MARKETS ................................................................................................................................... 81 19.6 CONTRACTS ................................................................................................................................ 82 19.7 ENVIRONMENTAL CONSIDERATIONS .......................................................................................... 82 19.8 TAXES......................................................................................................................................... 82

19.8.1 Royalties ...................................................................................................................... 82 19.8.2 Corporate Income Tax ................................................................................................. 82

19.9 OPERATING COST ESTIMATES (OPEX) ........................................................................................ 82 19.9.1 Mining OPEX .............................................................................................................. 83 19.9.2 Mineral Processing OPEX and Beneficiation ............................................................. 84 19.9.3 General and Administration and Site Services OPEX ................................................. 85 19.9.4 OPEX Summary ........................................................................................................... 86

19.10 CAPITAL COST ESTIMATES (CAPEX) ................................................................................ 86 19.10.1 Mining ......................................................................................................................... 87 19.10.2 Mineral Processing...................................................................................................... 88 19.10.3 Exploration and Permitting ......................................................................................... 89 19.10.4 CAPEX Summary ......................................................................................................... 89

19.11 ECONOMIC ANALYSIS ................................................................................................................. 89 19.11.1 Sensitivity Analysis ...................................................................................................... 90

19.12 PAYBACK .................................................................................................................................... 92 19.13 MINE LIFE .................................................................................................................................. 92 19.14 OPPORTUNITIES AND RISKS ........................................................................................................ 92

19.14.1 Opportunities ............................................................................................................... 92 19.14.2 Risks ............................................................................................................................. 92

20. INTERPRETATION AND CONCLUSIONS .................................................................................... 94

21. RECOMMENDATIONS ..................................................................................................................... 96

22. REFERENCES ................................................................................................................................... 101

23. CERTIFICATES ................................................................................................................................ 105

24. GLOSSARY ........................................................................................................................................ 116

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LIST OF APPENDICES

APPENDIX A – Mineralogical Investigations of Salado and Rustler Polyhalite APPENDIX B – Analytical Results from the Mineral Lab and ALS Chemex APPENDIX C – Metallurgical Test Results from RDi APPENDIX D – Polyhalite Density Calculations APPENDIX E – Mining Support Documents

LIST OF FIGURES

FIGURE 1.1 OCHOA AREA OF INTEREST LAND POSITION, PROPOSED DRILL HOLE LOCATIONS

AND POLYHALITE ISOPACHS ...................................................................................................... 2 FIGURE 1.2 K2SO4 PRICE SENSITIVITY .............................................................................................................. 6 FIGURE 2.1 GENERAL LOCATION OF THE OCHOA RESOURCE AREA .................................................. 12 FIGURE 4.1 GENERAL LOCATION MAP OF THE OCHOA PROPERTY IN NEW MEXICO .................... 15 FIGURE 4.2 LOCATION OF OIL AND GAS LEASES THAT OVERLAP POTASH PERMITS HELD BY

ICP IN THE OCHOA AOI ................................................................................................................ 17 FIGURE 4.3 LOCATION OF THE NEWLY ADDED ACREAGE CURRENTLY IN ENVIONMENTAL

ASSESSMENT STAGE ..................................................................................................................... 21 FIGURE 4.4 LOCATION OF THE FIVE ADDITIONAL ICP PROSPECTING PERMITS (17-21) ................ 22 FIGURE 5.1 TYPICAL TERRAIN AND VEGETATION FOR THE OCHOA AOI (AFTER MICON, 2008) 27 FIGURE 5.2 KPLA & WIPP .................................................................................................................................... 29 FIGURE 7.1 GEOLOGICAL MAP OF NEW MEXICO ....................................................................................... 31 FIGURE 7.2 LOCATION OF DELAWARE SUB-BASIN .................................................................................... 32 FIGURE 7.3 OCHOAN STRATIGRAPHIC MAPPING UNITS ......................................................................... 34 FIGURE 7.4 POLYHALITE SHOWING A HIGH GAMMA RAY RESPONSE ................................................ 35 FIGURE 7.5 CONCEPTUAL CROSS SECTION OF THE PERMIAN BASIN (AFTER JONES, 1972) ......... 36 FIGURE 7.6 LOCATION MAP FOR CROSS SECTIONS ................................................................................... 39 FIGURE 7.7 NW-SE CROSS-SECTION A-A’ ON WEST SIDE OF AOI ........................................................... 40 FIGURE 7.8 N-S CROSS SECTION B-B’ ON EAST SIDE OF AOI .................................................................... 41 FIGURE 7.9 THICKNESS ISOPACH FOR TAMARISK POLYHALITE BED WITH ICP PERMITS .......... 42 FIGURE 7.10 DEPTH FROM SURFACE ELEVATION TO THE BASE OF THE POLYHALITE IN THE

RUSTLER FM ................................................................................................................................. 43 FIGURE 7.11 CROSS-SECTION “C” SHOWING SALADO POTASH BED DISTRIBUTION ON THE

WEST ............................................................................................................................................... 44 FIGURE 10.1 PROPOSED DRILL HOLE LOCATIONS IDENTIFIED ............................................................ 50 FIGURE 17.1 SHOWS THE GAMMA RAY TRACK ON THE LEFT ................................................................ 62 FIGURE 17.2 SURPAC ISOPACH OF RUSTLER POLYHALITE BED WITH AOI OUTLINE .................... 68 FIGURE 17.3 LOCATION OF PERMIT TRACTS HAVING GREATER THAN 6 FT OF POLYHALITE IN

THE ICP AREA OF INTEREST .................................................................................................... 70 FIGURE 17.4 OCHOA INFERRED RESOURCE VOLUMES AND TONNAGES BY OBJECT AREA ......... 71 FIGURE 19.1 K2SO4 PRICE SENSITIVITY .......................................................................................................... 90 FIGURE 19.2 CONTROLLABLE COST SENSITIVITY ..................................................................................... 91 FIGURE 19.3 CAPITAL COST SENSITIVITY .................................................................................................... 91 FIGURE 19.4 DISCOUNT RATE SENSITIVITY ................................................................................................. 92

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LIST OF TABLES

TABLE 1.1 INFERRED POLYHALITE RESOURCES IN ICP AREA OF INTEREST ..................................... 3 TABLE 1.2 COST PER TON OF FEED .................................................................................................................... 5 TABLE 1.3 TOTAL ESTIMATED INITIAL CAPITAL COST FOR THE MINE AND PLANT ....................... 5 TABLE 1.4 EXPLORATION, ENGINEERING AND PERMITTING COSTS .................................................... 5 TABLE 1.5 NPV’S ...................................................................................................................................................... 6 TABLE 2.1 OCHOA POLYHALITE PROJECT QUALIFIED PERSONS AND THEIR

RESPONSIBILITIES .......................................................................................................................... 10 TABLE 4.1 BLM PROSPECTING PERMITS HELD BY ICP AT OCHOA ....................................................... 18 TABLE 4.2 DESCRIPTION OF ADDITIONAL PERMITS TO BE ADDED TO THE OCHOA AOI...................................... 23 TABLE 7.1 LOG CHARACTERISTICS OF EVAPORITE MINERALS ........................................................... 37 TABLE 9.1 AVERAGE COMPOSITION OF POLYHALITE (DANA, 1927) .................................................... 46 TABLE 17.1 OCHOA INFERRED MINERAL RESOURCES ............................................................................. 63 TABLE 17.2 INFERRED RESOURCE TABULATION ....................................................................................... 63 TABLE 18.1 WORLD POTASH PRODUCTION1 (THOUSAND TONS K2O) ................................................... 73 TABLE 19.1 MOBILE UNDERGROUND MINING EQUIPMENT .................................................................... 79 TABLE 19.2 DEVELOPMENT SCHEDULE ........................................................................................................ 80 TABLE 19.3 MINE STAFF ...................................................................................................................................... 83 TABLE 19.4 PLANT STAFF ................................................................................................................................... 84 TABLE 19.5 PROCESS OPERATING COSTS – EXCLUDING LABOR .......................................................... 85 TABLE 19.6 SURFACE STAFF .............................................................................................................................. 86 TABLE 19.7 COST PER TON OF FEED ................................................................................................................ 86 TABLE 19.8 MINE DEVELOPMENT CAPITAL COSTS PHASE I ................................................................... 87 TABLE 19.9 MINE DEVELOPMENT CAPITAL COSTS PHASE II – YEAR 14 ............................................... 88 TABLE 19.10 SURFACE AND PROCESS CAPITAL COSTS ............................................................................ 88 TABLE 19.11 EXPLORATION, ENGINEERING AND PERMITTING COSTS .............................................. 89 TABLE 19.12 TOTAL ESTIMATED INITIAL CAPITAL COST FOR THE MINE AND PLANT ................. 89 TABLE 19.13 NPV’S ................................................................................................................................................ 90

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1. SUMMARY

Chemrox Technologies and Gustavson Associates were contracted by Trigon Uranium

Corporation to prepare an independent Preliminary Economic Assessment (PEA) for their

interest in the Ochoa polyhalite property in southeastern New Mexico suitable for reporting

under Canadian National Instrument 43-101 (“NI43-101”). In order to make reasonable

predictions of the economics, a resource assessment was necessary and is part of this PEA. The

target mineral for potential development is a potassium sulfate mineral known as polyhalite.

Polyhalite is an evaporite mineral with chemical formula K2SO4.MgSO4.2CaSO4.2H2O but it

contains no sodium or chloride as its formula might suggest. Trigon and ICP’s goal is to produce

polyhalite as a multi-nutrient, chloride-free fertilizer and to produce potassium sulfate for the

agricultural marketplace internationally.

The Ochoa polyhalite property comprises 16 existing federal prospecting permits for potassium

located about 60 miles east-southeast of Carlsbad, New Mexico and less than 20 miles west of

the Texas-New Mexico state line. It also has 5 additional prospecting permits undergoing the

final Environmental Assessment (EA) evaluations by the Bureau of Land Management (BLM)

although a verbal approval has been given for the locations by BLM field personnel. Combined,

the permit holdings of ICP would be 45,712.66 acres on approximately 100,000 acre trend of

polyhalite at Ochoa.

Geophysical data from oil and gas well holes drilled in and around the Ochoa area of interest

(AOI) were combined with nearby core and local cuttings data to authenticate and model the

presence and thickness of polyhalite on the ICP property that occurs between 1200 and 2200 ft

beneath the property in the Rustler Formation of Permian age. Isopach and structure maps were

generated by Chemrox of the polyhalite using Petra and Surpac software under the supervision of

Chemrox. The Petra software and in-put rationale was also validated by a Gustavson expert in

Petra software. Gustavson also verified the resource estimate using Surfer software. Figure 1.1

shows the Area of Interest outline, proposed holes and polyhalite thicknesses for Ochoa.

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FIGURE 1.1 OCHOA AREA OF INTEREST LAND POSITION, PROPOSED DRILL HOLE LOCATIONS AND POLYHALITE ISOPACHS

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The area of polyhalite greater than 6 feet thick was calculated. The 6 ft thickness was chosen

because that is the minimum mineable thickness used in the Preliminary Economic Assessment.

The area was multiplied by the interpolated thickness to arrive at a volume that was reduced to a

tonnage using a tonnage factor of 11.43 ft3/ton derived from core hole densities. An 85%

polyhalite grade was assumed, based on core samples proximal to the Ochoa area. At this stage,

only inferred mineral resources can be estimated until implementation of a core drilling program

during the fall of 2009. During that drilling program, Trigon and ICP will be able to validate

polyhalite grade, thickness and continuity, in many instances twinning the oil and gas drill hole

locations to see if grade can be predicted using such data.

Below is the Chemrox estimate for the tonnage of the polyhalite inferred mineral resource in the

AOI and under the BLM permits for exploration in the Rustler Formation that are held by ICP

(Table 1.1). It should be noted that these mineral resources are not mineral reserves and do not

have demonstrated economic viability.

TABLE 1.1 INFERRED POLYHALITE RESOURCES IN ICP AREA OF INTEREST

Polygon Name Total Area (ft2)

Area greater than 6ft thick

Short tons in area greater than 6 ft thick

Avg thickness

(ft) AOI‐West 2,981,316,000 1,182,297,000 699,277,000 6.77AOI‐East 585,775,000 142,207,000 85,167,000 6.85

AOI Sum 3,567,091,000 1,324,504,000 784,444,000 6.78

ICP Permit Sum 1,994,698,000 679,209,000 399,574,000 6.73

Note: Estimates rounded to 1,000’s

An independent analysis of the inferred resource in the Rustler Formation supervised by

Chemrox was further validated by Chemrox using Surpac software wherein Chemrox calculated

382Mt of in-place inferred mineral resources, non-adjusted for grade. Mineralogical and

chemical analyses suggest that an average polyhalite grade in the Rustler Formation of 85%

polyhalite is not an unreasonable expectation for the ICP permits based upon core data from the

area to the northwest of the property.

A significant potential resource of potash bearing beds appears to occur at greater depths within

the Salado Formation on the BLM permits but has not been quantified as part of this report.

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Chemrox’s inferred mineral resource estimate within the ICP Permit AOI that is the subject of

the PEA summarized in this report should be considered too speculative geologically to have the

economic considerations applied to them that would enable them to be categorized as mineral

reserves, and there is no certainty that the preliminary assessment will be realized.

In order to evaluate the potential economic viability of the Ochoa polyhalite deposit, the PEA

was prepared. The conceptual mine plans were based on the experience of Randy Foote, Chief

Engineer and VP of Engineering for ICP, who previously worked as a mine manager at

operations of similar mines (potash) in the Carlsbad district. Gustavson developed the mine

staffing, capital and operating costs using the Mine and Mill Equipment Costs, An Estimator’s

Guide (2009) and the personal experience of Mr. Foote. The conceptual process flowsheet was

proposed by Mr. Foote and is based on work done in the late 1950’s and published in a report.

Gustavson utilized Mr. Foote’s experience and updated process operating costs in the 1958

report with current raw materials and energy cost data. Process operating and capital costs were

estimated by Gustavson and checked by Mr. Foote. Gustavson estimated the General and

Administrative costs as well. The pre-tax economic evaluation included royalties due to the

Federal Government and two other parties. The PEA of ICP’s estimated inferred mineral

resources at Ochoa indicates that development of the polyhalite resource is potentially

economically viable based on a conceptual underground room and pillar mining scenario

followed by processing through a plant designed using proven process technology.

Annual full production mining capacity from the underground room and pillar mine is 4.6

million tons per year. The mine will operate 350 days per year for a full daily production

tonnage of 13,143 tons. The process plant design selected utilizes ammonia to precipitate

magnesium hydroxide and in a second step, potassium sulphate. The plant would produce

904,000 tons of K2SO4 per year and 500,000 tons of polyhalite at full capacity.

All costs are stated in 2009 US dollars. Full capacity operating cost per ton of mill feed

estimates are shown in Table 1.2.

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TABLE 1.2 COST PER TON OF FEED

AREA Life of Mine Average Typical Year Mine $8.84 $10.74Mill $26.63 $27.48G&A $0.66 $0.64Total $36.13 $38.86

Total estimated initial capital cost for the mine and plant are shown in Table 1.3:

TABLE 1.3 TOTAL ESTIMATED INITIAL CAPITAL COST FOR THE MINE AND PLANT

The estimated exploration, engineering and permitting costs total $9.8 million, as shown in

Table1.4, bring the total preproduction expenditure to $887.3 million. The ICP Phase 1 drill

program budget is US $550 million and the Phase 2 budget is US$2.5 million US.

TABLE 1.4 EXPLORATION, ENGINEERING AND PERMITTING COSTS

ACTIVITY COSTPreliminary Drilling (Phase I) $550,000 Development Drilling (Phase II) $2,500,000Prefeasibility Study $2,000,000Feasibility Study $4,000,000Permitting $750,000Total $9,800,000

The project will produce two fertilizer products, potassium sulfate, and polyhalite. The potassium

sulfate product is readily marketable as a highly desirable fertilizer. 85% of the project revenue is

derived from potassium sulfate at full production. Test work has shown polyhalite to be a good

direct application fertilizer; however polyhalite is currently not utilized as a fertilizer and will

require market development. Initial polyhalite production is planned for 50,000 tons per year;

rising by 50,000 tons per year for 9 years to a maximum of 500,000 tons per year. Polyhalite

sales at full production represent 15% of the project’s revenue. The pricing of the polyhalite

Total Mine and Plant Capital $589,884,206

Total Direct Costs $589,884,206EPCM 12% direct $70,786,105

Indirects 4% direct $23,595,368Subtotal Direct plus Indirect $684,265,679

Owners costs 3% direct $17,696,526Contingency 25% total $175,490,551

Subtotal Other Costs $193,187,077

Total Estimated Costs $877,452,756

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product is at a discount to competing fertilizer products. The selling price of direct application

polyhalite fertilizer used in the PEA is $250/ton and the selling price used for potassium sulphate

is $750/ton.

It is assumed a 5% gross royalty would be imposed by the federal government. A $1/ton

potassium product produced, and a 3% net profits royalty are also included.

The 30-year life project gives a pre-tax IRR of 43% and NPV of $2.90 billion with a 10%

discount rate. NPV’s at other rates are listed in Table 1.5. TABLE 1.5 NPV’S

NPV BILLION15% $1.5012% $2.2010% $2.908% $3.865% $6.19

The project has a payback period of 3.1 years from the start of production.

Sensitivity analysis was completed on the project to determine those costs to which the project

was most sensitive. The project is most sensitive to the selling price of K2SO4 followed by

controllable cost, capital cost, and discount rate (Figure 1.2).

FIGURE 1.2 K2SO4 PRICE SENSITIVITY

NPV vs. K2SO4 Price

2,0202,310

2,6012,891

3,1813,472

3,762

‐

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

590 640 690 740 790 840 890 940Product $/Ton

NPV

@ 10%

($00

0's)

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Based on the assumptions and results of the PEA, Gustavson considers that the Ochoa polyhalite

project has potential to be an economically viable operation, annually producing over 900,000

tons of potassium sulphate and 500,000 tons of polyhalite product for the world market.

Gustavson and Chemrox Technologies recommend that Trigon and ICP execute their Phase I

drilling program. If the results are encouraging, we further recommend Phase II drilling and

subsequent metallurgical and other test work and engineering.

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2. INTRODUCTION

Chemrox and Gustavson were retained by Trigon Uranium Corp to evaluate their potash interests

in the ICP property in southeastern New Mexico known as Ochoa. Chemrox and Gustavson

prepared an independent Technical Report on the Ochoa polyhalite property AOI which is

located in Lea County, New Mexico (Figure 2.1). Polyhalite is an evaporite mineral with

chemical formula K2SO4.MgSO4.2CaSO4.2H2O. The area of interest is being investigated by

Intercontinental Potash with the ultimate objective of producing and marketing polyhalite as a

multi-nutrient, chloride-free fertilizer (re: new market commodity competing with langbeinite)

and using polyhalite as a feedstock to produce potassium sulfate (re: an established and

significant potash market).

Intercontinental Potash Corp. ("ICP") owns 100% of the Ochoa project. However, the

independent Technical Report on the Ochoa polyhalite property of ICP and the “area of interest”,

both of which are located in Lea County, New Mexico, has been prepared for Trigon Uranium

Corp. ("Trigon"). Trigon owns 36.8 percent of ICP, a related company by virtue of common

directors and officers. ICP and Trigon have entered into a non-binding letter of intent executed

on June 18, 2009 pursuant to which Trigon intends to make an offer to acquire all of the issued

and outstanding common shares of ICP that it does not already own by way of a share exchange

(the “Transaction”). In anticipation of the closing of the Transaction, Trigon proposes to

consolidate all of its currently issued and outstanding common shares on the basis of one new

share for each four existing shares (subject to receipt of shareholder and regulatory approval).

Under the terms of the offer, ICP shareholders will receive one new Trigon common share (on a

post-consolidation basis) for each ICP common share. Because Trigon and ICP are not arm’s

length parties, the Transaction must be approved by an ordinary resolution of shareholders and a

majority of the votes cast by minority shareholders of Trigon. In addition, the consolidation and

name change must be approved by a special resolution of shareholders of Trigon. Completion of

the Transaction is subject to a number of conditions, including the approval of the TSX Venture

Exchange, the execution of definitive documentation, the completion of satisfactory due

diligence, shareholders holding a minimum of 75% of the issued and outstanding common shares

of ICP (excluding common shares held by Trigon) tendering such shares to the offer, and the

approval of the requisite majority vote of shareholders of Trigon. Trigon has no direct

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obligations with respect to the Ochoa project, however if the Transaction closes, then Trigon

must simply ensure that ICP meets its property maintenance obligations to retain its interest in

the property. The initial term of the permits is two years and may be extended to four years in

total if in the opinion of the BLM exploration has proceed in an expeditious manner.

The Qualified Person responsible for the preparation of the resource portion of this report is Sean

C. Muller, C.P.G, R.G. He was supported by the modeling expertise of Robert Galyen, C.P.G.

The effective date of this resource report is August 18, 2009, and the final PEA is included

within this report. Sean Muller has visited the Ochoa property with ICP personnel and

surrounding area on three occasions in 2009; January 20th to 22nd, March 16th to 19th, and May 4th

to May 8th. During these site visits, Mr. Muller and ICP personnel visited all of the proposed

locations; met with BLM to discuss permits; sampled polyhalite in an underground potash mine;

reviewed and sampled core north of the Ochoa property; examined outcrops of the Rustler

Formation in Nash Draw west of Ochoa; met with landmen, surveyors, archeologists, drillers,

other contractors, and property owners of the surface land over the BLM permits. During these

site visits Mr. Muller gained important insight as to the field conditions, current land use, surface

hydrology, access, surface conditions, vegetation/wildlife and other elements of factors requisite

for future development. Further, samples collected during these field visits have been evaluated

in great detail to develop a conceptual geologic model consistent with the drill hole data on the

property.

The Qualified Persons responsible for the Ochoa Preliminary Economic Assessment (PEA) are

William J. Crowl, R.G., Donald E. Hulse, P.E., Terre A. Lane, Member AusIMM and Richard D.

Moritz, Member MMSA, all employees or associates of Gustavson Associates. Hulse, Lane and

Moritz are mining engineers, while Crowl is a geologist. Assisting both Chemrox and Gustavson

with review of the resource estimation efforts in Petra was Briana Lamphier, a Gustavson oil and

gas geologist. A site visit to Ochoa was made by William Crowl on August 13, 2009 to spot

check drilling locations and meet surface land owners. Karl Gurr, Principal Mining Engineer for

Chemrox assisted Gustavson with development of the PEA and the economic model. Table 2.1

summarizes the qualifications of the Qualified Persons for this report, as well as, specifying the

areas of responsibilities in the report, as required by NI43-101.

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TABLE 2.1 OCHOA POLYHALITE PROJECT QUALIFIED PERSONS AND THEIR RESPONSIBILITIES

Qualified Person Credential Area of Responsibility in Ochoa Technical Report

Sean C. Muller, CPG, R.G. Chemrox Technologies

AIPG Certified Professional Geologist, CPG06942; SME Registered Member as QP; Registered Professional Geologist in 7 States

Report Sections 1-15, 17 and 18, specifically Petra mineral resource estimate and SURPAC validation estimate

Robert Galyen, CPG AIPG Certified Professional Geologist, CPG08505;

Surpac modeling for validating Petra model results (Report subsection 17.2)

William J. Crowl, R.G. Gustavson Associates

Registered Professional Geologist, Oregon, G573

Entire Report

Donald E. Hulse, P.E. Professional Engineer, Colorado 35269

Verification of Trigon (ICP) resource estimation methodology and results

Terre A. Lane, Member AusIMM Gustavson Associates

Member, Australasian Institute of Mining and Metallurgy (AusIMM)

Report Section 19 – Conceptual mining plans, mine operating and capital cost estimates

Richard D. Moritz, Member MMSA Gustavson Associates

Member, Mining and Metallurgical Society of America (MMSA)

Report Section 19 – Mine layout, production scheduling, process operating and capital cost estimates, owner’s costs, economic modeling and sensitivity

The purpose of a Preliminary Economic Assessment is to present basic analytical assumptions

for decision-making early in the process of a property evaluation. To enable the development of

a PEA, one first must have a resource and if only an Inferred Resource, it should be suitably

evaluated to have a level of certainty that can be used for conducting preliminary economic

evaluation. Secondly, one must have a sound framework and comparable basis for developing a

conceptual production scenario and estimated cost considerations. It is fully understood that this

planning tool is not meant as a substitute for more detailed information requisite for defining

indicated and measured resources and conducting a detailed mine planning effort required for

developing sound and defensible reserves and economics. This level of prefeasibility will only

be possible with comprehensive resource, geotechnical and hydrological drilling due to

commence in the Fall of 2009. That being said, conclusions drawn in this report must be viewed

only for planning purposes and not as an absolute quantification of the resource or economics.

Caution should be used by a reviewer of this document as all results, interpretations, and

conclusions are of a preliminary nature subject to refinement as more information becomes

available.

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The sources of information for this 43-101 included:

• Prior publications and internal reports on the subject of polyhalite; • Over 200 oil and gas geophysical logs in the Ochoa area; • Channel samples of polyhalite from one of the operating langbeinite mines in the Salado

Formation; • Core samples or polyhalite from Sandia Laboratories; • Chip samples of polyhalite from the University of New Mexico at Socorro form oil and gas wells

in the AOI; • Analytical test data from The Mineral Lab, ALS-Chemex, Florin Analytical Laboratory; • Microscopy of select polyhalite samples conducted by Dr. John Lufkin; • Metallurgical results from RDi; • Consultations with prior ICP employees and contractors; • Consultation with existing potash mining companies; • Consultation with the Bureau of Land Management; • Legal reviews of contract land personnel; • Filed investigations by the resource QP; • Land survey and archeological survey data and consultations with contractors; and, • Consultations with experienced drillers, construction contractors and reclamation contractors.

The permitted drill sites and area of interest (AOI) are located within the Permian Basin of the

Great Plains physiographic province. Evaporites in New Mexico and Texas occur in the Permian

sedimentary basin which is roughly oval in shape and elongated in a northeast-southwest

direction. The Delaware and Midland sub-basins of the upper Permian Basin are separated by

the Central Basin Platform and contain extensive evaporite deposits of the Ochoa Series which

lie between the Capitan Reef limestone of the underlying Guadalupe Series and the fine clastic

sediments of the Dewey Lake redbeds.

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FIGURE 2.1 GENERAL LOCATION OF THE OCHOA RESOURCE AREA

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3. RELIANCE ON OTHER EXPERTS

The Ochoa area was originally brought to the attention of ICP by Robert Hite, a former U.S.

Geological Survey (USGS) geologist whose specialty is evaporites, in particular, the mineral

polyhalite. Mr. Hite worked for the USGS from 1956 to 1989 and developed knowledge of

polyhalite occurrences in the Carlsbad area through the examination of oil and gas drill

holes/logs comparing the diagnostic signatures of polyhalite in boreholes with that of the minor

occurrence associated with the sylvite and langbeinite deposits in the mines.

Under his supervision, former ICP oil and gas geologist, Susan Wager, mapped the polyhalite

occurrence in the Rustler Formation and equivalents throughout the southeastern part of New

Mexico and west Texas and confirmed that the best occurrence for potential economic

development was in the Ochoa area. She also assisted in the land selection process avoiding the

major oil and gas fields to facilitate mine planning.

Marc Melker, C.P..G., an employee of ICP and an experienced resource modeler, expanded the

interpretation with Petra software volumetric computations under the direct supervision of Sean

Muller, C.P.G, R.G. for Chemrox focusing on the BLM permits. Gustavson had their Petra

modeler, Briana Lamphier review the Petra model and found it to be suitable and defensible for

developing the inferred resources presented in this report. The cooperation of Sandia Labs, US

Department of Energy (DOE) and URS (previously Westinghouse) was extraordinary relative to

accessing pertinent databases and testing information in the Permian Basin and west of the

Ochoa area. The groups collaboratively enabled not only visual inspection of core to the south

of their waste repository known as WIPP, but also allowed ICP to sample polyhalite core just

west of Ochoa.

Additional invaluable consultation was obtained from hydrogeological consultant Dennis

Powers, PhD., of Anthony, Texas who previously worked for Sandia when the relevant WIPP

drill holes intersected polyhalite. Dr. Powers is also an expert in evaporites, and has knowledge

of polyhalite deposits in the Ochoa area. Dr. Powers has utilized the Rustler Formation

polyhalite as a marker horizon for correlations of drill data in the area. Other support was

available from the active mining companies. One company (name withheld at their request)

allowed ICP to evaluate and sample the thin beds of polyhalite from their potash mine. The

P a g e | 14


expertise of ICP’s VP of Engineering, Randy Foote, was invaluable. He developed his expertise

managing large scale mining and milling operations in the Carlsbad area for 27 years. ICP

provided complete and total access to all technical data and reports allowing full transparency in

our review.

Micon International Limited, of Toronto, provided an Independent Technical Report on the

Ochoa Polyhalite Project November, 2008, revised January 2009. Chemrox has utilized certain

information from that report in preparing this report. Dr. John Lufkin, formerly a mineralogy

professor at the Colorado School of Mines, provided oversight of the microscopy presented in

this report. Dr. Deepak Malhotra of the metallurgical testing firm of RDi, who is an adjunct

professor of metallurgy at the Colorado School of Mines, provided expertise in the testing and

evaluation of polyhalite samples, and Peggy Dalheim, previous analytical manager at the

Colorado School of Mines Research Institute, provided expertise in evaluating the nature and

concentration of polyhalite using X-ray Diffraction (“XRD”) and X-ray Fluoroscopy (“XRF”),

and additionally conducted Scanning Electron Microscopy (“SEM”) work to determine

cation/anion location within the mineral grains of polyhalite through her world recognized

company The Mineral Lab.

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4. PROPERTY DESCRIPTION & LOCATION

The Ochoa AOI is located about 60 miles east-southeast of Carlsbad, New Mexico and less than

20 miles west of the Texas-New Mexico state line and spans portions of 8 townships,

specifically: T23S, R33E, T23S, R34E, T23S, R36E, T24S, R33E, T24S, R34E, T24S, R35E,

T24S, R36E and T25S; R36E. The general location is shown in Figure 4.1 below:

FIGURE 4.1 GENERAL LOCATION MAP OF THE OCHOA PROPERTY IN NEW MEXICO

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The Ochoa polyhalite property is comprised of 16 BLM prospecting permits (re: 36,589 acres)

and 5 pending permit applications (re: 9,124 acres) for potassium minerals that would include

polyhalite. The 5 pending permits have gone through the Plan of Operations submittal phase and

BLM has already verbally approved the drill site locations during a field visit in June 2009.

Archeological and land surveys are in progress as is the final EA by the BLM. Verbal

authorization for the site locations has been given by BLM field personnel.

The term of each permit is two years, renewable for an additional two years. A drilling

exploration plan for the required 16 exploration holes was submitted to the BLM on May 27,

2008, and on July 20, 2009 for the 6 exploration holes on the five new permits. The Plan of

Operations describes the drilling methods, drilling stipulations and related reclamation plans.

During June 2008, and June 2009, the BLM inspected the respective proposed drill hole

locations, modified the locations where necessary and approved them with respect to water and

wildlife issues. The drilling exploration plans were modified and resubmitted as a result of this

process. A cultural resource survey was also performed for each of the 16 drill sites with

satisfactory results and no cultural resource sites were identified. Equivalent surveys are on-

going for the other 6 drill sites on the new applications. The drill pad and access roads have been

surveyed for 16 locations.

The property and area of interest are located in Lea County, southeast New Mexico, of which the

county seat is Lovington. The town of Jal, with a population of about 2,000, is the nearest

community to the AOI. Oil and gas production is active in Lea County, with the town of Hobbs,

about 15 miles to the northeast of the property of interest, being the center of this industry. Oil

and gas leases that overlap with the potash permits are seen in Figure 4.2. ICP did make an

effort to avoid oil and gas fields in its acreage selection process to avoid potential conflicts in

development of the mineral resources.

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1

2 3

3 2

8

4

65

7

9 10

e

e

e

nd

nd

nd

ndnd

nd

nd

nd

nd

nd

ndndT23S-R34E

sect 6sect 1T23S-R33ET23S-R33ET23S-R32E

T23S-R32ET23S-R33E T23S-R33ET23S-R34E

sect 1 sect 6

sect 36 sect 31 sect 36 sect 31

SO&G

SG

SO&G

SO

SO&G

SG

SG

SO

New Mexico, Ochoa

Oil and Gas Leases in Yellow

and labeled with active lease #

as described belowWELL SYMBOLS

Location OnlyOil WellGas WellDry HoleInjection WellJunkedUnknown StatusAbandoned Well

SG Dry Hole With Gas Show

SO Dry Hole With Oil Show

SO&GDry Hole With Oil & Gas ShowFilled Large Diamond

ICP permit areas in Diagonal pattern, O+G leasesin yellow, e=expired lease, nd= no detail.

1- NM103609, 2- NM104695, 3- NM20073,4- NM114985, 5- 121489, 6- 114986,

7- NM112940, 8- NM94186, 9- LC068387,10- LC065194

FEET

0 10,000

METERS

0 1,000 2,000 3,000 4,000 5,000 6,000

PETRA 9/4/2009 3:37:19 PM

FIGURE 4.2 LOCATION OF OIL AND GAS LEASES THAT OVERLAP POTASH PERMITS HELD BY ICP IN THE OCHOA AOI

P a g e | 18


Other than inactive caliche pits and one permitted land farm for devolatilizing well-field soils,

there are no other mineral development activities excepting minor oil and gas production. No

other mineral claims or leases are known to occur or conflict with ICP’s holdings on BLM in the

area.

TABLE 4.1 BLM PROSPECTING PERMITS HELD BY ICP AT OCHOA

SERIAL NUMBER TOWNSHIP AND RANGE

SECTIONS AND DESCRIPTIONS

BLM APPROVAL DATE ACREAGE

121100 Township 24

South, Range 35 East, NMPM

Section 27: E2, W2SW Section 28: N2NE, E2SE Section29: W2 Section 31: E2, NW, SWSW Section 33: SW, W2SE, NENE Section 34: NE, S2SW, N2SE, NWNW Section 35: S2NE, S2SE

12/1/2008 2,200.00

121101 Township 24


Section 23: All Lands (640ac) Section 24: All Lands (640 ac) Section 25: All Lands (640 ac) Section 26: W2, E2NE, E2SE

12/1/2008 2,400.00

121102 Township 24


Section 17: N2, SE Section 20: All Lands (640 ac) Section 21: All Lands (640 ac) Section 22: NE, N2SE, NESW, SENW

12/1/2008 2,080.00

121103 Township 24


Section 9: All Lands (640 ac) Section 12: All Lands (640 ac) Section 13: All Lands (640 ac) Section 14: SWNW, E2NW, E2, SW

12/1/2008 2,520.00

121104 Township 24


Section 1: W2, W2E2 Section 6: All Lands (640 ac) Section 7: W2, W2SE Section 8: E2, SW, E2NW Section 11: NENE Section 18: SW Section 19: SW Section 35: SENW, SESW

12/1/2008 2,520.00

121105 Township 24


Section 9: N2, SE Section 11: W2W2, E2E2 Section 12: E2, SW, E2NW Section 13: All Lands (640 ac) Section 19: N2, SE, N2SW

12/1/2008 2,560.00

121106 Township 24


Section 23: E2, SWSW Section 24: SE, NESW, SENE, N2NW Section 25: W2W2, E2E2 Section 26: W2 Section 27: S2, E2NE Section 34: NW, N2SW, W2SE

12/1/2008 2,360.00

P a g e | 19


SERIAL NUMBER TOWNSHIP AND RANGE


BLM APPROVAL DATE ACREAGE

Section 35: E2

121107 Township 23


Section 6: Lots1‐7, SENW, E2SW, S2NE, SE Section 7: Lots1‐2, E2NW, NE Section 18: Lots3‐4, E2SW, SE Section 19: Lots1‐4, E2W2, E2

12/1/2008 1,892.00

121108 Township 24


Section 1: Lots1‐4, S2N2, N2SW, SE Section 3: Lots1‐2, S2NE, SE Section 4: Lots1‐2, S2NE, SE, S2SW, NWSW Section 5: Lots3‐4, S2NW, SW Section 7: Lots1‐2, E2NW, NE Section 8: N2, SW

12/1/2008 2,439.00

121109 Township 24


Section 11: N2 Section 12: All Lands (640 ac) Section 13: SE, E2SW Section 14: W2, W2E2 Section 23: All Lands (640 ac)

12/1/2008 2,320.00

121110 Township 24


Section 24: W2 Section 25: W2 Section 26: All Lands (640 ac)

12/1/2008 1,280.00

121111 Township 23


Section 24: All Lands (640 ac) Section 25: All Lands (640 ac) Section 26: All Lands (640 ac) Section 28: All Lands (640 ac)

12/1/2008 2,560.00

121112 Township 24


Section 17 all Lands (640 ac) Section 18: Lot1, NENW, NE Section 20: All Lands (640 ac) Section 21: N2, SW, W2SE Section 22: N2, SESE

12/1/2008 2,440.00

121113 Township 23


Section 13: S2 Section 14: S2 Section 21: All Lands (640 ac) Section 23: All Lands (640 ac)

12/1/2008 1,920.00

121114 Township 23


Section 1: Lots1‐4, S2N2, S2 Section 4: Lots1‐4, S2N2, S2 Section 5: Lots1‐4, S2N2, S2 Section 6: Lots1‐7, E2SW, SENW, S2NE, SE

12/1/2008 2,547.00

121115 Township 23


Section 7: Lots1‐4, E2W2, E2 Section8: All Lands (640 ac) Section 9: All Lands (640 ac) Section 11: All Lands (640 ac)

12/1/2008 2,551.00

TOTALS: 36,589.00

Figure 4.3 shows the areas held by ICP under BLM prospecting permits 1 through 16 in the AOI

plus five new prospecting permit applications 17 through 21 to the east that are in the final stage

P a g e | 20


of review and approval. These new prospecting permits are located in T23S, R36E; T24S, R36E

and T25S, R36E as seen in Figures 4.4. ICP would have an exclusive option to lease these tracks

from BLM during the two year option period or extension, once it confirms reserves.

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FIGURE 4.3 LOCATION OF THE NEWLY ADDED ACREAGE CURRENTLY IN ENVIONMENTAL ASSESSMENT STAGE

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FIGURE 4.4 LOCATION OF THE FIVE ADDITIONAL ICP PROSPECTING PERMITS (17-21) IN THE AREA OF INTEREST

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These new tracts east of the present permits would cover an extension of a potentially thick but

deep zone of polyhalite in the Rustler Formation and are described in Table 4.2.

TABLE 4.2 Description of Additional Permits to be added to the Ochoa AOI

TRACT NUMBER

TOWNSHIP AND RANGE


BLM APPLICATION

DATE

PLAN OF OPERATIONS

FILED

ANTICIPATED APPROVAL

DATE

PERMIT ACREAGE

122278 Township 23 South, Range 36 East, NMPM

Section 29: All Section 30: Lots1‐4, E2,E2W2 Section 31: Lots1‐4, E2W2

3/19/2009 7/22/2009 8/30/2009 1,591.12


Section 6: Lots1‐5, S2NE, SENW, SE Section 7: E2 Section 17: S2SE, S2NW, SW Section 18: Lots1‐2, E2NW, NE Section 19: Lots1‐4, E2W2, E2

3/19/2009 7/22/2009 8/30/2009 2,081.31


Section 20: All Section 28: N2NW, E2NE, E2SE Section 29: NWNW, S2SW Section 30: Lots1‐4, E2W2, SE, W2NE, NENE Section 31: Lots1‐2, E2NW, NE Section 33: S2SE

3/19/2009 7/22/2009 8/30/2009 2,006.33

122281 Township 25South, Range 36 East, NMPM

Section 4: Lots1‐4, S2N2, S2 Section 5: Lots1‐4, S2N2, S2 Section 6: Lots6‐7, E2SW, SE Section 7: Lots1‐4, E2W2, NE, N2SE

3/19/2009 7/22/2009 8/30/2009 2,164.90


Section 8: All Section 9: All 3/19/2009 7/22/2009 8/30/2009

1,280.00

TOTALS: 9,123.66

4.1 Prospecting Permits To date, exploration activities by ICP have been limited to oil and gas log interpretation and

evaluating polyhalite from potash mines and nearby core. A confirmation core drilling program

is planned for the Fall of 2009, once ICP subsequent to becoming a public company in October.

This drilling program is designed to twin prior oil and gas locations for further validation of the

usefulness of such data for resource appraisals. Further the exploration drilling program will

have strategic locations to extend or better quantify the resource to enable the possible

designation of indicated resources.

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Coring will be an essential part of the planned drilling program so that analysis of the polyhalite

grade can be a part of the next resource appraisal. This will be particularly important for

determining an acceptable drill hole spacing for indicated and measured resources. The results

of this fall program will necessitate another resource evaluation and the determination of the

spacing and location for the next round of drilling in the spring of 2010.

A significant amount of new exploration data has been acquired since Micon wrote their Scoping

Study in 2008, and this is the basis for this 43-101.

4.1.1 Federal Land Holdings

In order to drill on federal land that is not part of a permitted mine, a prospecting permit

application is filed with the BLM office in Carlsbad, New Mexico under 43 CFR 3505 in order

to determine if a valuable deposit exists of potassium (among a list of minerals). Following

review of the application, the BLM requires an exploration plan and a bond before the

prospecting permit is issued. The plan should include the number of holes to be drilled, the

locations of the drilling, size of drill pads and drilling methods. In addition, archeological

clearance must be obtained for each road and drill pad in the plan and the BLM will seek

clearance from the US Fish and Wildlife in order to confirm that breeding grounds of the prairie

chicken are not within the vicinity, as well as the presence of other wildlife concerns.

Prospecting permits for potassium have an initial term of two years and may be renewed for a

further two years.

4.1.2 Other Land Requirements

ICP has invested a great deal of time and effort with surface owners in the area to facilitate

access and good relations. To what extent private and State minerals plus surface rights are

necessary for the development of a large scale project is still unknown at this time and this PEA

does not consider the acquisition of non-BLM ownership.

4.1.3 Royalties

There is a 5% gross royalty on potash production payable to the Federal Government. A further

royalty of $1/ton of any potassium product produced is payable to Robert Hite.

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4.1.4 Environmental Considerations

Preliminary screening of the AOI indicates that there are no existing environmental liabilities

excepting for abandoned oil and gas wells. These would need to be effectively plugged and

abandoned if there was a concern for natural gas leakage into future mine workings.

Shallow aquifers exist in the AOI at or around 300 foot in depth that are utilized for potable

water supply. The continuity and areal extent of these aquifers has not been quantified. For the

most part, the surface conditions throughout the AOI are such that only limited grazing is

possible. This is a function of the arid climate and nature of the poor soils. Water usage for

mine development has not been ascertained from an availability standpoint. Brines, while

present at depth, are thought to exist below the target Rustler Formation polyhalite. If there were

brine producing zones, consideration for disposal or treatment would be necessary.

Surface development activities such as the establishment of tailings impoundments will require

consideration of potential potable water supplies should potential infiltration be an issue. While

it is unlikely that this condition would exist, special studies and infrastructural siting for low

infiltration areas away from shallow aquifers may be necessary.

Some sensitive species such as the Lesser Prairie Chicken and a sand lizard are known in the

area and the habitat appears to be widespread and non-unique. Currently the BLM supports

limiting activities for earth disturbing activities during the mating seasons of the Lesser Prairie

Chicken in the few areas where the birds have been documented. There does not appear to be

any Threatened or Endangered Species or suitable habitat in the AOI, but baseline studies still

need to be conducted.

4.1.5 Retention and Obligations of the Permits

ICP must drill 2 test holes on each prospecting permit within two years of securing the permit or

lose the Permit. An exclusive extension of the permit is possible to meet this obligation and

BLM is amenable to such so long as the company is diligently doing exploration. After the term

of the prospecting permit, should ICP prove reserves of potash minerals, then it may apply for a

mining lease. Since this is in an non-KPLA area, ICP would be granted an exclusive right to

obtain this lease. Data generated would be held in confidence by the BLM.

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4.1.6 Bonding and other Financial Obligations

Bonding has been posted for reclamation at all approved permit locations and no other

compensation other than surface usage compensation to surface landowners is necessary at this

time to retain and explore on the properties.

4.1.7 Boundaries and Survey Requirements

No detailed land surveys are required by BLM at the stage of holding prospecting permits. It is

legally sufficient at this stage to have BLM permits identified by BLM title specialist with only

the legal subdivisions of the respective land Sections. However, before issuing a drilling permit

on the prospecting permit, BLM requires that a land survey be done of the location to ensure

ownership.

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5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY

The property and area of interest are located in Lea County, southeast New Mexico, of which the

county seat is Lovington. According to the 2000 census, the county population was some 55,500.

The town of Jal, with a population of about 2,000, is the nearest community to the property,

located only a couple of miles from the southeastern portion of the AOI on State Highway 128.

Oil and gas exploration and production is active in Lea County, with Hobbs, about 15 miles to

the northeast of the property.

The Lea County airport is located near Hobbs. Carlsbad has air service from Albuquerque.

Electric power is supplied by Xcel Energy. Water is supplied from local wells. The property is

traversed by County Road 2, as well as two track roads and primitive jeep roads. A rail line runs

24 km (15 miles) to the east of the area of interest, through Jal, south to El Paso, Texas.

FIGURE 5.1 TYPICAL TERRAIN AND VEGETATION FOR THE OCHOA AOI (AFTER MICON, 2008)

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The Federal Department of Energy (DOE) Waste Isolation Pilot Plant (WIPP) site is located

about 12.5 km (8 miles) west-northwest of the northwest corner of the area of interest. Among the

documents relating to the WIPP site, DOE/CAO 1996-2184, Compliance Recertification

Application, Title 40 CFR 191, provides descriptions of the geology and local resources and is

referenced herein as DOE/CAO 1996-2184. The climate is semi-arid with generally mild

temperatures, low precipitation and humidity, and a high evaporation rate. Moderate winds blow

from the southeast in summer; in winter there may be strong west winds. Temperatures are

moderate. Winter temperatures range from lows around -6oC (20oF) to highs around 10oC (50oF).

Summertime high temperatures are typically above 32oC (90oF). Average precipitation is about

330 mm (13 in) per year, about half of which comes from thunderstorms in June through

September (DOE/CAO 1996-2184, p. 2-178, 2-179). AOI is in the High Plains section of the

southern Great Plains physiographic province. The surface consists of relatively flat terrain with

minor arroyos and low-quality semi-arid rangeland. Vegetation is mesquite, Shinnery oak and

coarse grasses that grow on soil of a fine veneer of sandy caliche rubble to wind-blown sand. On

the new pending permits, the north part is in sandy dune country with much different plant

species.

According to Micon (2008), wildlife includes jack rabbit and the desert cotton tail, with the Ord’s

kangaroo rat, the Plains pocket mouse and northern grasshopper mouse. Local sensitive species

include the Lesser Prairie Chicken or grouse and a variety of sand lizard. Larger species include

the mule deer, pronghorn antelope and coyote. Reptiles include the side-blotched lizard. Raptors

are a common bird species and loggerhead shrike, Pyrrhuloxias and black-throated sparrows are

also predominant species. (DOE/CAO 1996-2184, p. 2-164).

Elevation ranges from around 900 to 1,005 m (3,100 to 3,750 ft) above sea level and is generally

higher in the northwest corner and lower in the southeast corner of the area of interest.

Exploration, mining and mineral processing may take place year-round. Personnel for

construction, mining and support are available in local southeastern New Mexico communities

such as Carlsbad, Loving, and Hobbs.

The majority of United States potash production takes place in three conventional underground

mines, operated by The Mosaic Company (Mosaic) and Intrepid Potash, Inc. (Intrepid) near

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Carlsbad in Eddy County which is to the west of, and adjacent to, Lea County as outlined in

Figure 5.2 below.

FIGURE 5.2 KPLA & WIPP

ICP’s surface rights will be sufficient for development of an underground mine and plant site.

Power will be available from a nearby high voltage line. At this time, no hydrological studies

have been conducted in the area. Skilled labor is available in the area. Surface tailings storage is

expected to be minimal, and waste ponds will be sited where infiltration, if it occurs, will not

adversely affect shallow acquifers. No specific plant site has been selected. Siting the plant will

require studies of geotechnical issues as well as significant hydrological investigations. ICP has

budgeted for these studies in Phase II of their proposed exploration program.

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6. HISTORY

In the 1920’s and 1930’s the US Commerce Department in conjunction with the US Bureau of

Mines embarked upon a strategic exploration program across the Permian Basin of Texas and

New Mexico to protect the US from the monopoly of potash resources that the Germans had

under control at that time. During this drilling campaign, polyhalite was found throughout the

region but never in any quantities thought to be mineable. It was shortly after that the sylvite, or

potassium chloride, deposits were discovered near Carlsbad and polyhalite was all but forgotten

until recently.

No major oil fields appear to exist in the AOI with only areas of minor production. These areas

have been avoided by the ICP permits. Gas exploration is more widespread but not concentrated

in any one area. While permits to drill for deep gas have been filed recently, there does not seem

to be the potential for development conflicts. In Section 19, the resources were adjusted to reflect

buffer zones around current product equal to the depth of the target mine zone which is standard

practice in potash mining. Minor caliche deposits have also been found and developed locally for

road and platforms for drilling equipment. Preliminary exploration by ICP first started in the

Ochoa AOI in 2008 under the direction of former USGS geologist, Robert J. Hite. After detailed

log interpretation, exploration permits were procured in 2008. The consulting group, Micon, did a

scoping study in early 2008 concluding that the area had favorable potential for a large polyhalite

deposit. A more comprehensive evaluation of the oil and gas drill log data was then undertaken to

determine the relative uniqueness of the Ochoa occurrence as well as its suitability to

conventional underground mining.

In early 2009, it was determined that in absence of confirmatory drilling, samples needed to be

procured to confirm the oil and gas drill hole logs. Samples of polyhalite within the Salado

Formation from a producing potash mine were procured and tested to determine the nature of

polyhalite and its likely gangue constituents. Chip samples from oil and gas drilling were

available from the university in Socorro which confirmed the presence of polyhalite under the

Ochoa AOI. More recently core samples of the target polyhalite zone in the Rustler Formation

were obtained from Sandia Labs just west of the Ochoa AOI, which confirmed the presence of

polyhalite from oil and gas data. These recent developments afforded a unique opportunity to

assess the physical-chemical characteristics of the target horizon that ICP hopes to mine.

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7. GEOLOGICAL SETTING

7.1 Regional Geology The AOI lies in the Delaware Sub-basin of the Permian Basin of the Great Plains physiographic

province. The surface geologic map of New Mexico is shown in Figure 7.1. This map shows

the Ochoa area to mainly have limited, bedrock exposures which indeed is the case.

FIGURE 7.1 GEOLOGICAL MAP OF NEW MEXICO

Large scale evaporite deposits occur throughout the Permian age sedimentary basin elongated in

a northeast-southwest direction. The Delaware and Midland sub-basins of the upper Permian

Basin are separated by the Central Basin Platform on the Texas-New Mexico border and contain

extensive evaporite deposits of the Ochoa Series. These evaporites lie between the Capitan Reef

P a g e | 32


limestone of the underlying Guadalupe Series and the fine clastic sediments of the Dewey Lake

redbeds. The location of the Delaware Basin where Ochoa is located can be seen below in Figure

7.2. The other potash deposits that have been developed to date in the Carlsbad area occur in the

Delaware sub-basin of the Permian Basin as well.

FIGURE 7.2 LOCATION OF DELAWARE SUB-BASIN

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The first evaporite cycle of the Ochoa Series is known as the Castile Formation. The Castile

consists of anhydrite and halite within the Delaware Basin. The overlying Salado Formation is

structurally and lithologically complex and, in addition to the cyclic anhydrite, halite, clay

sedimentation, it is also host to the McNutt potash zone. Potassium-bearing salts accumulated in

the northeast Delaware Basin. With later subsidence, the remainder of the Salado Formation

sediments was deposited, followed by anhydrite and dolomite of the Rustler Formation and the

Dewey Lake Formation red beds. Collectively, the Castile, Salado and Rustler formations are

over 4,000 feet thick.

The Ochoa Series underlie an area of about 400,000 square miles. Potash salts are found

throughout the southern half of the area of the Ochoa Series. Potash in the Salado Formation

occurs in both the anhydrite and halite members of the cyclic units. In the former, it occurs in the

form of polyhalite and in the latter as sylvite, langbeinite or carnallite. The Salado Formation in

the northern Delaware Basin is divided into three members, of which the middle zone, known as

the McNutt potash zone, varies in thickness between 120 ft in the northwest part of the Delaware

Basin to over 590 ft in the eastern part of the basin. Within the McNutt zone, there are 11 distinct

potash cycles of which five have been commercially developed in the Carlsbad area but none

have been correlated in the AOI. A stratigraphic column of the Ochoa evaporite series is shown

in Figure 7.3. As noted above, the McNutt potash zone occurs within the Salado Formation. The

target horizon of ICP is the polyhalite in the Rustler Formation which overlies the Salado

Formation.

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FIGURE 7.3 OCHOAN STRATIGRAPHIC MAPPING UNITS

The first evaporite cycle of the Ochoa Series, the Castile Formation, consists of anhydrite and

halite in the Delaware Basin. The overlying Salado Formation is structurally and lithologically

complex and, in addition to the cyclic anhydrite, halite, clay sedimentation, it is also host to the

McNutt potash zone. Potassium-bearing salts accumulated in the northeast Delaware Basin. With

later subsidence, the remainders of the Salado Formation sediments were deposited, followed by

anhydrite and dolomite of the Rustler Formation and the Dewey Lake Formation red beds.

Together, the Castile, Salado and Rustler Formations are some 1,300 m (4,250 ft) thick.

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The occurrence of polyhalite in the AOI has been inferred from analysis of geophysical logs of

oil and gas wells in the Tamarisk member of the Rustler Formation at a depth of between 1,200

and 2,000 ft. although the Salado Formation also has polyhalite and possibly other potash

minerals on the ICP permits. Polyhalite shows a high gamma ray response, high velocity on

sonic logs and relatively high density as seen in Figure 7.4 below. Figure 7.5 shows the Rustler

stratigraphy and that of the underlying Salado Formation that produces sylvite and langbeinite

near Carlsbad.

FIGURE 7.4 POLYHALITE SHOWING A HIGH GAMMA RAY RESPONSE AND A HIGH VELOCITY ON SONIC LOGS AND RELATIVELY HIGH DENSITY

Figure 7.4

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FIGURE 7.5 CONCEPTUAL CROSS SECTION OF THE PERMIAN BASIN (AFTER JONES, 1972)

7.2 Local Geology The AOI is located in the southeast corner of New Mexico, southeast of the potash producing

area near Carlsbad. ICP’s exploration target is polyhalite in the Rustler Formation which

overlies the Salado Formation. The Salado is host to the McNutt potash zone in the Carlsbad

area. The Rustler Formation is predominantly made up of anhydrite and dolomite and represents

the transition from the predominantly halite-bearing evaporites of the Salado Formation to the

red beds of the Dewey Lake Formation. The occurrence of polyhalite has been inferred from

analysis of geophysical logs of oil and gas wells in the Tamarisk member of the Rustler

Formation.

The Los Medaños member consists of siliclastics, halitic mudstones and muddy halite, and

sulfate minerals, principally anhydrite (Powers and Holt, 1999). The Tamarisk member occurs

between the dolomite sequences of the Culebra and Magenta members and comprises lower and

upper anhydrite beds with an intervening unit that progresses from mudstone in the west to halite

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in the east. The Forty-niner has a similar general stratigraphy to the Tamarisk. The thickness of

the Tamarisk varies principally as a function of the thickness of the middle halite unit.

7.3 Identification Of Polyhalite In Geophysical Well Logs

The following geophysical responses characterize the identification of several evaporite

minerals, namely:

• Halite is identified by a uniformly low gamma ray response similar to anhydrite, an oversized hole (owing to its high solubility) on caliper logs, moderate to low neutron response, moderate density and sonic log response, and high resistivity.

• Anhydrite beds are recognized by low response on gamma ray logs, normal bore-hole diameter on caliper logs, low count on neutron logs, high velocity on sonic logs, and high density log response.

• Polyhalite can be identified by high gamma ray response, a normal bore hole diameter on caliper logs, high velocity on sonic logs and relatively high density on density logs. Its response on caliper and neutron logs distinguishes polyhalite from sylvite.

• Sylvite is identified by high gamma ray response, an enlarged bore hole diameter on caliper logs, relatively low density and low neutron response.

Table 7.1 shows the borehole geophysical response of select evaporite minerals.

TABLE 7.1 LOG CHARACTERISTICS OF EVAPORITE MINERALS

Mineral Specific Gravity

Log Density

Average Interval Transit Time

Gamma Ray Deflection (API, d=8”)

Halite 2.165 2.032 67 0

Anhydrite 2.960 2.977 50 0

Gypsum 2.320 2.351 52 0

Sylvite 1.984 1.863 74 ~500

Carnallite 1.610 1.570 78 200

Langbeinite 2.830 2.820 52 275

Polyhalite 2.780 2.810 58 180

Kainite 2.130 2.120 - 225

*Modified after Nurmi (1978)

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Thus, a combination of geophysical logs from drill holes can be used to identify various

evaporite minerals.

7.4 Data Interpretation The locations of geologic cross sections are shown in Figure 7.6. The NW-SE cross section A-

A’ in Figure 7.7 is shown looking eastward in the western part of the AOI. Cross section B-B’ is

shown looking to the east. The section shows the relation of thickness of the Rustler Formation

to interpreted presence of the polyhalite bed in the Tamarisk member. Where the Rustler is

thinner and relatively less deep, the polyhalite appears to pinch out. To the East, the N-S cross-

section in Figure 7.8 shows a relatively thickening trend to the south as the beds dip more

steeply.

Figure 7.9 represents a computer generated thickness isopach for the mappable polyhalite bed in

the Rustler Formation in the AOI. As can be seen from this map, the eastern portion of the

deposit represents a continuous thickness of polyhalite over several square mile sections. Figure

7.10 illustrates the depth to the floor of the Rustler polyhalite from the relatively flat ground

surface. Figure 7.11 is another cross section that highlights the Salado potash beds underlying

the BLM permits in the western AOI.

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FIGURE 7.6 LOCATION MAP FOR CROSS SECTIONS

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FIGURE 7.7 NW-SE CROSS-SECTION A-A’ ON WEST SIDE OF AOI

A A’ A A’

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FIGURE 7.8 N-S CROSS SECTION B-B’ ON EAST SIDE OF AOI

B’ B

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FIGURE 7.9 THICKNESS ISOPACH FOR TAMARISK POLYHALITE BED WITH ICP PERMITS

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FIGURE 7.10 DEPTH FROM SURFACE ELEVATION TO THE BASE OF THE POLYHALITE IN THE RUSTLER FM

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FIGURE 7.11 CROSS-SECTION “C” SHOWING SALADO POTASH BED DISTRIBUTION ON THE WEST

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8. DEPOSIT TYPES

Bedded potash deposits occur in sedimentary basins in which the minerals have formed as a

result of the evaporation of seawater, or mixtures of seawater and other brines, in restricted

marine basins and through post diagenetic processes. The following description is taken from

Williams-Stroud et al., 1994:

“The reflux depositional model for evaporite deposition was first described in the literature in 1888 by

Ochsenius. A shallow bar, or sill, across the mouth of a basin lets in a restricted flow of seawater which

evaporates into a salt-precipitating brine. The density of brine at the distal end increases with increased

salinity, sinks to the bottom, and sets up a reflux current of higher density brine back towards the ocean.

The sill, which restricts the inflow of seawater, allows inhibited flow of evaporation-concentrated brines

back to the ocean. The least soluble salts are precipitated nearer the sill, and the most soluble components

come out of solution in the deeper parts of the basin. The result is a lateral facies change in a tabular –

shaped deposit that is due to the salinity gradients in the brine. The asymmetrical facies distribution of the

Paradox Formation (Middle Pennsylvanian) Utah, the Prairie Formation (Middle Devonian) in

Saskatchewan, and the Salado Formation (Upper Permian) in New Mexico.

“The evaporation of seawater results in the precipitation of alkaline earth carbonate minerals [i.e., calcite,

dolomite], followed by calcium sulfates, halite, magnesium sulfates, and then magnesium and potassium

chlorides. The ratio of sodium to potassium in seawater is 27:1, and, in general, minable potash beds are

accompanied by thicker halite deposits. Often, the potash ore zone is located near the tops of halite beds

in relatively thin layers because the potash is precipitated from brines of higher salinities occurring near

the end of the evaporation sequence. The potash salt precipitated from evaporation of seawater after

precipitation of magnesium sulfates is carnallite (KCl.MgCl2.6H2O) rather than sylvite (KCl) due to the

high concentration of magnesium in seawater.”

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9. MINERALIZATION

In the Tamarisk Member of the Rustler Formation, polyhalite may be an early diagenetic

replacement of a porous gypsum or anhydrite beds by brine. However, there appears to be

abundant anhydrite in correlative areas such as north of the AOI where the Sandia core was

procured suggesting that the origin of polyhalite is more complex.

Polyhalite is a hydrated potassium-calcium-magnesium-sulfate salt. Unlike other potassium salts,

such as sylvite, langbeinite or carnallite, polyhalite dissolves only slowly in water leaving a

residue of calcium sulfate which breaks down further with time and exposure to air and water.

Polyhalite is white, colorless or gray but may be brick red or pink due to the presence of iron

oxides. It has a hardness of 2.5 to 3.5 on the Moh’s scale and a specific gravity of approximately

2.8 g/cc. As noted above, it occurs in evaporite deposits in association with halite, anhydrite,

kainite, carnallite and sylvite and has been recognized in Carlsbad, New Mexico, and in western

Texas, at Hallstatt, Austria, Galicia in Poland Stassfurt, Germany and the mid-east..

The composition of polyhalite according to Dana (1927) is defined in Table 9.1:

Potassium 12.97% K2O 15.62%

Calcium 13.29% CaO 18.60%

Magnesium 4.03% MgO 6.68%

Hydrogen 0.67% H2O 5.98%

Sulfur 21.27% SO3 53.12%

Oxygen 47.76%

TABLE 9.1 AVERAGE COMPOSITION OF POLYHALITE (DANA, 1927)

Mineralogically, polyhalite exhibits a triclinic crystal habit although it is commonly extremely

fine-grained or aphanitic. When large enough crystals are present to get an interference figure,

polyhalite is biaxial (-) as opposed to anhydrite which is biaxial positive. Anhydrite, a common

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polyhalite gangue mineral, is orthorhombic with perfect cleavage and produces a biaxial (+)

interference figure. Physical properties such as cleavage and crystal form are sometimes

observed (i.e. Schaller and Henderson, 1932) to be inherited from parent alteration phases, which

sometimes results in polyhalite appearing to have the crystal form, structure and cleavage of

anhydrite for instance. Another common gangue mineral with polyhalite, particularly in the

underlying beds of the Salado Formation, is halite or sodium chloride salt.

Polyhalite, like many of the direct application fertilizers, is very susceptible to change under

moist or wetting conditions. While not extremely soluble, polyhalite will alter to gypsum

(CaSO4) under humid or submerged conditions.

Within the AOI, there is one chief target horizon in the Rustler Formation between 1200 ft below

the surface on the west side of the AOI and up to 1000 feet deeper on the east side of the AOI.

Beneath the Rustler Formation polyhalite bed in the Salado Formation are numerous polyhalite

and undifferentiated potash beds that are not a continuous in nature. In many areas beneath the

target resource in the Rustler, 8 or more beds of varying thickness exist over a thick zone.

Further work will be necessary to evaluate the economic significance of the Salado potash beds.

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10. EXPLORATION

Since 2008, ICP has spent over $1M in USD for the prupose of identifying, permititing and

evaluating what it consideres to be the best polyhalite trend in New Mexico for potential

development. This work entailed looking at data throughout New Mexico and several

neighboring states before deciding to focus on the Ochoa target area. For the purpose of

determining the polyhalite trends in the Ochoa area, 216 oil and gas drill holes were evaluated,

72 of which are in the AOI boundary as shown below. While the drill density is variable, with

some distances between holes greater than one mile, there is a remarkable depth and thickness

continuity across the westen part of the AOI that further supports the validity of the oil and gas

data for polyhalite bed correlation. In the area currently developed for sylvite and langbeinite to

the west of the AOI, correlations of beds for several miles is not atypical. This is a function of

the basin-wide uniformity of a depositional environment for many minerals in the evaporative

sequence. However preliminary examination of potash bearing beds within the Salado Formation

(underlying the Rustler) via gamma logs from the same oil and gas wells, as those examined for

the Rustler Formation suggests that the Rustler Formation polyhalite bed is more consistent in

thickness and continuity. This inference is supported by observations of Salado Formation

potash beds within the operating mines to the west. Salt beds in the area attain thicknesses of

over 100 feet indicating relatively quiescent conditions over great expanses of geologic time.

Figure 10.1 below shows the location of ICP drill hole locations permitted by BLM and proposed

drill hole locations currently under review by BLM. The first 8 drill holes currently proposed by

ICP are identified with diamond symbols, and several of these drill holes have alternate locations

in the event that data supports alternate drilling. This program of drilling will entail rotary

drilling to within 20 feet of the target polyhalite zone and continuous corring for at least 40 feet

through the target bed in the Rustler Formation. Several of these drill holes have been located as

twins to prior oil and gas holes to use for validation of the prior correlation of the polyhalite

beds. Borehole geophysics will also be undertaken for correlation purposes and to see if any

data can be calibrated with core analyses to predict polyhalite grade in existing or future drill

holes.

During the planned drilling program, ICP will be able to compare core quality results with the

gamma-acoustic logs of the nearby oil and gas holes. Augmented with analyses of potash and

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mineralogical confirmation studies of the polyhalite concentration and gangue constituents,

the predicailibty of grade over great distance can assessed. If there is a high degree of grade

variability, more in-fill drill holes in subsequent phases of drilling will be required to elevate

inferred resources to either indicated or measured resources that can be used for mine

planning and reserve conversion. Neither polyhalite thickness nor core recovery are thought

to be an issue in that the correlation between the bed over great distances is so strong and the

potash drillers have had tremdous success in achieving near 100% recovery in comparable

potash zones to the west of the property.

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FIGURE 10.1 PROPOSED DRILL HOLE LOCATIONS IDENTIFIED

FOR ICP’S FALL DRILLING PROGRAM (2009)

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11. DRILLING

No new polyhalite exploration drilling has been undertaken on the Ochoa property as yet,

although there is a high degree of confidence in the gamma log interpretation of oil and gas logs,

which is often supported further by acoustic or sonic logs for identifying polyhalite across the

property. Futher, evidence of polyhalite in oil and gas drill cuttings and a polyhalite core sample

just off of the property confirms the oil and gas interpretive assumptions. The thicknesses of

polyhalite beds are reasonably accurate to calculate from the well logs due to the reproducibility

of similar intercepts over several miles. Calculation of the polyhalite grade from well logs is not

veiwed as quantitative. Therefore grade assumptions for an inferred resource have been based

upon analytical results of nearby core samples that are believed to be representative of AOI site

conditions in for the Rustler Formation polyhalite.

Sandia recently (January 2009) attempted to correlate potassium grade from gamma logs and

found that the data was inconsistent. Although the thickness measurements were predictable

from the gamma and density logs, perturbations in the gamma readings did not necessarily

correlate with potassium grade in the core samples. Taking this interpretation yet a step further,

oil and gas gamma measurements would likely be even less accurate given the length of the

geophysical probe and speed at which the probe could have been moving when they logged

intervals that were not within their target zone. However, for purposes of estimating inferred

polyhalite resources, the existing data is deemed adequate. For indicated and measured

resources, core data will be necessary.

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12. SAMPLING METHOD AND APPROACH

Using gamma and density logs from a corehole drilled in 1987, ICP was able to locate about an

8-foot sample interval of potential polyhalite core from Sandia Laboratories drilling program at

the WIPP site. A specific protocol for analysis for logging, sampling, sample preparation and

analysis was developed prior to evaluating the polyhalite from the Sandia core. These steps

roughly follow the same procedures that were used to sample and evaluate channel samples of

polyhalite from an underground langbeinite mine. The ICP sampling steps that were followed

for the core were as follows:

(1) The split-core interval was relogged by an ICP geologist, wrapped in plastic, and placed in an ICP supplied plastic corebox to minimize moisture. The core splits were carefully photographed with footage increments labeled. Each piece of split core was wrapped in plastic cling wrap and thermally sealed in sterile Visqueen flexible tubing before being placed it in the core box.

(2) Discrete lithologic changes were the basis for marking and physically separating each interval in the ICP core box for later discrete analysis by the labs.

(3) The core boxes were sealed and transported by a company truck back to Golden, Colorado for sample preparation at RDi and the Mineral Lab.

(4) Each discrete sample interval was carefully measured and bagged in plastic sacks to minimize moisture for analytical testing.

(5) Each sample went to RDi labs in Golden, Colorado for sample preparation and wash-testing (Step 8 below). The discrete samples were weighed and then crushed to -1 inch then split using a Jones splitter to about 100 grams to procure a couple samples for microscopy.

(6) The thin sections were carefully prepared to minimize the potential for dissolution of mineral phases such as halite. Then half of the side of each thin section was soaked for 1 hour in tap water to stimulate dissolution and to determine if the effects could be observed though microscopy.

(7) To confirm elemental distributions in select mineral phases, SEM was also employed. Mineral percentage texture, intergrowths and other characteristics were reported and photomicrographs were taken by an expert mineralogist.

(8) A 50 gram sample split of the -1 inch sample was pulverized to -400 mesh and hand blended. A 50 gram sample was sent to the Mineral Lab in Wheatridge, Colorado for XRD and XRF analyses. The percentage of

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polyhalite in the sample was qualitatively estimated to about 5% depending upon the other associated minerals. To our knowledge, a standard of polyhalite for quantifying the mineral concentration using XRD is not available.

A 200 gram -400 mesh sample was sent to ALS Chemex in Vancouver, BC or for MS analysis (ME-MS81) of major and trace analytes and ICP-AES analyses of whole rock oxides. Additionally, chloride and sulfur were analyzed using methods CL-XRF11 and S-GRA06 respectively and pH using method OA-ELEO5.

(9) A representative weight percentage equivalent of each sample was combined into a single sample (composite) of about 500 grams for metallurgical testing by calcining and leaching methods

(10) A representative split was crushed and screened to +1 inch, <-8 mesh to >+10mesh; <-20 mesh to >100 mesh; and -200 mesh and weighed.

(11) These samples were then tested for polyhalite and other mineral concentration using a combination of XRF, XRD and microscopy using a vacuum impregnated mount to facilitate thin section preparation.

For select solute derived from additional metallurgical testing, Florin Analytical Services

conducted analysis using MS-AA methods. For purposes of this study, nearby core of the target

interval is deemed representative of the likely mineralogy, grade and thickness of polyhalite to

be encountered on the ICP area of interest. This is based upon the author’s cross-comparison of

gamma and acoustic logs plus experience with polyhalite and associated potash beds elsewhere

in the Permian Basin of New Mexico. Further, testing of mine samples believed to be

comparable to the polyhalite in the underlying Salado Formation are likely representative of this

interval as well based upon the unique depositional and post-diagenic environments.

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13. SAMPLE PREPARATION, ANALYSES AND SECURITY

For core sampling, the cutting of the whole core was done by Sandia Laboratories under the

direction of the resource QP. After taking 6 inch lengths of core that were logged by the ICP

geologist in the lab, the Sandia geologist cut the core in half using an automated diamond wire

rock saw. This method was employed so as not to introduce any moisture in the samples with a

drilling lubricant such as water or oil.

Transportation of the secured samples that were individually wrapped and sealed in moisture-

proof core boxes was performed by a resource QP to ensure that testing and sample preparation

was done by a third-party other than ICP. Upon driving the samples by truck to Golden,

Colorado, the samples were taken to a secure office area where the QP had the only key. The

samples were stored in a locked office area when logging and sample selection for preparation

and analysis was conducted again under the supervision of the QP. Samples were then taken

directly to The Mineral Lab for XRD and XRF. Select samples were directly given to

microscopist, Dr. John Lufkin. Samples were crushed to minus 8 mesh at The Mineral Lab and

the pulp rejects were transported directly to RDi for compositing and metallurgical testing.

Reject pulps will be securely stored and retained for future testing and/or validation testing.

For polyhalite samples that were channeled sampled by the resource QP from a nearby mine site;

a level of QA/QC was employed to test the XRF accuracy of results from The Mineral Lab a

firm that has been in business for 17 years. The QP had replicate splits of select samples

analyzed by ALS Chemex by AA-MS, trace metals, sulfate and whole rock oxides for

comparison with The Mineral Lab results. ALS Chemex is certified under ISO 9001:200 and for

several specialty methods of analysis, ISO 17025. Results were within an acceptable 10% range

for key cation and sulphate constituents.

The importance of this lab check is due to the lack of a standard for the mineral polyhalite that

also has an affinity to change under most conditions to other minerals phases. This concern will

not be an issue for potential processing to make potassium sulphate but it is an issue for a direct

application fertilizer. The importance of XRF is its ability to derive a semi-quantitative estimate

of the percentages of the other mineral phases confirmed through XRD. There is no industry

standard yet for polyhalite concentrations. To further validate percentage of polyhalite in

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specific sample splits, microscopy has been employed. This was particularly useful for

determining grain size of polyhalite crystals, aphanitic phase of polyhalite and gangue mineral

constituents for process design. SEM has also been used as a back up to microscopy to ascertain

the cations within specific transitional phase of polyhalite minerals. The work of Florin

Analytical Laboratory by the metallurgical consultant RDi has been cross-checked with splits of

samples using XRF since the laboratory that is owned by Kappes, Cassiday & Associates (KCA)

is not certified by ISO standards. Florin was used on the recent analytical testing for potassium

sulphate amenability.

The work done under the oversight of the resource QP for QA/QC will form the basis for

developing a protocol for sample collection, logging, handling; preservation and future analytical

work for the core drilling program. While the recent work done for this report included the

analysis of replicate splits and check-lab samples, the future program that will include ICP core

will include the addition of sample blanks; potassium standards; possibly magnesium and

sulphate standards and a polyhalite standard that is being prepared from sample spilt of the

Sandia core.

Chemrox considers the sample preparation, analyses and security measures employed by ICP to

be adequate for the project at its current stage of development.

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14. DATA VERIFICATION

Chemrox examined more than 50% of the drill logs to assess the completeness and acceptability

of the ICP interpretations. While in some instances it could be argued that minor splits of salt or

shale might be present, the author feels that using the data for this purpose is unwarranted for an

inferred resource estimate. Instead, core from west of the property was examined and tested to

ascertain the level of purity in a composite interval and it was found that, in general, at the

centroid of the interval the quality or grade of polyhalite is over 90%. Local grade deviation is

found particularly toward the top and bottom of the interval where grades drop toward 80%, then

to about 23% within 1 foot of the top and bottom boundaries. A sharp contact is defined where

the polyhalite concentration drops to 0% at the bedding plane boundaries. A clear correlation

between the logs and grade was not readily apparent and it would be presumptuous to think that

discriminative analysis of oil and gas logs would provide better information than a hole that was

drilled and logged by Sandia Laboratory.

In all of the polyhalite samples procured for analytical, mineralogical, and metallurgical testing,

a high degree of certainty was obtainable by the careful sampling, logging, and testing

procedures. One of the most difficult QA/QC issues is the fact that standards of polyhalite are

not known to exist to verify the precision of the analytical instrumentation. To reconcile this

issue, samples where polyhalite was quantified using a material balance of XRF against XRD of

the same sample were then compared with optical mineralogy where the relative percentage of

the mineral phase could be cross-compared with the XRF results. Where potential existed for

exsolution phases of minerals from the transformation of polyhalite to other mineral species, the

scanning electron microprobe was utilized for determination of the concentration of metals or

anions per individual crystal.

To enable yet another cross check of the XRF, replicate splits were sent for discriminate

Inductively Coupled Plasma and AA-MS analyses to ALS Chemex verifying that the XRF data

generated by The Mineral Lab was in an appropriate concentration range.

While core samples had been originally logged lithologically by Sandia geologists, under the

supervision of the resource QP, ICP re-logged the samples using knowledge gained from

polyhalite testing. Where the gangue material is anhydrite, it is very difficult to ascertain the

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presence of polyhalite concentrations without analytical testing. There are some field tests that

have been developed by ICP using wetting and drying procedures, but such tests always require

XRD and XRF to confidently determine the concentration of polyhalite (within 5 %) as well as

other mineral phases present. As more and more polyhalite samples are processed through the

lab, the precision of the estimates will increase and the viability of creating laboratory grade

standards will evolve.

Therefore, from a data validation standpoint, the spacing of the drill holes is reasonable for this

level of study; the determination of polyhalite from oil and gas logs has been proven from

cuttings and drill core proximal to the AOI. The methods used in discriminate analysis and

sampling methodologies are most defensible for this level of study. The resource QP has

validated that the data and methodologies are defensible and justifiable for developing an

inferred resource estimate but not indicated until validation coring is employed this fall (2009)

by ICP.

ICP is now at a point where detailed sampling, logging and testing procedures can be developed

at a high level of predictability and confidence for further review and validation.

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15. ADJACENT PROPERTIES

The property and area of interest lie outside the area designated by the federal government as the

Known Potash Leasing Area (KPLA) of about 1,100 km2 (425 square miles) and which covers

the area of potash mineral reserves and resources in the upper Permian Salado Formation east of

Carlsbad, New Mexico. The KPLA consists of that part of the Carlsbad potash district where

federal lands under BLM management require competitive bidding for mineral leases. The mines

in the Carlsbad district are the only potash mines in the state and produce potassium chloride

from the mineral sylvite and potassium-magnesium sulfate from the mineral, langbeinite. These

potassium salts are used primarily by the fertilizer industry as sources of potassium (or potash)

and magnesium. The eastern boundary of the KPLA is 14.5 km (9 miles) from the west boundary

of the area of interest. Land outside the KPLA is available for potash exploration by means of

filing prospecting permits.

At present, other than oil and gas development and local caliche mining, there are no active

mines in the immediate Ochoa area.

ICP’s polyhalite target is in the Tamarisk Member of the Rustler Formation, stratigraphically

overlying the Salado Formation that produces potash minerals in what is known as the Carlsbad

district. There are no publicly available reports on polyhalite occurrences immediately adjacent

to ICP’s property.

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16. MINERAL PROCESSING AND METALLURGICAL TESTING

Two basic sample suites were collected and analyzed by ICP and RDi’s personnel with the

oversight of the resource QP, Sean Muller. One suite of rock samples was collected at two

underground locations in a potash mine where polyhalite was found as a thin (<18 in.) caprock

and in discontinuous stringers or layers. The polyhalite found in these Salado Formation mines

tends to be red in color due iron coloration. After channel sampling and sorting material from a

gob pile, samples were crushed to a minus one inch size fraction and split for testing by XRD,

XRF, AA-MS and IC Plasma. Microscopy and SEM methods were also employed. Sample

splits were further crushed and screened into discrete size fractions (Appendix B). Results of the

testing showed that the samples were generally 80% polyhalite with the chief gangue constituent

being halite. Dry crushing and screening tended to drop halite to the finer fraction likely due to

differential hardness and cleavage fracturing. Polyhalite was further upgraded to nearly 100% by

washing. Other tests were run on these samples originally intended for discrete size fraction

wash analysis. Instead, the samples remained in a bath and it was determined that after 48 hours

certain amounts of potassium were immediately released to the water. Optical mineralogy

(Appendix A) and SEM (Appendix C) confirmed that there were two sizes of polyhalite, but the

testing did not go far enough to determine whether it was the fine or coarse grained polyhalite

that preferentially went into solution with the remainder retained for slower release. This testing

shows that a suitable product for direct application can be readily upgraded if the main gangue

constituent is halite.

Polyhalite core obtained from a Sandia drill site west of Ochoa was carefully split and relogged.

The core is from the Rustler Formation target horizon for prospective mining on the AOI. The

core looks very much like anhydrite macroscopically but possesses a gamma and density

signature typical for polyhalite. Further positive polyhalite wetting test results correlated with

the change from polyhalite to anhydrite at the top and bottom of the bed shown by XRD and

XRF. Discrete 6 inch intervals were collected and several evaluated by microscopy including a

technique by which half of the thin section was soaked to exsolve a portion of the polyhalite

(Appendix A). Select portions of these samples have also been examined by SEM to ascertain

potential phase change and discriminate chemical composition within specific minerals. The

chief gangue constituent in this Rustler Formation polyhalite is anhydrite which has a similar

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hardness and specific gravity to polyhalite. Further testing has been completed on these core

samples as a composite of its entire core length. A split has also undergone similar testing by

screen fraction as were the Salado samples, described above (Appendix C). Further, the

composites have undergone further testing by calcining and hot water dissolution to prove that

polyhalite can be effectively dissolved and that the anhydrite can be effectively removed.

Results of this work, as presented in Appendix C, show that 97% the potassium of the polyhalite

in the samples can go into solution. Therefore, the feedstock for the production of potassium

sulfate will be readily available from polyhalite regardless of gangue constituents such as

anhydrite.

This is quite important in that mineralogical results presented by Dr. Lufkin, has shown that

anhydrite was replaced by polyhalite in many instances but the conversion was not complete in

all instances on the edge of the main polyhalite section from Sandia. Work of RDi also shows

that some of the anhydrite can be concentrated by dry physical screening that conforms to

observations in grain size observed in mineralogical investigations. In effect, a dry concentrate

step may reduce the overall feedstock of ROM material at the mill that would need to go into

solution for potassium sulfate production.

Work conducted in the 1940s on polyhalite for fertilizer use focused on the extraction of

potassium sulfate by means which included various approaches using hot dissolution,

calcinations, and reduction. This is documented in Conley and Partridge, 1944.

On the basis of pot tests, Barbarick, 1989 and 1991 has proposed that polyhalite ground to less

than 100 mesh is an effective, slow release, direct application fertilizer providing potassium,

calcium, magnesium, and sulfur.

Both the Salado and Rustler formation polyhalite samples are deemed representative for

purposes of calculating grade and gangue minerals. The Salado polyhalite beds in the Carlsbad

area are intermixed with halite and discontinuous over great distances. This appears to be also

the case with the Salado potash beds beneath the AOI which are not the target of this

investigation. The Salado polyhalite taken from active mines was sampled from two areas with

nearly identical chemistry and mineralogy.

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The Rustler polyhalite is especially representative due to its proximity to the AOI and continuity

of gamma and density signatures in the core hole and on the AOI permits. While in this case,

polyhalite is intermixed with anhydrite, anhydrite has no potassium 40 that makes the contact

easy to pick on gamma logs. For 6 feet of polyhalite to be uniform over 10 or more miles, the

conclusion that the Sandia core is representative of the Rustler polyhalite underlying the AOI is

logical.

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17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

17.1 Petra Model Calculations The thickness model supervised by Chemrox using Petra software was based on top and bottom

picks for the Tamarisk polyhalite bed. These picks were made based on the gamma ray response

from historic geophysical, oil and gas well logs, as shown in Figure 17.1 below.

FIGURE 17.1 SHOWS THE GAMMA RAY TRACK ON THE LEFT AND THE BULK DENSITY ON THE RIGHT

The parallel black lines show the top and bottom picks for the interpreted polyhalite bed within

the Tamarisk Member of the Rustler Formation. The thickness in Figure 17.1 is about 6.4 feet.

The picks were made in a similar fashion for all logs used in the resource calculation and then

correlated across the entire area of interest. These tops and bottoms were then used to create a

thickness grid of the polyhalite bed using an isotropic search range of 30,000 feet within the grid

made of blocks measuring 2,640 feet by 2,640 feet. Figure 7.9 shows the thickness isopach

developed for the Ochoa study area. The map includes the 72 holes within the area of interest

boundary. The total number of holes used was 216, the balance are found in the area surrounding

the leased lands.

The total inferred resource for the polyhalite bed within the Tamarisk member of the Rustler

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Formation, greater than 6 feet thick and within the boundaries of the ICP permitted land holdings

is approximately 399 million short tons, using a tonnage factor of 11.43 ft3/ton. This tonnage

factor was derived from core samples from the Sandia labs (Appendix E). Table 17.1 below

shows the inferred mineral resources in the AOI area categories which were modeled under the

supervision of Chemrox for this report. Sean C. Muller, C.P.G., R.G. is the Qualified Person

responsible for the inferred mineral resource estimate below and is independent of Trigon and

ICP.

TABLE 17.1 OCHOA INFERRED MINERAL RESOURCES

Polygon Name Total Area (ft2)



Avg thickness

(ft) AOI‐West 2,981,316,000 1,182,297,000 699,277,000 6.77AOI‐East 585,775,000 142,207,000 85,167,000 6.85

AOI Sum 3,567,091,000 1,324,504,000 784,444,000 6.78

ICP lease sum 1,994,698,000 679,209,000 399,574,000 6.73

Table 17.2 is tabulation for the resource greater than 6 feet for each ICP Permit boundary.

TABLE 17.2 INFERRED RESOURCE TABULATION

Application Block ID

Total Area (ft2)



Avg thickness

(ft) app1d 27,925,439 0 0 0.00app1c 27,803,507 27,803,507 16,275,090 6.70App 1b 27,872,414 27,872,414 15,878,478 6.52App 1a 27,348,006 27,348,006 16,209,461 6.78app2b 83,083,172 83,083,172 49,087,942 6.76app2a 27,842,164 4,215,634 2,247,757 6.10app3b 27,883,295 27,883,295 15,364,230 6.30app3a 3,533,950 3,533,950 1,913,955 6.20app3d 27,820,435 27,820,435 15,540,733 6.39app3c 27,878,552 27,878,552 15,981,944 6.56App 4c 55,809,587 42,845,581 24,041,909 6.42app4b 27,874,546 27,874,546 16,402,156 6.73app4a 27,838,750 27,838,750 17,028,291 7.00app5a 27,406,686 0 0 0.00

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Total Area (ft2)



Avg thickness

(ft) app5b 13,714,505 0 0 0.00app5c 13,752,891 13,063,912 7,698,936 6.74App 5d 27,557,542 9,859,630 5,459,406 6.34app6a 13,894,395 13,894,395 8,216,467 6.77app6b 27,940,168 27,940,168 17,301,650 7.09app6d 10,471,615 10,471,615 6,235,570 6.81app6c 20,916,797 12,648,878 7,013,750 6.34app6e 27,900,976 46,698 24,601 6.03app7 55,737,408 6,200,450 3,324,768 6.14app8d 24,366,816 0 0 0.00app8c 13,978,182 7,794,669 4,409,939 6.47app8b 19,157,303 6,916,726 3,911,089 6.47app8a 13,917,465 2,856,535 1,538,528 6.16app8d 34,620,667 26,860,465 15,005,900 6.39app9a 20,865,169 17,715,282 9,801,678 6.33app9b 6,973,374 2,891,463 1,587,178 6.28app9c 6,976,570 0 0 0.00app9d 24,368,456 0 0 0.00app9e 27,838,872 0 0 0.00app9f 24,367,497 3,646,659 1,955,412 6.14app10b 27,808,422 9,470,147 5,090,139 6.15app10a 10,424,751 10,424,751 6,180,891 6.78app10c 27,825,192 0 0 0.00app10d 24,347,203 0 0 0.00app10e 13,969,364 0 0 0.00app10f 1,746,342 0 0 0.00app11b 13,929,817 0 0 0.00app11c 1,734,793 0 0 0.00App 11m 8,717,990 0 0 0.00App 11n 1,740,403 0 0 0.00App 11a 3,477,017 0 0 0.00app11k 6,977,954 0 0 0.00app11L 6,977,938 0 0 0.00app11d 13,945,277 0 0 0.00app11f 13,951,374 0 0 0.00App 11e 3,485,470 0 0 0.00app11g 6,974,740 0 0 0.00app11h 3,483,111 0 0 0.00app11i 3,487,008 0 0 0.00

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Total Area (ft2)



Avg thickness

(ft) app11j 13,932,763 0 0 0.00app12g 13,957,340 13,802,335 8,978,944 7.44app12h 7,011,052 7,011,052 4,916,706 8.02app12a 27,928,212 0 0 0.00app12b 17,484,379 0 0 0.00app12c 24,463,587 0 0 0.00app12f 1,729,969 1,729,969 1,072,328 7.09app12d 6,993,021 0 0 0.00app12e 7,005,712 0 0 0.00app12i 1,744,350 0 0 0.00app12j 1,745,986 0 0 0.00app13d 27,878,029 0 0 0.00App 13a 27,890,571 25,707,367 19,518,934 8.69app13b 27,904,330 223,046 117,639 6.03app13c 26,080,017 0 0 0.00app14a 20,955,971 0 0 0.00app15 104,574,766 0 0 0.00app16m 13,966,233 0 0 0.00app16g 3,487,021 0 0 0.00app16f 3,474,970 0 0 0.00app16h 3,477,401 0 0 0.00app16d 13,963,406 0 0 0.00app16c 13,992,016 2,205,262 1,207,203 6.26app16b 7,004,401 660,684 350,957 6.08app16a 1,748,381 1,748,381 1,042,342 6.82app16e 10,474,000 0 0 0.00app16i 1,736,804 0 0 0.00app16L 10,472,349 0 0 0.00app16k 3,487,403 0 0 0.00app16j 1,740,740 0 0 0.00app16n 3,489,615 0 0 0.00app16o 3,493,577 0 0 0.00app17 69,537,577 18,719,585 10,613,925 6.49app18 48,657,071 41,627,348 26,416,770 7.26app18b 13,979,461 11,920,274 6,479,984 6.22app18c 27,946,387 0 0 0.00app19a 27,853,881 7,431,226 3,950,687 6.08app19b 45,497,257 0 0 0.00app19c 3,478,190 2,880,854 1,546,152 6.14

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Total Area (ft2)



Avg thickness

(ft) app19d 6,960,913 4,840,889 2,633,639 6.22app19e 3,482,532 0 0 0.00app20 94,250,971 0 0 0.00app21 55,708,701 0 0 0.00app14b 55,828,603 0 0 0.00

app14c 13,986,289 0 0 0.00

ICP Permit Sum 1,994,697,544 679,208,558 399,574,056 6.73 17.2 Validation of Petra Model Using Surpac

The objective of this Surpac model validation was to separately calculate the polyhalite resources

using the same input data as the Petra model. The Surpac database contains information on the

same 216 oil/gas wells and dry holes, for which downhole e-logs are available and used in the

Petra model. Of these wells, 72 are located within the AOI. Information in the database includes

well locations, both latitude/longitude and coordinates in New Mexico State Plane (NMSP),

collar elevations and formation intervals determined from e-logs. As downhole drift surveys are

not available, all wells are assumed to be perfectly vertical.

Chemrox validated and used the AOI boundary map developed by ICP in NMSP coordinates

(NAD 27 datum). The AOI covers an area of approximately 128 mi2 and includes property

under permit by ICP as well as property not controlled by ICP. ICP also derived a polyhalite

density estimate, of 2.805 g/cm3 (11.43 ft3/ton) based on 22 density measurements that was

checked by Chemrox (see Appendix D). Software used included both Surpac version 6.1.2 and

Surfer 2009. Surpac is used for geostatistics and to develop the inferred resource estimate.

Surfer is used to perform contouring of polyhalite thickness. AutoCAD LT 2010 was also used

to develop boundary files.

17.3 Development of an Independent Resource Estimate Variography was attempted, using Surpac, with mixed results. A strong northwest (330°)

orientation was evident in the variograms; however no preferred orientation for radius of

influence was observed. This is due, at least in part, to the many locations showing no

polyhalite. Radius of influence varied from 20,000 to 40,000 feet, depending on lag distances

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and other variables. The most frequent radius of influence was in the 30,000 to 35,000 foot

range. A more detailed investigation into the variography is warranted to determine polyhalite

continuity when more information from the planned drilling programs is available.

Polyhalite thickness contouring was performed in Surfer using kriging methods with a nodal

search radius of 35,000 feet. The resulting thickness contour isopach map was imported into

AutoCAD LT and combined with the AOI boundary file to create inferred resource boundary

files for use in Surpac.

A 6-foot polyhalite interval was used as the minimum cut-off thickness for conducting the

resource estimate. Four areas inclusive of the 6-foot contour interval and the AOI boundary

were identified for an inferred resource estimate. Polyhalite thicknesses of 5.99 ft occur in the

area around two holes that are located in the NW resource area. These are included in the

inferred resource. The resource in these two holes is slightly below cutoff thickness; however,

this material would likely be recovered during mining operations.

Using Surpac, the polyhalite top and basal surfaces in, and adjacent to, the AOI were gridded

using inverse distance squared methods. These surfaces were then used to form a continuous

solid or wireframe body for the entire area. This solid body was then intersected with each of the

four inferred resource areas to yield four separate resource solids with defined volumes.

Volume measurements in cubic feet, as determined in Surpac, for each of the areas is divided by

the tonnage factor of 11.43 ft3/ton to yield the tons of polyhalite in-place in Table 17.3 for the

entire area of interest regardless of mineral ownership.

The discrete areas that had 6 feet or more of polyhalite thickness on BLM permits were then

specifically evaluated, and inferred resource numbers were calculated independently as depicted

in Figure 17.2. It was estimated that 382 million short tons of inferred polyhalite (in-place)

resources can be found under the BLM tracks that met the 6 foot thickness cut-off criteria. This

estimate does not include a reduction for grade across the 6-foot interval.

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FIGURE 17.2 SURPAC ISOPACH OF RUSTLER POLYHALITE BED WITH AOI OUTLINE

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Next, Chemrox looked at just the permits that comprised 6-foot or better polyhalite and

developed object map only showing the areas and permit tracks where this occurrence was

evident (see Figures 17.3 and 17.4).

These Surpac areas (Figure 17.3) are called northwest, southeast, south and northeast. The

permits with the inferred resources can be seen in Figure 17.4 delimited called “Object Areas”

numbers 1 through 18 to come open with a cross check of the Petra model Inferred Resource.

The Surpac Inferred Resource was 382M tons or within 96% of the Petra modeled resource,

validating the Petra model results for this 43-101. and The Inferred Resource of 382M tons

reflects the results within the 18 Object areas that are outlined around multiple permit tracts in

many instances. These results are essential a model-check of Petra and validate that the Petra

results are defensible for this level of study. .

Based upon testing with the Sandia core, it is presumed that the polyhalite run-of-mine grade, not

including mine dilution would be 85%. This presumption is based upon the polyhalite analysis

of over a dozen continuous 6 inch increments of polyhalite core with some grades running over

93%.

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FIGURE 17.3 LOCATION OF PERMIT TRACTS HAVING GREATER THAN 6 FT OF POLYHALITE IN THE ICP AREA OF INTEREST

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FIGURE 17.4 OCHOA INFERRED RESOURCE VOLUMES AND TONNAGES BY OBJECT AREA

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18. OTHER RELEVANT DATA AND INFORMATION

Intercontinental Potash plans to explore and potentially develop polyhalite mineralization within

the Tamarisk member of the Rustler Formation on its AOI. Although polyhalite was considered

as a potential source of potash fertilizer in the 1940s (Conley and Partridge, 1944), this

consideration pre-dated the development of the extensive sylvite resources of Saskatchewan,

Canada, and the former Soviet Union (Belarus and Russia). The development of potash

operations based on sylvite in Saskatchewan, Canada, in the early-1960s (where the grade of

sylvinite was particularly high at approximately 25% K2O) and the expansion of output in the

USSR resulted in those two countries holding the first-ranking positions until the breakup of the

former Soviet Union in 1989.

18.1 Background To The Potash Industry

Potash was first produced near Carlsbad, New Mexico in 1931. At that time, world production

was approximately 1.5 million tons K2O and Germany and France together accounted for 1.3

million tons K2O. By 1943, the United States had overtaken France as the second largest potash

producer. The majority of United States output was from mines established in Eddy County,

New Mexico. The first potash mine in Lea County, New Mexico was opened in 1957 and closed

between 1968 and 1974. The second mine in Lea County was opened in 1965. At that time,

world potash production had increased to over 13.5 million tons K2O and the United States was

the largest single producer, with output of 2.8 million tons K2O, followed by the then USSR and

West Germany, each with output of around 2.4 million tons K2O.

The majority of potash output in New Mexico has been based on mining sylvinite and the First

Ore Zone of the McNutt Potash Zone has provided the greater proportion of mined ore.

Langbeinite is also mined to recover a beneficiated potassium-magnesium sulfate fertilizer. At

present, two companies, Intrepid and Mosaic, mine and process sylvite and langbeinite in New

Mexico. The USGS reports that sales from these two companies account for nearly 80% of total

United States producer sales of potash.

The development of potash operations based on sylvinite in Saskatchewan, Canada in the early-

1960s and the expansion of output in the USSR resulted in those two countries holding the first-

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ranking positions until the breakup of the former Soviet Union in 1989. Table 18.1 shows the

development of world potash output since 1990.

TABLE 18.1 WORLD POTASH PRODUCTION1 (THOUSAND TONS K2O)

Country 1990 2000 2005 2006 2007P

Belarus2 n.a. 3,400 4,928 4,605 5,400

Brazil 98 340 385 424 410

Canada 7,002 9,033 10,596 8.36 11,426

Chile 20 355 431 374 450

China 46 380 1,480 1,572 1,700

Former Soviet Union 9,126 ‐ ‐ ‐ ‐

France 1,292 321 ‐ ‐ ‐

Germany 4,850 3,409 3,665 3,616 3,700

Israel 1,311 1,710 2,224 2,123 2,000

Italy 68 ‐ ‐ ‐ ‐

Jordan 841 1,180 1,098 1,020 1,105

Russia2 n.a. 3,680 6,265 5,724 6,460

Spain 686 522 494 437 450

Ukraine2 n.a. 30 20 60 65

United Kingdom 488 590 439 430 450

United States 1,654 1,300 1,200 1,100 1,200

Total 27,482 26,250 33,225 29,845 34,816

18.1.1 Fertilizer Products Micon (2008) reported that approximately 93% of world potash production is used by the

fertilizer industry as a source of potassium which is one of the three essential plant nutrients,

along with nitrogen and phosphorus. Potassium salts are used in a wide range of non-fertilizer

applications, including glass and ceramics, soaps and detergents, synthetic rubber and chemicals.

1 Includes estimated output of primary sulfate and nitrate salts. 2 Reported as Former Soviet Union in 1990. P Sources: USGS; Natural Resources, Canada; corporate reports.

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The abstract to Barbarick, 1991 from CSU, is reproduced below:

“Acid, infertile soils typically benefit from the addition of K, Ca, Mg, or S fertilizers.

Polyhalite, K2MgCa2(SO4)4.2H2O, may provide a slow-release fertilizer source of these

nutrients. Sorghum-sudan-grass (Sorghum bicolor, L. Moench ‘NB280S – S. Sudanese

(Piper) Stapf.) was grown in Red Feather loamy sand soil (Lithic Cryoboralf) in a

greenhouse study to compare responses to polyhalite (<0.15-mm particle size) to soluble

sulfate sources of K, Mg, and Ca. Treatment rates for both fertilizer sources ranged from 0

to 600 mg K kg-1 soil in 100 K kg-1 increments. Eight plant harvests were obtained.

Finely-ground polyhalite produced larger total dry matter yields and total K uptake than

the soluble treatments. Increasing the fertilizer rate produced a positive quadratic dry

matter yield (largest at the 400 mg K kg-1 soil rate) and significant plant K and S uptake

responses. Electrical conductivity (EC) of saturated soil-pastes at the end of the study was

higher in the soluble fertilizer treatments compared to the polyhalite nutrient source. A

column leaching study showed that Ca and K were leached more readily while Mg and

SO4-S were leached to a lesser extent in the polyhalite treatments than the soluble-

fertilizer treatments. In these studies, finely-ground polyhalite provided adequate K, Ca,

Mg, and SO4-S to the plants and performed somewhat like a slow-release fertilizer

compared to more soluble fertilizer sources. This mineral should be an effective fertilizer

in acid, infertile soils.”

Barbarick (1991) cites earlier studies that compared polyhalite to other sources of potassium and

magnesium when applied to a variety of plants including corn, sorghum, potato, flax, beet, rye,

mustard, oats, barley and ryegrass. Barbarick’s study was based on the hypothesis that polyhalite

applied to sorghum-sudan-grass could provide potassium, calcium, magnesium and sulfur at a

level equivalent to the combined application of potassium sulfate, calcium sulfate and

magnesium sulfate.

Polyhalite, as a potential new fertilizer potash product, is more comparable with other multi-

nutrient potassium fertilizers such as langbeinite or kainite, than with potassium chloride,

potassium sulfate and potassium nitrate. It has the advantage, with potassium nitrate and sulfate

salts, of being chloride-free. As with all new industrial mineral products, extensive market

analysis and market development will be required in order to promote its use. While polyhalite

has not been commercially mined and marketed as a multi-nutrient fertilizer product, Barbarick’s

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and others’ work has shown that it has potential as a slow release, direct application fertilizer

when finely ground, particularly on acid and nutrient-poor soils.

18.1.2 Polyhalite as a Direct Fertilizer and K2SO4 Feed Stock Potassium chloride is the principal product of the potash industry. Other primary sources of

potassium for fertilizer use are potassium sulfate and potassium nitrate. Langbeinite is recovered

in New Mexico and is marketed as a source of potassium, magnesium and sulfur as sulfate.

Intrepid Potash, Inc. (Intrepid) markets langbeinite under the trade name Trio®; The Mosaic

Company (Mosaic) uses the trade name K-Mag®. Kainite is recovered in Germany by K+S Kali

to produce a potash fertilizer product known as “magnesia-kainit”.

While potassium chloride is the most widely available and widely used source of fertilizer

potassium, certain crops are intolerant of, or sensitive to, chloride and in some regions

agricultural soils are naturally salty. In these cases, potassium sulfate, potassium magnesium

sulfate and potassium nitrate are alternative products and, in the case of potassium magnesium

sulfate and potassium nitrate, these also provide magnesium, nitrogen and sulfur.

The development concept being considered by Intercontinental Potash is in part based on the

work at the Colorado State University (CSU) Agricultural Station by Barbarick (1989 and 1991).

This work demonstrated that, in greenhouse tests, finely ground polyhalite was an effective

source of potassium, magnesium, calcium and sulfur as fertilizer nutrients. Intercontinental

Potash and its prior consultant, Robert Hite, believe that polyhalite may be developed as a new

fertilizer material which will provide these four nutrients in a slow-release, chloride-free product.

Polyhalite, as a potential new fertilizer potash product, is more comparable with other multi-

nutrient potassium fertilizers such as langbeinite or kainite, than with potassium chloride,

potassium sulfate and potassium nitrate. It has the advantage, with potassium nitrate and sulfate

salts, of being chloride-free. As with all new industrial mineral products, extensive market

analysis and market development will be required in order to promote its use. While polyhalite

has not previously been commercially mined and marketed as a multi-nutrient fertilizer product,

Barbarick’s work and the work of others in the field has shown that it has potential as a direct

application fertilizer when finely ground, particularly on acid and nutrient-poor soils.

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A number of studies comparing polyhalite to either potassium or magnesium fertilizers have

been completed in Eastern Europe. Lepeshkov and Shoposhnikova (1958) showed that

polyhalite was at least as effective as potassium sulphate for potato (Solanum tubersosm, L.) and

flax (Linum usitatissum, L.) production. Panitkin (1967) concluded that polyhalite was better

than potassium sulfate for potatoes and beets (Beta vulgatis L.) because of the magnesium

derived from the polyhalite. Boguszewski et. Al. (1968) stated that the fertilizer value of

polyhalite was equivalent to potassium sulfate plus magnesium sulfate. Terelak (1974) reported

that crushing and calcinations of polyhalite improved potassium and magnesium solubility in

corn. Terelak (1975) found polyhalite was as effective as potassium chloride plus magnesium

sulfate in producing corn, rye (Secale cereal, L.), mustard (Brassica alba, L.), and oats (Avena

sativa, L.). Literature from eastern European studies indicates that polyhalite may be at least as

effective as potassium chloride or potassium sulfate.

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19. ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES

A large number of oil and gas drill holes in the area of interest provided sufficient geophysical

logs to infer polyhalite resources in the Tamarisk member of the Rustler Formation. Exploration

drilling by Intercontinental Potash will be necessary in order to provide core that can be

examined and sampled directly to generate indicated resources. Physical examination of drill

core will allow accurate measurement of the thickness of the polyhalite unit. Correlation between

drill holes and comparison with the geophysical log data, will permit assessment of the

continuity of polyhalite mineralization for classification as indicated and perhaps measured

resources, provided adequate drill hole density is obtained.

Phase I drilling will include the drilling of 8 widely spaced drillholes through the property, some

of which will be “twins” of dry oil and gas holes or wells. Holes will be located to maximize use

of available information and to verify the grade and thickness of the data used in the exploration

model. The Phase 1 program cost includes the estimated costs to drill holes 1700 feet deep with a

40 foot interval of core through the polyhalite horizon, gamma logging, and analysis of the core

samples.

All bonds for the current drilling programs and Environmental Assessments, excepting new

applications, have been completed for the Phase I drilling program. The BLM bonding covers

any reclamation required over and above that planned in the ICP budget and if for whatever

reason, the reclamation work is not performed.

19.1 Preliminary Economic Assessment In order to evaluate the potential economic viability of the Ochoa polyhalite deposit, a

preliminary economic assessment (PEA) was prepared. The conceptual mine plans were based

on the experience of Randy Foote, Chief Engineer and VP of Development for ICP, who

previously worked as a mine manager at operations of similar mines (potash) in the Carlsbad

district. Gustavson developed the mine staffing, capital and operating costs using the Western

Mine Engineering Cost Estimators Guide (2009) and the personal experience of Mr. Foote. The

conceptual process flowsheet was proposed by Mr. Foote and is based on work done by others in

the late 1950’s and published in a report. Gustavson utilized Mr. Foote’s experience and updated

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process operating costs in the 1958 report with current raw materials and energy cost data.

Process operating and capital costs were estimated by Gustavson and checked by Mr. Foote.

Gustavson estimated the General and Administrative costs as well. The pre-tax economic

evaluation included royalties due to the Federal Government and two other parties.

This PEA is preliminary in nature, as it is based on inferred mineral resources which are by

definition too speculative geologically to assign economic certainty. Inferred resources cannot

be treated as mineral reserves. There is no certainty that the results presented in this PEA will be

realized until more is known about these resources.

19.2 Mining

Underground mining is planned for the known polyhalite beds that are approximately 1,500 feet

below the surface and 6.5 feet in thickness. Mining methodologies will be very similar to that

currently conducted for the production of potash within the Permian Basin.

19.2.1 Mining Method Selection Mining will be room and pillar with a projected extraction of 87% within the active mining

“panels”. Mining will be in a herringbone pattern as is done in the adjacent potash mines,

(reference drawing 02 and 03 in Appendix E). After development has been completed, mining

will progress in a retreating manner, which will allow for minimal pillars left for support and

increase the mining extraction rate. As in the adjacent mines, it is expected that the panels will

slowly close through plastic deformation of the overlying strata. Directly above the polyhalite

beds is a 60 foot layer of salt that is compatible with the plastic failure model for the pillars.

19.2.2 Mine Design Two adjacent concrete lined circular shafts 20 feet in diameter will serve the underground mine.

One shaft will be dedicated to production, while the second shaft will be a utility shaft for men

and material transportation. The two shafts will provide ventilation for the mine. One shaft will

serve as an intake and the other as exhaust. Ventilation will be relatively straight forward as the

mine is not expected to be gassy and will only have minimal underground diesel equipment.

Each shaft will be 1,700 feet in depth, extending approximately 200 feet below the polyhalite

beds. This additional depth will be used for ore pockets on the production shaft and access to the

pockets from the utility shaft, (reference drawing 03 in Appendix E). A barrier pillar 1,500 ft. in

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diameter will protect the shafts.

19.2.3 Mine Development Design Development from the shafts will be by two parallel 8 feet by 30 feet wide main headings that

will extend one mile in an east and west direction from the shaft, (reference drawing 02 and 05 in

Appendix E). Developed at right angles to the main headings will be the panel development,

which will allow for the extraction of a panel 830 feet wide by one mile long. Underground

shops will be constructed adjacent to the shafts for equipment service and maintenance. A 500-

foot wide barrier pillar will protect the main haulage drifts. The barrier pillars will be recovered

at the end of the mine life.

19.2.4 Mobile Equipment Capital and operating costs for the required mobile equipment has been included within the

economic analysis. Underground mobile equipment will consist of 50 items as listed in the

following table.

TABLE 19.1 MOBILE UNDERGROUND MINING EQUIPMENT

QUANTITY DESCRIPTION

10 ea Continuous miners – Joy 12HM20 ea Shuttle cars10 ea Man trips ‐ diesel10 ea Rock bolters

All equipment is electrically powered with the exception of the man trip, these will be diesel. All

support feeder breakers, conveyors and feeder conveyors at the load out pocket have been

included in support of the mobile equipment.

19.2.5 Development and Production Schedules Planned production for the mine builds up from 3.06 million tons in year one, to 4.6 million tons

per year of mill feed in year 10. This will result in the production of 904,000 tons of K2SO4 year

two and beyond, and 50,000 tons of polyhalite product the first year, building to 500,000 tons in

year 10. All required labor and equipment have been included in order to meet the planned

production quantities as well as the pre-production panel development. Each shift will require 6

production crews and 1.7 development crews; an allowance of 2 development crews is included

within the costs and schedule. Table 19.2 presents the development schedule.

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TABLE 19.2 DEVELOPMENT SCHEDULE

19.2.6 Mining Support Services Mining support services include engineering, mechanical, and electrical maintenance. In

addition, an allowance has been made for laboratory and warehouse facilities.

19.3 Mining Recovery

Based on the planned mining methodology, which is consistent with other mines in the Permian

Basin, it is expected the mining recovery will be 87%. This mine recovery percentage is

considered reasonable as some of the mines in the district exceed this amount.

ACTIVITY year ‐4 year ‐3 year ‐2 year ‐1 year 1 year 2Engineering studies

Conceptual study

Pre‐Feasibility

Feasibility

Exploration drilling

Phase I

Phase II ‐ Definition and metallurgy

Permitting

Base line data collection

Project permitting

Project development

Mine design

Mine construction

Shaft sinking

Mine development

Process development

Process design

Process plant construction

Process plant commissioning

INTERCONTINENTAL POTASH PROJECT DEVELOPMENT SCHEDULE

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19.4 Process Description

There are several processes available to process polyhalite in order to produce potassium sulfate.

The process selected for this study utilizes ammonia to precipitate magnesium hydroxide and in

a second step, potassium sulphate. A brief description of the process follows.

1. Polyhalite is crushed and ground to minus 10 mesh and then subject to a cold water leach to remove most of the sodium chloride.

2. The salt free solids are then calcined (sintered) to drive of the water of hydration, which makes the magnesium and potassium sulphates water soluble.

3. The calcined solids are leached with water and the insoluble calcium sulphate is filtered off and discarded in the waste storage facility.

4. Anhydrous ammonia is introduced into the clarified solution till the ph reaches 10.3 when Magnesium present in the solution begins to precipitate as magnesium hydroxide which is filtered off and discarded in a separate waste storage facility.

5. The filtrate is then treated with additional ammonia until a concentration level of 310 grams per liter is reach. This depresses the solubility of the potassium sulphate to an extent that it crystallizes out of solution. The potassium sulfate is then filtered out, recovering of 92% potassium sulphate.

6. The filtrate is then heated and passed through a stripping column where free ammonia is removed and recycled back into the process. Since some of the ammonia took part in a chemical reaction in step 4 and is no longer free, lime is added to the stripped liquor in order to free up the ammonia. The treated liquor is then sent to a final stripping column to recover the final traces of ammonia. The residual liquid from this step is reused in at the beginning of the process.

The production of the second product, polyhalite, requires only crushing, washing to remove

salt, and then drying.

19.5 Markets

The project will produce two fertilizer products, potassium sulfate, and polyhalite. The potassium

sulfate product is readily marketable as a highly desirable fertilizer. Test work has shown

polyhalite to be a good fertilizer; however polyhalite is currently not employed as a fertilizer and

will require developing a market. Initial polyhalite production is planned for 50,000 tons per

year; rising by 50,000 tons per year for 9 years to a maximum of 500,000 tons per year. The

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pricing of the polyhalite product is at a discount to competing fertilizer products. The polyhalite

price used in the PEA is $250/ton and the price of potassium sulphate is $750/ton.

19.6 Contracts

There are currently no contracts in place for the project.

19.7 Environmental Considerations An allowance has been made for baseline data collection and project permitting within the

project development capital costs. This cost will need refinement as the project progresses and

the location of surface facilities are chosen. There is significant environmental compliance and

permitting costs associated with the ownership of the surface potentially being used for that

purpose.

19.8 Taxes

Economic modeling was completed pre-tax.

19.8.1 Royalties It is assumed a 5% gross royalty would be imposed by the federal government. A $1/ton

potassium product produced, and a 3% net profits royalty are also included.

19.8.2 Corporate Income Tax Economic modeling was completed pre-tax.

19.9 Operating Cost Estimates (Opex) Operating costs for the project were developed using the Western Mine Engineering Cost

Estimators Guide, firsthand knowledge of the potash operations in Carlsbad, and the Report

Potassium Sulphate and Magnesium Oxide from Polyhalite, written by Cummings, Engelhardt &

Corbin , giving detailed information on a treatment process for the production of potassium

sulfate from polyhalite feed stocks. Staffing levels and operating positions were generated

including overtime allowance and burden at 35% of the base cost.

Detailed equipment costs were developed for the mine, including overhaul parts, maintenance

parts, power / fuel costs, lubricants, and wear parts. As previously noted, the necessary

maintenance and operational staff were included in the staff and operating personnel detail.

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19.9.1 Mining OPEX Mining costs will be $10.47 per ton for a typical full production year and for the life of mine will

average $10.91 which includes the inefficiencies that will be experienced during year 1 start up.

Table 19.3 is a detailed listing of the staffing for the mine. There are 295 people in the mine at a

fully loaded annual cost of $21 million. Detailed mine equipment and operating cost are included

within the PEA appendix (see Appendix E).

TABLE 19.3 MINE STAFF

Mine StaffQTY Salary Hourly rate Roll up OT allowance Burden Annual Cost

Mine Management

Mine Manager 1 $134,400 $47,040 $181,440Mine Superintendent 1 $112,000 $39,200 $151,200Maintenance Superintendent 1 $89,600 $31,360 $120,960Chief Mine Engineer 1 $89,600 $31,360 $120,960Mine Engineers 6 $67,200 $403,200 $141,120 $544,320Surveyors 2 $44,800 $89,600 $31,360 $120,960

$1,239,840

Mining Crew, (6 panels, 24 crews)Shifters 8 $37.70 $627,328 $55,494 $219,565 $902,387Miner 24 $22.40 $1,118,208 $98,918 $391,373 $1,608,499Operators 72 $22.40 $3,354,624 $296,755 $1,174,118 $4,825,498Shuttle operators 48 $20.00 $1,996,800 $176,640 $698,880 $2,872,320

Skip Tender 4 $22.40 $186,368 $16,486 $65,229 $268,083Electrician 4 $27.40 $227,968 $20,166 $79,789 $327,923Oilers 8 $23.00 $382,720 $33,856 $133,952 $550,528Mechanics 8 $26.40 $439,296 $38,861 $153,754 $631,910

$11,987,149Mine Maintenance (Days)

Electrical Foreman 1 $37.70 $78,416 $6,937 $27,446 $112,798Electricians 9 $27.40 $512,928 $45,374 $179,525 $737,827Mechanical Foreman 4 $36.40 $302,848 $26,790 $105,997 $435,635Mechanics 36 $26.40 $1,976,832 $174,874 $691,891 $2,843,597Utility 33 $21.00 $1,441,440 $127,512 $504,504 $2,073,456

$6,203,314Development Crew, (4 crews)

Miner 4 $22.40 $186,368 $16,486 $65,229 $268,083Operators 12 $22.40 $559,104 $49,459 $195,686 $804,250Shuttle operators 8 $20.00 $332,800 $29,440 $116,480 $478,720

$1,551,053

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19.9.2 Mineral Processing OPEX and Beneficiation The equipment and materials portion of the processing costs is $121.18 per ton of potassium

sulphate for a yearly total of $109.6 million. Plant labor at full production is an additional $11.8

million, and an allowance of $6 million is included for production of the polyhalite product.

Table 19.5 shows the equipment and materials cost processing cost. Table 19.4 is a detailed

listing of the staffing for the mill. There are 111 people in the mill at a fully loaded annual cost

of $11.8 million.

TABLE 19.4 PLANT STAFF

Plant StaffingQTY Salary Hourly rate Roll up OT allowance Burden Annual Cost

Plant ManagementMill superintendant 1 $100,800 $35,280 $136,080Maintenance Superintendant 1 $100,800 $35,280 $136,080Chief process engineer 1 $95,200 $33,320 $128,520Process engineers 4 $78,400 $313,600 $109,760 $423,360Lab technician 1 $44,800 $15,680 $60,480

$884,520Hot Leach Plant (total staff 4 crews)

Shift Supervisor 4 $37.70 $313,664 $27,747 $109,782 $451,194Crush grind 4 $23.00 $191,360 $16,928 $66,976 $275,264Leach area 4 $23.00 $191,360 $16,928 $66,976 $275,264Crystallizer 4 $23.00 $191,360 $16,928 $66,976 $275,264Tails 4 $22.00 $183,040 $16,192 $64,064 $263,296Thickener 4 $22.00 $183,040 $16,192 $64,064 $263,296Control room 4 $24.00 $199,680 $17,664 $69,888 $287,232Relief 4 $24.00 $199,680 $17,664 $69,888 $287,232

Electrician 4 $27.40 $227,968 $20,166 $79,789 $327,923Mechanic 8 $26.40 $439,296 $38,861 $153,754 $631,910

$3,337,875Surface Maintenance

Electrical Foreman 1 $37.70 $78,416 $15,683 $27,446 $121,545Electricians 6 $27.40 $341,952 $68,390 $119,683 $530,026Instrument technicians 3 $27.40 $170,976 $34,195 $59,842 $265,013

Mechanical Foreman 2 $37.70 $156,832 $31,366 $54,891 $243,090Mechanics 12 $26.40 $658,944 $131,789 $230,630 $1,021,363

Utility Foreman 1 $24.00 $49,920 $9,984 $17,472 $77,376Utility Crew 12 $18.00 $449,280 $89,856 $157,248 $696,384

$9,630,546Lab support

Lab Supervisor 1 $56,000 $56,000 $19,600 $75,600Lab technician 8 $44,800 $358,400 $125,440 $483,840

$559,440Product Loadout Crew

Loadout Foreman 1 $24.00 $49,920 $9,984 $17,472 $77,376Loadout crew 12 $18.00 $449,280 $89,856 $157,248 $696,384

$773,760

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Process operating costs were estimated based upon the information provided within the report;

“Potassium Sulphate and Magnesium Oxide from Polyhalite”, written by Cummings, Engelhardt

and Corbin, March 31, 1958. Estimated costs and the treatment flowsheet were updated by ICP

and Gustavson to represent current costs. Additional detail of the process can be found within the

report attached in Appendix E. Drawing 04 in Appendix E presents the envisioned flowsheet as a

block flow diagram. Drawing 01 in Appendix E shows the general facilities arrangement.

TABLE 19.5 PROCESS OPERATING COSTS – EXCLUDING LABOR

19.9.3 General and Administration and Site Services OPEX General and administrative costs will be $0.64 per ton for a typical full production year and for

the life of mine will average $0.66 per ton. Annual G&A costs will be $2.96 million.

Raw Materials # unitsunits/ton K2SO4

Cost / unit raw

material

raw material units

Cost / ton K2SO4 Annual Cost (000's)

Ammonia 72.6 lbs / ton of Potassium 72.6 lbs $400.00 ton $14.52 $13,126Lime 603 lbs $100.00 ton $30.15 $27,255Water 1400 gallons $1.00 000's gal $1.40 $1,266Natural Gas 6.66 1000 CF $3.50 1000 CF $23.31 $21,072

Electricity 160 kwh $0.06 kwh $9.60 $8,678Laboratory allowance $1.00 $904Operating Supplies allowance $6.00 $5,424Equipment Maintenance allowance $15.00 $13,560Subtotal Operating Cost $100.98 $91,285

Contingency 20% $20.20 $18,257Total Processing Cost with Contingency $121.18 $109,542

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TABLE 19.6 SURFACE STAFF

19.9.4 OPEX Summary

TABLE 19.7 COST PER TON OF FEED

AREA Life of Mine Average Typical Year Mine $8.84 $10.74Mill $26.63 $27.48G&A $0.66 $0.64Total $36.13 $38.86

19.10 CAPITAL COST ESTIMATES (CAPEX) The total estimated initial capital cost for the project is $880.3 million. The capital estimate has

been broken into three general areas

1. Mine capital; 2. Surface and process capital; and 3. Exploration, engineering and permitting.

The following tables contain the detail for the above-mentioned areas. An additional capital

amount of $549 million will be required as sustaining capital over the life of the mine.

Surface StaffQTY Salary Hourly rate Roll up OT allowance Burden Annual Cost

AdministrationGeneral Manager 1 $168,000 $58,800 $226,800Mill Manager 1 $134,400 $47,040 $181,440Controller 1 $89,600 $31,360 $120,960Controller support 5 $44,800 $224,000 $78,400 $302,400

$831,600Safety

Safety director 1 $89,600 $31,360 $120,960Safety support 5 $44,800 $224,000 $78,400 $302,400

$423,360Environmental

Environmental Manager 1 $89,600 $31,360 $120,960Environmental support 2 $44,800 $89,600 $31,360 $120,960

$241,920Service

Purchasing 5 $56,000 $280,000 $98,000 $378,000Warehouse 10 $44,800 $448,000 $156,800 $604,800

$982,800Customer Service

Orders and Distribution 8 $44,800 $358,400 $125,440 $483,840$483,840

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19.10.1 Mining Initial development capital totals $143.3 million for phase I and an additional $105 million for

phase II in year 14 of the project; this includes all the necessary equipment and mine pre-

production. Phase II is not included in the Initial Capital cost. Development of the main access

and production panels is accounted for in the working capital as all of this development produces

mill feedstock. Typically underground mines have significant development in waste. However,

this is not the case in bedded evaporite deposits.

TABLE 19.8 MINE DEVELOPMENT CAPITAL COSTS PHASE I

Initial CapitalMine Development Number Units Units Cost/Unit Total Cost

Sinking 2 ea $6,385,200 $12,770,400Head Frame 2 ea $1,500,000 $3,000,000Koepe Hoist / skip / cage 1 2000 hp ea $3,800,000 $3,800,000Double drum hoist/skip cage 2 1800 hp ea $2,500,000 $5,000,000Concrete Lining (in shaft sinking cost)Shaft Equip (in shaft sinking cost)Loading Station 2 ea $250,000 $500,000Ore Pocket 2 ea $706,903 $1,413,806Feeders/conveyor to loading pocket 6 ea $150,000 $900,000Level Development 4 6000 ft $300 $7,200,000Refuge Station 2 ea $200,000 $400,000Underground Shop 1 ea $500,000 $500,000Underground Shop Equipment 1 ea $500,000 $500,000Underground warehouse / spares 1 ea $5,000,000 $5,000,000Mine transformer and switch gear 1 ea $1,500,000 $1,500,000Main Vent Fans 2 ea $1,500,000 $3,000,000Communication system 1 ea $1,000,000 $1,000,000

Production and Development Equipmentpanel transformer 10 ea $150,000 $1,500,000Continuous Miner - Joy 12 HM 10 ea $2,500,000 $25,000,000Feeder Breaker 10 ea $400,000 $4,000,000Sub - conveyor 48" 10 5300 ft $400 $21,200,000Main - conveyor 72" 10 5300 ft $600 $31,800,000shuttle car 20 ea $500,000 $10,000,000Man trip 10 ea $50,000 $500,000Rock bolter 10 ea $150,000 $1,500,000Vent Fans 25 ea $20,000 $500,000Vent tube 20000 ft $10 $200,000

trash pump - pipe 10 ea $10,000 $100,000Electrical - Wire/switch gear 10 ea $50,000 $500,000

Total Mine Equipment and Development Capital $143,284,206

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TABLE 19.9 MINE DEVELOPMENT CAPITAL COSTS PHASE II – Year 14

(not included in the Initial Capital)

AREA MillionsMine equipment and development $80Surface facilitates $5Contingency $20TOTAL $105

19.10.2 Mineral Processing Mineral processing and surface development capital costs are presented within Table 19.10. The

associated additional direct and indirect costs are shown in Table 19.12. Mineral processing

capital costs were developed based upon experience of ICP personnel, with support from the

Cummings, Engelhardt & Corbin report, and other plant design and capital cost estimates for a

similar plants treating dilute brine solutions or Trona.

TABLE 19.10 SURFACE AND PROCESS CAPITAL COSTS

Surface DevelopmentBuildingsHoist house 1 ea $1,000,000 $1,000,000Mine Admin building 1 ea $500,000 $500,000Shop - Plant Maintenance 1 ea $15,000,000 $15,000,000Dry 1 ea $500,000 $500,000Process Warehouse 1 ea $500,000 $500,000Assay Lab 1 ea $500,000 $500,000Security 1 ea $50,000 $50,000

Total Surface Development $18,050,000

Process Capital1. Crushing and Grinding 1 ea $18,000,000 $18,000,0002. Calcination 1 ea $15,000,000 $15,000,0003. Extraction 1 ea $40,000,000 $40,000,0004. Filtration of Gypsum 1 ea $20,000,000 $20,000,0005. Ammonia Reaction 1 ea $220,000,000 $220,000,0006. Filtration of Mg(OH)2 1 ea $10,000,000 $10,000,0007. Filtration of K2SO4 1 ea $10,000,000 $10,000,0008. Drying of K2SO4 1 ea $15,000,000 $15,000,0009. Product Storage Bldg. 1 ea $25,000,000 $25,000,00010. Plant infrastructure-power, water, gas, and roads 1 ea $33,000,000 $33,000,00011. Paste Thickener 1 ea $4,500,000 $4,500,000

Total Plant Capital $428,550,000

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19.10.3 Exploration and Permitting Estimated costs prior to a production decision are estimated to be $9.8 million as shown in Table

19.11. This will allow completion of the necessary exploration drilling, engineering studies and

permitting efforts. ICP’s Phase 1 and 2 drill program budgets are $550,000 and $2,500,000

respectively. The Exploration and Permitting costs are incurred during years -4 to -1.

TABLE 19.11 EXPLORATION, ENGINEERING AND PERMITTING COSTS

ACTIVITY COSTPreliminary Drilling $550,000Development Drilling $2,500,000Prefeasibility Study $2,000,000Feasibility Study $4,000,000Permitting $750,000Total $9,8,000

19.10.4 CAPEX Summary The total initial capital for the mine and plant of $877.4 million as shown in Table 19.12, plus an

additional amount of $9.8 million during the pre-production phase of the project brings the total

estimated pre-production capital cost to $887.3.

TABLE 19.12 TOTAL ESTIMATED INITIAL CAPITAL COST FOR THE MINE AND PLANT

Additional capital expenditures totaling $549 million are included for sustaining capital and

Phase II mine development.

19.11 Economic Analysis A 30-year life project gives a pre-tax IRR of 43% and NPV of $2.90 billion with a 10% discount

rate. NPV’s at other rates are listed in Table 19.13.

Total Mine and Plant Capital $589,884,206

Total Direct Costs $589,884,206EPCM 12% direct $70,786,105

Indirects 4% direct $23,595,368Subtotal Direct plus Indirect $684,265,679

Owners costs 3% direct $17,696,526Contingency 25% total $175,490,551

Subtotal Other Costs $193,187,077

Total Estimated Costs $877,452,756

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TABLE 19.13 NPV’S

NPV BILLION15% $1.5012% $2.2010% $2.908% $3.865% $6.19

19.11.1 Sensitivity Analysis Sensitivity analysis was completed on the project to determine those costs to which the project

was most sensitive. The project is most sensitive to the selling price of K2SO4, followed by

controllable cost, capital cost, and discount rate. Figures 19.1 to 19.4 present the sensitivities

graphically.

FIGURE 19.1 K2SO4 PRICE SENSITIVITY

NPV vs. K2SO4 Price

2,0202,310

2,6012,891

3,1813,472

3,762

‐

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000590 640 690 740 790 840 890 940

Product $/Ton

NPV

@ 10%

($00

0's)

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FIGURE 19.2 CONTROLLABLE COST SENSITIVITY

FIGURE 19.3 CAPITAL COST SENSITIVITY

Controllable Cost Increase

3,173

3,032

2,891

2,750

2,609

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400‐25% ‐20% ‐15% ‐10% ‐5% 0% 5% 10% 15% 20% 25%% Controllable Cost Increase

NPV @ 10% ($000's)

Capital Cost Increase

3,094

3,026

2,959

2,891

2,823

2,755

2,688

2,650

2,700

2,750

2,800

2,850

2,900

2,950

3,000

3,050

3,100

3,150‐40% ‐30% ‐20% ‐10% 0% 10% 20% 30% 40%% Capital Cost Increase

NPV

@ 1

0% ($

000'

s)

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FIGURE 19.4 DISCOUNT RATE SENSITIVITY

19.12 Payback

The project has a payback period of 3.1 years from the beginning of production.

19.13 Mine Life The current mine life is 30 years for the areas selected to begin operations. Depending on the

outcome of subsequent engineering studies and access to additional land, the mine life could be

increased.

19.14 Opportunities and Risks

19.14.1 Opportunities • Process piloting and process flowsheet development could potentially reduce the capital

costs. • Exploration drilling may indicate a larger resource. • Land acquisition may increase the available resource.

19.14.2 Risks • Exploration drilling may not confirm the resource. • Financing risk. • Business risk. • Market risk: the polyhalite market may be more difficult to develop than anticipated.

‐

1,000

2,000

3,000

4,000

5,000

6,000

7,000

4% 6% 8% 10% 12% 14% 16%N

PV @

10%

($00

0's)

Discount Rate

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• Permitting, bonding, and permit requirements may increase the capital requirements, and the time necessary to develop the project.

• Process piloting and process flowsheet development may increase the capital and operating costs.

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20. INTERPRETATION AND CONCLUSIONS

Based upon an independent review of the data and interpretations done with the database, the

following conclusions can be made at this time:

1. Natural gamma and sonic or acoustic logs from oil and gas drilling are adequate for calculating polyhalite thickness;

2. Grade calculations from geophysical logs are not currently possible and will need to be qualified after validation coring;

3. The database is sufficient to warrant a calculation of inferred resources of polyhalite in the Rustler Formation in the AOI;

4. Drill hole spacing is adequate for estimation of inferred resources for the entire AOI. For the eastern-most area outside the AOI and under permit application, the drill hole spacing is not adequate for estimation of mineral resources at this time.

5. The discontinuity of the Rustler polyhalite bed from west to east across the area of interest does not appear to be a stratigraphic change but a structural or dissolution phenomenon that is seen both in the top and base of the Rustler Formation. It will not affect mineability due to the distances involved

6. Chemrox using the Petra model, estimated 399 Mt inferred resource and 382Mt of inferred resource using the check-model Surpac. Petra is a defensible model for calculation of inferred resources of polyhalite. Analytical and mineralogical data obtained for the Salado polyhalite from the langbeinite mine and the Rustler polyhalite from the core likely are representative of the gangue mineral associations and grade to be expected from core on the property.

7. Based upon preliminary log interpretation and examination of oil and gas cuttings, it is known that polyhalite and likely other potash also occurs in the underlying Salado Formation beneath the BLM permits in the AOI. The zones are more discontinuous but range in thickness up to 8 feet above a depth of 2500 ft. It is unknown at present what the continuity of the beds might be, due to the drillhole spacing. It appears that the Salado potash beds are less continuous and more variable in thickness.

8. Using the grade of the Sandia core, 85% percent polyhalite, the Rustler polyhalite bed contains an inferred polyhalite resource of 339Mt, within the BLM permitted AOI. This has not been adjusted for mine dilution or buffer zones which would be required around existing and shut-in oil or gas production wells.

9. If the polyhalite has halite as a gangue mineral, as the Salado Formation at the langbeinite mines do, production of a direct application polyhalite product would merely require crushing and washing. Screening may also be effective to reduce halite gangue as halite often pulverizes during crushing and reports to the finer fraction, reducing

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washing requirements.

10. Polyhalite in the samples tested in the Salado Formation showed immediate release of potassium and significant residual potassium for likely slow release.

11. If polyhalite has anhydrite as its main gangue constituent (re: Sandia Rustler Formation), concentration of a direct application fertilizer by physical methods may be more difficult or quite costly. However, testing of polyhalite of this nature using calcining and leaching has proven successful for the extraction of the potassium and sulfate.

12. The positive results of the PEA, (indicating that based on the enumerated assumptions in Section 19, a potentially economically viable polyhalite mining and processing facility can be developed at Ochoa), justify the Phase 1 drilling program outlined herein.

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21. RECOMMENDATIONS

During the data review and continuing through resource development, several features that could

possibly affect geologic or geostatistical interpretations were noted. A major northwest to

southeast structural depression was observed through the eastern portion of the AOI. The nature

of this depression, whether it is synclinal, faulted or another feature is not known. Additionally,

while the trend orientation of the polyhalite can be visually observed to be northwest-southeast,

the numerous wells lacking polyhalite intercepts appears to strongly influence variography.

Polyhalite analytical standards should be developed to satisfy QA/QC needs of the project in the

future. The addition of potassium and other key cation standards during the core preparation

process would enhance the defensibility of the results.

The Phase I exploration program to be carried out by ICP in late 2009 is comprised of drilling 8

core holes, averaging 1700 feet in depth. The budget for Phase I is $550,000, including all

ancillary costs (labor, drilling, geophysical logging, analysis, etc.). With drilling success in

Phase I, ICP will initiate Phase II (in-fill drilling). Phase II is comprised of 30 core holes, with

an estimated budgetary cost of $2.5 million. The budget includes all of the cost categories of

Phase I, plus geotechnical studies, preliminary hydrological studies and other investigations

which will support an eventual pre-feasibility study if the drilling campaign is successful in

defining mineral resources of a higher confidence than inferred.

The Phase I program budget is as follow:

Drill pad construction and reclamation $40,000

Drilling (8 rotary/core holes) 280,000

Aquifer Protection (temporary casing) 80,000

Geophysical logging 60,000

Geological oversight (labor) 30,000

Analytical 30,000

Field Expenses 30,000

ESTIMATED TOTAL Phase I $550,000

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The Phase II budget will be largely dependent upon the results of Phase I but at the

present time is:

Drill Pad construction and reclamation $150,000

Drilling (30 rotary/core in-fill holes) 1,050,000

Aquifer Protection (temporary casing) 300,000

Drilling (5 geotechnical/metallurgical holes) 250,000

Drilling and pump testing (5 water wells) 300,000

Geophysical Logging 120,000

Geological Oversight (labor) 200,000

Field Expenses 100,000

Analytical and Physical Testing 75,000

ESTIMATED TOTAL Phase II $2,500,000

Chemrox and Gustavson consider that the proposed estimated budgets and plans for the phased

exploration program at Ochoa are reasonable and adequate to test the polyhalite occurrences and

move the project to succeeding stages.

Figure 21.1 below shows the ICP drill hole locations permitted by BLM and proposed drill hole

locations currently under review by BLM. The first 8 drill holes proposed by ICP are identified

with diamond symbols, and several of these drill holes have alternate locations in the event that

data supports alternate drilling. This program of drilling will entail rotary drilling to within 20

feet of the target polyhalite zone and continuous corring for at least 40 feet through the target bed

in the Rustler Formation. Several of these drill holes have been located as twins to prior oil and

gas holes to use for correlation of the polyhalite beds. Borehole geophysics will also be

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undertaken for correlation purposes and to see if any data can be calibrated with core analyses to

predict polyhalite grade in existing or future drill holes. Chemrox and Gustavson would

recommend modifying ICP’s priority holes to concentrate efforts on the northwestern portion of

the AOI for the first Phase of drilling where it appears that the more favaorable trend for mining

might exist.

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FIGURE 21.1 LOCATION OF ICP PRIORITY HOLES

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Chemrox and Gustavson recommend drilling all permitted holes in the northwestern portion of

the AOI for the first phase of drilling.

Based on the assumptions and results of the PEA, Gustavson considers that the Ochoa polyhalite

project has potential to be an economically viable operation annually producing over 900,000

tons of potassium sulphate and 500,000 tons of polyhalite product for the world market.

Chemrox and Gustavson recommend that ICP execute their Phase I drilling program. If the

results are encouraging, we further recommend Phase II drilling and subsequent metallurgical

and other testwork and engineering.

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22. REFERENCES

Adams, S.S., Hite, R.J., 1983, “Potash”, in Industrial Minerals and Rocks, 5th ed., AIME, New

York, pp 381-383.

Asquith, G.B., Gibson, C.R., 1982, Basic Well Log Analysis for Geologists, American

Association of Petroleum Geologists, Tulsa, Oklahoma.

Bachman, G.O., 1983, Regional geology of Ochoan evaporites, northern part of Delaware Basin,

New Mexico Bureau of Geology and Mineral Resources, Open File Report 184.

Barbarick, K. A., T. M. Lai, and D. D. Eberl. 1988. Response of sorghum-sudangrass in soils

amended with phosphate rock and NHA-exchange zeolite (clinoptilolite). Colorado State Univ.

Agric. Exp. Sta. Technical Bulletin TB 88-1.

Barbarick, K.A., 1989, Polyhalite as a potassium fertilizer, Colorado State University

Agricultural Station, Technical Bulletin TB89-2.

Barbarick, K.A., 1991, Polyhalite application to sorghum-sudan-grass and leaching in soil

columns, Soil Science, vol. 151, no. 2, pp. 159-164.

Boguszewski, W., K. Drzas, and E. Drzas. 1968. Investigations on the fertilizing values of Polish

polyhalites. Pam. Pulawaki. 32:155-168.

British Sulfur Corporation Limited, 1985, World Survey of Potash Resources, Fourth Edition.

Brookins, D.G., Register, J.K., and Krueger, H., 1980, Potassium- Argon dating of polyhalite in

SE New Mexico. Geochem. Cosmochem. Acta, v. 44, pp. 635-637.

Conley, J. E, Partridge, E. P., 1944, Potash Salts from Texas-New Mexico Polyhalite Deposits,

Commercial Possibilities, Proposed Technology, and Pertinent Salt-Solution Equilibria, United

States Department of the Interior, Bureau of Mines, Bulletin 459.

Dana, E. S., Ford, W. E., 1932, A Textbook of Mineralogy, John Wily & Sons, Inc.

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Dean, W. E., 1978, Theoretical Versus Observed Successions from Evaporation of Seawater, in

Marine Evaporites, SEPM Short Course No. 4, Dean W. E. and Schreiber, B. C., eds.

Fraps, G. S., 1932, Availability to plants of potash in polyhalite. Texas Agricultural Experiment

Station Bulletin No. 449. College Station, Texas.

Grace, K.A., and Spooner, J., 2008. Independent Technical Report on the Ochoa Polyhalite

Project, New Mexico. Micon consultants. 67p.

Havlin, J. L. and P. N. Soltanpour, 1980, A nitric acid plant tissue digest method for use with

inductively coupled plasma spectrometry. Comm. Soil Sci and Plant Anal. 11:969-980.

Holt, R.M., Powers, D.W., 1987, The Permian Rustler Formation at the WIPP Site, Southeastern

New Mexico, Guidebook 18, El Paso Geological Society, pp. 140-148.

Holt, R.M., Powers, D.W, 1988, Facies Variability and Post-depositional Alteration Within the

Rustler Formation in the Vicinity of the Waste Isolation Pilot Plant, Southeastern New Mexico,

DOE/WIPP 88-004, U.S. Department of Energy, Carlsbad, NM.

Hovorka, S. ca. 2000, online publication, Characterization of Bedded Salt for Storage Caverns, Case Study from the Midland Basin. http://www.beg.utexas.edu/environqlty/salt/index.htm.

InfoMine USA, Inc., 2009, Mine and Mill Equipment Costs, An Estimator’s Guide, CostMine,

InfoMine USA, Inc. publisher.

Jones, C. L., 1972, Permian basin potash deposits, south-western United States, in Geology of

Saline Deposits, Proceedings of Hanover Symposium, 1968, Unesco, Paris.

Keith, D., 2008, Preliminary Scoping Study, Environmental Permitting for Underground Potash

Mining in Southeast New Mexico, prepared for Trigon Uranium Corporation by Diane Keith

Consulting LLC, March 14, 2008 (in draft).

Lepeshkou, I. N. and A. N. Shaposhnikova, 1958, Natural polyhalite salt, as a new type of

potassium-magnesium-boron fertilizers. Udobr. Uzozh. 11:33-35.

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Lorenz, J.C., 2005, Assessment for Potential Karst in the Rustler Formation at the WIPP site.

Pre-publication draft of Internal WIPP document, 127 p.

Lowenstein, T.K., 1983 Deposition and Alteration of an Ancient Potash Evaporite: The Permian

Salado Formation of New Mexico and West Texas. PhD. Dissertation, The Johns Hopkins

University. 411 p.

Mercer, J.W., and Snyder, R.P., 1990, Basic Data Report for Drillholes H-17 and H-18 (Waste

Isolation Pilot Plant- WIPP), Sandia Report RS-8232-2/70269.

Mercik, S., 1981, The effect of polyhalite of varying degrees of conununitation on the yield

dynamics and uptake of nutrients by plants. Roczniki Nauk Rolniczych 104(4):53-66.

New Mexico Bureau of Geology and Mineral Resources, 2008, Potash – Past, Present and,

Future, Earth Matters, Summer, 2008.

Nurmi, Roy D., 1978, Use of Well Logs in Evaporite Sequences, in Marine Evaporites, SEPM

Short Course No. 4, Dean, W. E. and Schreiber, B. C., eds.

Panitkin, V. A., 1967, Effect of polyhalite on sandy loam soil. Agrokhimiya. 1:81-84.

Powers, D.W., Holt, R.M., 1999, The Los Medaños Member of the Permian (Ochoan) Rustler

Formation, New Mexico Geology, November, 1999.

Powers, D.W., Holt, R.M., Beauheim, R.L., Richardson, R.G., 2006, Advances in Depositional

Models of the Permian Rustler Formation, Southeastern New Mexico, New Mexico Geological

Society Guidebook, 57th Field Conference, Caves and Karst of Southeastern New Mexico, pp.

267-276.

Roberts, B.L., and Brainard, J.R., 2009, Interim Report on the Use of Oil and Gas Well Logs for

Potash Reserve Identification in Southeastern New Mexico. BLM publication, in press. 56 p.

Schaller, W. T., and Henderson, E.P., 1932, Mineralogy of Drill Cores from the Potash Field of

New Mexico and Texas. USGS Bull. 833, 124 p.

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Snyder, R.P., 1985, Dissolution of Halite and Gypsum, and Hydration of Anhydrite to Gypsum,

Rustler Formation, in the Vicinity of the Waste Isolation Pilot Plant, Southeastern New Mexico,

United States Geological Survey, Open File Report, 85-229.

Spooner, J., 2007, Potash, in Country and Commodity Reports published by Mining

Journal/Mining Communications Ltd.

Spooner, J., 2006, Potash, in Country and Commodity Reports published by Mining

Journal/Mining Communications Ltd.

Spooner, J., 2000, Potash, Financial Times Executive Commodity Reports.

Terelak, H., 1974, Solubility and fertilizing value of polyhalite as affected by the degree of

crushing and calcination. Pam. Pulawski 59:39-52.

Terelak, H., 1975, The effect of polyhalite fertilizer on the content of potassium and magnesium

in the soil and plants. Pam. Pulawski 63:67-84.

U.S. Department of Energy, Sandia, NM, Compliance Certification Application for the Waste

Isolation Pilot Plant, 21 vols., DOE/CAO, 1996-2184, Title 40 CFR Part 191: vol. 2 and

appendix FAC.

United States Geological Survey, Potash in Annual Yearbooks and Mineral Commodity

Summaries.

Williams-Stroud, S.C., Searls, J. P. and Hite, R. J., 1994, Potash Resources, in Industrial

Minerals and Rocks, 6th Edition, Donald C. Carr, Senior Editor, Society for Mining, Metallurgy,

and Exploration, Inc., Littleton, Colorado.

Workman, S. M., P. N. Soltanpour, and R. H. Follett, 1988, Soil testing methods used at

Colorado State University for the evaluation of fertility, salinity and trace element toxicity.

Colorado State University Agric, Sta. Technical Bulletin LTB88-2.

Wroth, J.S., 1930, Commercial Possibilities of the Texas-New Mexico Potash Deposits. USBM

Bulletin 316. 144 p.

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23. CERTIFICATES

I, Sean C. Muller of Chemrox Technologies, Inc., do hereby certify that the following are accurate on August 19, 2009.

1. My business address is 8547 East Arapahoe Road, Suite J-397, , Greenwood Village, Colorado and work for Chemrox Technologies www.chemrox.com as the Operations Manager and Senior Resource Geologist

2. I have a Bachelors degree in Earth Science from LaSalle University and a Masters in Science degree in Geology from Idaho State University.

3. I am a consulting geologist providing professional services internationally. I have been registered with the American Institute of Professional Geologists since 1985 and hold licenses to practice in 8 states (one by 16 hours of examination). These licensed organizations have the attributes of professional associations. I’ve been a member of the Society of Mining Engineers since 1979, a Registered Member and have served as the National Chairman of the SME National Committee on Mineral Resources in 2002.

4. I have practiced my profession since 1973 and have extensive experience in exploration and development for evaporite and other bedded deposits. This experience includes the operation of sample preparation laboratories, drill hole planning and oversight, geochemistry, data interpretation, metallurgy and data validation. I have also been responsible for developing QA/QC protocols for various evaporite projects starting in 1973 and have worked over 5 years in the study and evaluation of potassium and other evaporite deposits throughout the world.

5. I am a “qualified person” as that term is defined in National Instrument 43-101.

6. I monitored and reviewed relevant drill data, data sampling and laboratory preparation activities at the Ochoa site January 3, 2009 and have visited proposed drill sites on January 20th through 22nd, March 16th through 19th and again May 4th through May 8th, 2009 and sampled polyhalite in underground workings and nearby core for analytical and metallurgical testing.

7. I supervised the modeling of the resource calculations, validated the data and resources and wrote the respective geologic sections in the report entitled “Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project, Lea County, Southeast New Mexico” dated August 19, 2008 for Trigon Uranium using the Intercontinental Potash data.

8. I have had no prior involvement in the property which is the subject of this technical report.

9. I am not aware of any material fact or material change with respect of the subject matter of this Study, which is not reflected in the Study, the omission of which would make the Study misleading.

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10. I am independent of Trigon Uranium and Intercontinental Potash Corp., pursuant to Section 1.5 of the NI43-101.

11. I do not have nor do I expect to receive direct or indirect interest in the projects of Intercontinental Potash Corp. and do not beneficially own, directly or indirectly, any securities, stock or options, or royalties of resources controlled by Trigon Uranium or Intercontinental Potash Corp. or any associate or affiliate of such Companies.

12. I have personally completed an independent review and analysis of the data and written information contained in this Technical Report.

13. I have read NI 43-101 and Form 43-101F1 and have prepared the technical report in compliance with these, and in conformity with generally accepted Canadian mining practice.

14. I consent to the filing of this Technical Report with the securities regulatory authorities.

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I, Robert L Galyen, of Chemrox Technologies, Inc., do hereby certify that the following are accurate on August 19, 2009.

1. My business address is 8547 East Arapahoe Road, Suite J-397, Greenwood Village, Colorado and I work for Chemrox Technologies www.chemrox.com as the Senior Resource Geologist

2. I have a Bachelors degree in Geology from Northern Arizona University and a Master of Science degree in Geology from Idaho State University.

3. I am a consulting geologist providing professional services internationally. I have been registered with the American Institute of Professional Geologists since 1992. I've been a registered member of the Society of Mining, Metallurgy, and Exploration (SME) since 2008.

4. I have practiced my profession since 1977 and have extensive experience in minerals exploration and development. This experience includes drill hole planning and oversight, geochemistry, data interpretation, resource estimation and data validation.

5. I am a "qualified person" as that term is defined in National Instrument 43-101.

6. I conducted modeling of the resource for the report entitled "Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project, Lea County, Southeast New Mexico" dated August 19, 2008 for Trigon Uranium using the Intercontinental Potash data.

7. I have had no prior involvement in the property which is the subject of this technical report.

8. I am not aware of any material fact or material change with respect of the subject matter of this Study, which is not reflected in the Study, the omission of which would make the Study misleading.

9. I am independent of Trigon Uranium and Intercontinental Potash Corp., pursuant to Section 1.5 of the NI43-101.

10. I do not have nor do I expect to receive direct or indirect interest in the projects of Intercontinental Potash Corp. and do not beneficially own, directly or indirectly, any securities, stock or options, or royalties of resources controlled by Trigon Uranium or Intercontinental Potash Corp. or any associate or affiliate of such Companies.

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William J Crowl Vice President, Mining

Gustavson Associates, LLC 274 Union Blvd, Suite 450

Lakewood, Colorado 80228 Telephone: 720-407-4062 Facsimile: 720-407-4067

Email: [email protected]

CERTIFICATE of AUTHOR I, William J. Crowl do hereby certify that:

1. I am currently employed as Vice President, Mining by Gustavson Associates, LLC at:

274 Union Boulevard Suite 450 Lakewood, Colorado 80228

2. I am a graduate of the University of Southern California with a Bachelor of Arts in Earth Science (1968), and a MSc. in Economic Geology from the University of Arizona in 1979, and have practiced my profession continuously since 1973.

3. I am a registered Professional Geologist in the State of Oregon (G573) and am a member in good standing of the Australasian Institute of Mining and Metallurgy and the Society of Economic Geologists.

4. I have worked as a geologist for a total of 37 years since my graduation from university; as a graduate student, as an employee of a major mining company, a major engineering company, and as a consulting geologist.

5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I take full responsibility for the technical report titled “Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project Lea County, southeast New Mexico”, dated August 19, 2009 (the “Technical Report”). A Personal visit of the subject properties was conducted on August 13, 2009.


8. I have not had prior involvement with Intercontinental Potash Corp. on the property that is the subject of this Technical Report.

9. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.

10. I do not hold, nor do I expect to receive, any securities or any other interest in any corporate entity, private or public, with interests in the properties that are the subject of this report or in the properties themselves, nor do I have any business relationship with any such entity apart from a professional consulting relationship with the issuer, nor to the best of my knowledge do I have

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any interest in any securities of any corporate entity with property within a two (2) kilometer distance of any of the subject properties.

11. I am independent of Intercontinental Potash Corp. in accordance with Section 1.4 of NI 43-101.

12. I have read National Instrument 43-101 and Form 43-101, and the Technical Report has been prepared in compliance with that instrument and form.

13. I consent to the filing of the Technical Report with any stock exchanges or other regulatory authority and any publication by them, including electronic publication in the public company files on the websites accessible by the public, of the Technical Report.

Dated this 19th day of August, 2009. ________________________. Signature of Qualified Person “William J Crowl” . Print name of Qualified Person

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Donald E. Hulse, P.E. Principal Mining Engineer Gustavson Associates, LLC 274 Union Blvd, Suite 450



CERTIFICATE of AUTHOR I, Donald E. Hulse do hereby certify that:

1. I am currently employed as Principal Mining Engineer by Gustavson Associates, LLC at:


2. I am a graduate of the Colorado School of Mines with a Bachelor of Science in Mining Engineering (1982), and have practiced my profession continuously since 1983.

3. I am a registered Professional Engineer in the State of Colorado (35269).

4. I have worked as a mining engineer for a total of 27 years since my graduation from university; as an employee of a major mining company, a major engineering company, and as a consulting engineer.


6. I have contributed to the preparation of the technical report titled “Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project Lea County, southeast New Mexico”, dated August 19, 2009 (the “Technical Report”) and take responsibility for verification of resource estimation methodology and results. I have not made a visit to the project site.




10. I do not hold, nor do I expect to receive, any securities or any other interest in any corporate entity, private or public, with interests in the properties that are the subject of this report or in the properties themselves, nor do I have any business relationship with any such entity apart from a professional consulting relationship with the issuer, nor to the best of my knowledge do I have any interest in any securities of any corporate entity with property within a two (2) kilometer distance of any of the subject properties.


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Dated this 19th day of August, 2009. ________________________. Signature of Qualified Person “Donald E. Hulse, P.E.” . Print name of Qualified Person

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Terre A. Lane Principal Mining Engineer Gustavson Associates, LLC 274 Union Blvd, Suite 450



CERTIFICATE of AUTHOR I, Terre A. Lane do hereby certify that:

1. I am currently employed as Principal Mining Engineer by Gustavson Associates, LLC at:


2. I am a graduate of the Michigan Technological University of Michigan with a Bachelor of Science degree in Mining Engineering (1982).

3. I am a member in good standing of the Australasian Institute of Mining and Metallurgy.

4. I have worked as a Mine Engineer for a total of 22 years since my graduation from university; as an employee of several mining companies, an engineering company, a mine development and mine construction company, an exploration company, and as a consulting engineer.


6. I have contributed to the preparation of the technical report titled “Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project Lea County, southeast New Mexico”, dated August 19, 2009 (the “Technical Report”) and take responsibility for part of Section 19 of the report, namely the conceptual mine plans, and the mine operating/capital cost estimates.. I have not made a visit to the project site.





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Dated this 19th day of August, 2009. ________________________. Signature of Qualified Person “Terre A. Lane” . Print name of Qualified Person

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Richard D. Moritz Associate Principal Mining Engineer

Gustavson Associates, LLC 274 Union Blvd, Suite 450



CERTIFICATE of AUTHOR I, Richard D. Moritz do hereby certify that:

1. I am currently employed as an Associate Principal Mining Engineer at Gustavson Associates, LLC at:


2. I am a graduate of the Mackay School of Mines with a Bachelor of Science degree in Mining Engineering (1979).

3. I am a member in good standing of the Mining and Metallurgy Society of America.

4. I have worked as a Mine Engineer for a total of 29 years since my graduation from university; as an employee of several mining companies, an engineering company, and as a consulting engineer.


6. I have contributed to the preparation of the technical report titled “Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project Lea County, southeast New Mexico”, dated August 19, 2009 (the “Technical Report”) and take responsibility for part of Section 19 of the report, namely the mine layout, production schedule, process operating/capital costs, owner’s costs, and economic modeling and sensitivity. I have not made a visit to the project site.





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Dated this 19th day of August, 2009. ________________________. Signature of Qualified Person “Richard D. Moritz” . Print name of Qualified Person

D-116


24. GLOSSARY

Term Definition

AA-MS Atomic Absorption Mass Spectrometry method of chemical analysis. AOI Area of Interest

Assay: The chemical analysis of polyhalite or other mineral samples to determine the potassium and other cations/anions content.

Bed: A sedimentary rock unit generally deposited slowly over time as in a basin environment. Sometimes referred to as seam.

BLM Bureau of Land Management

CAPEX Capital expenditures for tangible structures, shafts, mine workings and equipment that not classified as operating costs or royalties or taxes..

Composite Combining more than one sample result to give an average result over a larger distance or thickness interval.

Concentrate A mineral or potassium-rich product resulting from a mineral enrichment process such as washing, in which most of the polyhalite has been separated from the waste material in the ore.

Crushing Initial process of reducing ore particle size to render it more amenable for further processing.

Cut-off Grade (CoG) The grade of the polyhalite or concentration of polyhalite per weight percentage of rock that includes gangue constituents.

Dilution Wasterock which is unavoidably mined with ore. Dip Angle of inclination of a geological feature/rock from the horizontal. EA Environmental Assessment Fault The surface of a fracture along which movement has occurred. Footwall The underlying side of an orebody or stope. Gangue Non-valuable components of the polyhalite ore such as halite or anhydrite. Grade The measure of concentration within mineralized rock. Haulage A horizontal underground excavation which is used to transport mined ore.

Kriging An interpolation method of assigning values from samples to blocks that minimizes the estimation error.

IRR Internal Rate of Return. ICP Intercontinental Potash Corporation Level Horizontal tunnel the primary purpose is the transportation of personnel and materials. Lithological Geological description pertaining to different rock types. LoM Plans Life-of-Mine plans. Material Properties Mine and mill properties.

Milling A general term used to describe the process in which the ore is crushed and ground and subjected to physical or chemical treatment to extract the valuable metals to a concentrate or finished product.

Microscopy Microscopic identification of minerals and textures of grains. Mt Million tons Mineral/Mining Lease A lease area for which mineral rights are held. Mining Assets The Material Properties and Significant Exploration Properties. Ongoing Capital Capital estimates of a routine nature, which is necessary for sustaining operations. NPV Net Present Value OPEX Operating expenditures for the mine and mill.

D-117


Term Definition

Ore Reserve Indicated or measured resources that have been elevated in stature due to economic and mine planning considerations

Pillar Rock left behind to help support the excavations in an underground mine. QP Qualified Person under NI 43-101 RoM Run-of-Mine material (ore)

Sedimentary Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks.

Shaft An opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and waste.

SEM Scanning electron microprobe analysis used to determine actual cations and anions in a mineral phase.

Sill A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection of magma into planar zones of weakness.

Slope Generally the percentage grade of the floor of an underground mine as consistent with the basal portion of the

Split A bed of rock between a potential ore bearing zone that is not ore material but contamination leading to dilution of the RoM grade. Often these beds are salts, other evaporates, shales, siltstones or volcanic tuffs but in some instances, the splits can be sands.

Stope Underground void created by mining. Stratigraphy The study of stratified rocks in terms of time and space.

Strike Direction of line formed by the intersection of strata surfaces with the horizontal plane, always perpendicular to the dip direction.

Sulfate A sulfur bearing mineral such as polyhalite and langbeinite. Tailings Finely ground waste rock from which valuable minerals or metals have been extracted. Thickening The process of concentrating solid particles in suspension. Total Expenditure All expenditures including those of an operating and capital nature. Variogram A statistical representation of the characteristics (usually grade). XRD X-ray diffraction identification of solid mineral phases

XRF X-ray fluorescence that identifies the relative concentrations of cations and anions in a dry sample. Often used in conjunction with XRD and computed to mineral concentrations using mass balance calculations.

APPENDIX A Mineralogical Investigations of Salado and Rustler Polyhalite

PETROGRAPHIC STUDY OF POTASH CORE SAMPLES,

OCHOA PROPERTY, NEW MEXICO PART 2

Prepared for

Intercontinental Potash Corp 1600 Jackson Street Golden, CO 80401

Prepared by

John L. Lufkin, Ph.D. Consulting Geologist

995 Moss Street Golden, CO 80401

August 12, 2009

2

1.0 INTRODUCTION Four polished thin sections were prepared from core from one drill hole, DDH

H17-14-1A. For brevity, sample numbers in the following discussion are abbreviated as footage, eg., 651.8, etc. Each section was studied with a standard Nikon petrographic microscope, equipped with both transmitted and reflected light optics, and a camera for photomicrography.

2.0 SAMPLE PREPARATION Four core samples, identified as H17-14-1A-651.1, 651.8, 646.4, and 646.7,

were received from International Potash, and were sent to Montrose for polished thin section preparation by Mark Mercer. He was instructed to submerge one-half of each core length in water for 24 hours, and to cut the thin sections perpendicular to the core axis, producing a rock chip to be mounted that was half water treated, and the other half not treated. Unfortunately, the competent core samples broke up when submerged, resulting in a fractured sample that required impregnation.

After receiving the polished sections, Marc Melker suggested that we submerge half of each of two sections (Nos. 646.4 and 646.7) in water for a short time. After one hour, we got the desired result, which was a thin white zone of gypsum (Figures 3.3 and 3.4), confirmed later by SEM analysis).

3.0 PETROGRAPHIC STUDY All sections were examined under transmitted light only, at magnifications of 60x

or less. All textures were very fine grained, typically less than 150 microns in maximum dimension. Due to this fine texture, no complete optical data could be obtained on any grains, such as 2V and optical sign. Therefore, SEM and XRD are required for accurate mineral identification of these samples.

From previous XRD work, it was shown that these rocks contain varying amounts of polyhalite and anhydrite, with lesser amounts of halite, magnesite, and “unidentified”(probably clay). In this study, polyhalite is characterized mainly by its low birefringence, finer grain size, and is commonly twinned, both as single and polysynthietic twins. Anhydrite is generally coarser-grained, and features good 2- or 3-directioanl, pseudocubic cleavage, as well as high birefringence, in blue, green, and yellow colors.Magnesite was not identified optically.

3

Figure 3.1 Polished section 651.1. Plastic impregnation is blue.

Figure 3.2 Polished section 651.8

4

Figure 3.3 Polished section 646.4, after submersion in water for one hour.

Figure 3.4 Polished section 646.7, after submersion in water for one hour.

Section 646.4 This section is very fine grained, with crystals ranging in size from minute to

about 50 microns in maximum dimension. The majority of it consists of polyhalite, with scattered grains of an unknown, clear mineral with high relief ( labeled A, Figure 4.1).Patches and seams of clay are widespread, and appear black in transmitted light (Figures 3.7 and 3.8). Minute grains of polyhalite? are disseminated throughout the clay patches.

5

After water treatment of this section, a white zone of gypsum was produced.

Figure 3.5 Polished thin section 646.4. Acicular crystals of gypsum. These crystals form a very thin layer, a few microns thick, on polyhalite after the section is placed in water for one hour or less. Transmitted light.

Figure 3.6 Polished thin section 646.4. Concave side of prominent white gypsum zone, Figure 3.9. Transmitted light.

6

Figure 3.7 Polished thin section 646.4. Clay seam (black) with tiny, high birefringent grains (polyhalite?). Transmitted light.

Figure 3.8 Polished thin section 646.4. Abundant clay patches (black). Transmitted light.

7

Figure 3.9 Polished thin section 646.4, showing location of traverse E, locations of photomicrographs, and unknown mineral locations.

Figure 3.10 Polished thin section 646.4. Typical fine-grained texture of polyhalite, with maximum length of elongate grains of approximately 60 microns or less. Scale bar in microns, transmitted light.

8

Section 646.7 This section is characterized by fine to relatively coarse grain size of 300

microns, or less. Again, the mineralogy is dominated by polyhalite, which typically features twinned grains. Unknown clear crystals, about 100 microns in length, are scattered throughout the section. Patches of clay are also common in this section (Figure 3.11). After water treatment, a thin zone of white gypsum was developed (Figure 3.4).

Figure 3.11 Polished thin section 646.7. Cloudy, dark area is clay rich, and is marked for followup SEM work. Transmitted light.

9

Figure 3.12 Polished thin section 646.7. Contains crisscrossing, acicular needles of gypsum developed in thin white zone after water treatment (Figure 3.4) Transmitted light.

Figure 3.13 Polished thin section 646.7. Well-developed twinned crystal of polyhalite (ph), after anhydrite? (central photo). Transmitted light, crossed polars.

10

Section 651.1 Section shows a size range of anhydrite grains, generally 50 to 150 microns.

Anhydrite also is developed as radial clusters, as much 150 microns in diameter. Again, patches and seams of clay are widely distributed throughout the rock.

Figure 3.14 Polished thin section 651.1. Majority of section consists of anhydrite; note the high birefringence of grains. Transmitted light, crossed polars.

11

Figure 3.15 Polished thin section 651.1. Note right-angle cleavages in some larger grains of anhydrite. Transmitted light, crossed polars.

Section 651.8 Section is very similar to 651.1.

Figure 3.16 Polished thin section 651.8. Transmitted light.

12

Figure 3.17 Polished thin section 651.8. Relatively coarse-grained anhydrite, 100-150 microns in diameter. Transmitted light, crossed polars.

Figure 3.18 Polished thin section 651.8. Transmitted light, crossed polars.

13

Figure 3.19 Polished thin section 651.8. Note prominent rectangular cleavage pattern in anhydrite grain (arrow). Transmitted light, crossed nicols.

Figure 3.20 Same view of previous section. Transmitted light, crossed polars.

14

Figure 3.21 Polished thin section 651.8. Transmitted light, crossed polars.

4.0 MINERAL UNKNOWNS Several minerals could not be identified during this study. These are pictured

below, and generally include colorless, well-formed crystals. They have been marked for followup SEM analysis.

Figure 4.1 Polished thin section 646.4. Unknown crystal “A”, confirmed later as polyhalite. Transmitted light.

15

.

Figure 4.2 Polished thin section 646.4, showing unknown grains, E1 and E1a. E1a is site of unknown mass of clay. Unknown grains located along traverse E, convex side of white area, Figure 3.9. Transmitted light.

Figure 4.3 Polished thin section 646.4, showing unknown grain, E4, along Traverse E, concave side of white area, Figure 3.9. Transmitted light.

16

Figure 4.4 Polished thin section 651.8. Unknown mineral, D, confirmed later as anhydrite. Transmitted light.

Figure 4.5 Polished thin section 651.8. Section contains several unknown, anisotropic grains of high relief (?), confirmed later as anhydrite. Transmitted light.

17

Mineral Paragenesis Due largely to the fine grain size of the potash samples, the sequence of mineral

deposition, or paragenesis could not be determined with any degree of confidence.

5.0 SUMMARY OF XRD RESULTS XRD analysis of core samples from H17 are reported in Appendix A. Results of

this study for the interval 646.4-646.7 indicate the dominance of polyhalite (>90%), <5% magnesite, and <5% “unidentified”. (The unidentified material most likely is clay, which was observed in this petrographic study). In samples from 651.1-651.8 ft, anhydrite is the major phase, 68- >85%, with lesser amounts of polyhalite, magnesite, halite, and <5% unidentified. After these samples were submersed in water, a white deposit was formed. XRD analysis of the white deposit indicated that approximately half of the polyhalite was converted to gypsum in H17-14-1A (48% gypsum, 45% polyhalite; 55% gypsum and 38% polyhalite in H17-14-1B.

6.0 SUMMARY OF SEM RESULTS Polished sections were submitted to the Mineral Lab in Golden for followup

analysis of grains that were not identifiable under the petrographic microscope. Results of this study are presented in Appendix B. The image of crystal ‘A’, sample 646.4 is pictured in Figure 1, Appendix B. Semi-quantitative SEM analysis indicates that the unidentified grain fits the chemistry most closely to that of polyhalite---78% total SO3 + CaO, 7.0% MgO, and 13% K2O.After submersion of the slide in water, the white material gave a non-descript, massive appearance (Fig. 2). Analysis of this material is similar to the preceeding analysis, but the K2O content is much higher at 23%. This material is also considered to be polyhalite. A thin zone of acicular white crystals near the border of the massive white zone is shown in Figure 3. SEM analysis at point ‘X’ indicates that these grains are most likely gypsum, but they have significant contents of K2O (4.6%) and MgO (1.4%). The third phase that was unidentified under the petrographic microscope is shown in Figures 4 and 5, Appendix B. These crystals possess well-developed pseudocubic cleavage, with 3 cleavages intersecting at right angles. This cleavage pattern fits that of anhydrite, and both the XRD and chemical spectra corroborate this identification.

7.0 SUMMARY AND CONCLUSIONS Four polished thin sections were prepared from core from one drill hole, DDH

H17-14-1A. Sections are labeled according to sample depths, eg., 651.1, 651.8, 646.4, and 646.7. Core samples were first prepared by submerging in water to see the effects of dissolution and precipitation of the sulfate minerals. Unfortunately, the competent

18

core samples broke up when first submerged, and the fractured samples required impregnation. After the polished sections were prepared by Mark Mercer, and delivered to Lufkin, two of the sections were later placed in water for one hour by Marc Melker.This action produced the desired result of leaching and precipitation of a thin layer of white gypsum. Petrographic study indicates that all of the samples are fine grained, typically less than 150 microns in maximum dimension. Under these conditions, no complete optical data could be obtained on any of the grains, such as 2V angles and optic signs.Therefore, SEM and XRD analyses were required for precise identifications.

Previous XRD data indicate that the majority of minerals in these sections is either polyhalite or anhydrite. In two sample intervals, 14-1A, 646.7-647.0, and 14-1B, 646.4-646.7, over 90% of the sample contains polyhalite, and less than 5% magnesite and “unidentified” (clay). In sample 12A, 651.1-651.4, anhydrite is the dominant phase (68%), followed by 20% magnesite, 6% polyhalite, and less than 5% halite and “unidentified”. Followup analysis by SEM of several grains that were not identified by optical microscopy confirmed the presence of polyhalite, anhydrite, and gypsum. The gypsum is not pure, but contains appreciable K20 (4.6%) and MgO (1.4%) by weight. The clay minerals could not be identified either by XRD or SEM.

19

APPENDICES

20

21

22

23

24

25

26

27

28

29

APPENDIX B Analytical Results from the Mineral Lab and ALS Chemex

March 13, 2009Lab no. 209145

Mr. Sean C. MullerIntercontinental Potash Corp. 1600 Jackson Street, Suite 160Golden, Colorado 80401

Dear Mr. Muller:

Enclosed are scanning electron microscopy (SEM) image, EDS (energy-dispersive x-rayspectroscopy) and elemental map results for thin section samples, “119" and “6013" receivedWednesday, March 11. The analysis was performed on a rush basis so this report will be emailed toyou by Friday, March 13.

The thin sections were mounted on a holder with carbon tape for SEM examination. LV (low vacuum)mode was used to prevent charging of the samples. LV images of the samples are shown in Figures1 - 4. EDS spectra for the images are shown in Figures 1a - 4a. Approximate elemental compositionsfor the spectra is given in Tables 1 - 4. Elemental maps were collected for each of the four images.You specifically asked about the presence of Langbeinite (K2Mg2(SO4)3) in your Polyhalite(K2Ca2Mg(SO4)4

. H2O) ore. Please note that K is always associated with Ca in these samples asshown by the elemental map data. There are very few locations on sample #119 that showconcentrated Mg. These same areas show little or no K, Ca, or S associated with the Mg. Nolocations were found where K and Mg were associated without Ca present hence, no Langbeinite wasfound in your two samples.

Thank you for the opportunity to be of service to Intercontinental Potash Corp.

Sincerely,

Joy Maes

Figure 1. LV Image, 1,000x mag, 25 kV.

Figure 1a. EDS spectra for sample shown in Figure 1. 25 kV accelerating voltage.

Intercontinental Potash Corp March 13, 2009SEM Image and EDS Results for Sample, “119" Lab no. 209145

Element Na2O MgO Al2O3 SiO2 SO3 Cl K2O CaO Fe2O3

Approx. Wt.% 4.2 10. 1.0 14. 36. 7.8 11. 12. 0.9

Table 1. Semi-Quantitative elemental composition in weight % for spectra shown in Figure 1a.

Analysis performed by The Mineral Lab, Inc

Intercontinental Potash Corp. March 13, 2009SEM Elemental Map Results for Sample, “119" Shown in Figure 1 Lab no. 209145

Analysis Performed By The Mineral Lab, Inc.

Figure 2. LV Image, 500x mag, 25 kV.

Figure 2a. EDS Spectra for sample shown in Figure 2. 25 kV accelerating voltage.


Element MgO Al2O3 SiO2 SO3 K2O CaO Fe2O3

Approx. Wt.% 9.9 0.4 2.6 52. 15. 18. 0.5



Intercontinental Potash Corp March 13, 2009SEM Elemental Map Results for Sample, “119" Shown in Figure 2 Lab no. 209145

Analysis Performed By The Mineral Lab, Inc




Element MgO SiO2 SO3 K2O CaO Fe2O3

Approx. Wt.% 4.6 0.5 54. 17. 21. 0.2




Analysis Performed By The Mineral Lab, Inc.




Element MgO SiO2 SO3 K2O CaO Fe2O3

Approx. Wt.% 5.0 0.3 56. 16. 20. 0.1





April 2, 2009Lab no. 209179

Mr. Sean C. MullerIntercontinental Potash Corp.1600 Jackson Street, Suite 160Golden, Colorado 80401

Dear Mr. Muller:

Enclosed are the x-ray fluorescence (XRF) and x-ray diffraction (XRD) results for five samples received last week.This report will be mailed and emailed to you.

A representative portion of each sample was ground to approximately -400 mesh in a steel swing mill and thenanalyzed by our standard XRF procedure for 31 major, minor and trace elements. The relative precision/accuracyfor this procedure is ~5–10% for major–minor elements and ~10–15% for trace elements (those elements listedin ppm) at levels greater than twice the detection limit in samples of average geologic composition. A replicatesample and a standard reference material ("SY4", a CANMET standard rock) were analyzed with the samples todemonstrate analytical reproducibility for your samples and analytical accuracy for a geologic standard,respectively. The accepted ("known") values for the quality control standard are listed with the XRF results.

A representative portion of each ground sample was packed into a well-type holder and then scanned with thediffractometer over the range, 3-61° 2� using Cu-K� radiation. The results of the scans are summarized asapproximate mineral weight percent concentrations on the enclosed table. Estimates of mineral concentrationswere made using our XRF-determined elemental compositions and the relative peak heights/areas on the XRDscans. The detection limit for an average mineral in these samples is ~1-3% and the analytical reproducibility isapproximately equal to the square root of the amount. "Unidentified" accounts for that portion of the XRD scanwhich could not be resolved and a “?” indicates doubt in both mineral identification and amount.


Sincerely,

Peggy Dalheim

Intercontinental Potash Corp April 2, 2009XRF Results for Samples Lab no. 209179(Sample Labels Listed Below)

----------------------------------------------------- Wt % -------------------------------------------------IDENT Na2O MgO Al2O3 SiO2 P2O5 S Cl K2O CaO TiO2 MnO Fe2O3 BaO

1 1.00 3.96 14.5 43.6 0.10 5.25 0.34 4.26 8.75 0.59 0.04 5.89 0.04 2 0.69 3.70 1.65 8.09 <0.05 19.6 0.73 0.36 33.3 0.08 <0.01 0.66 <0.01 3 0.77 3.01 1.43 8.31 <0.05 18.6 0.92 0.43 31.7 0.09 <0.01 0.56 <0.01 4 0.69 4.79 2.77 12.5 <0.05 15.9 0.54 0.63 29.6 0.14 0.02 1.48 0.03 5 44.4 0.40 0.06 1.19 <0.05 1.26 51.7 0.35 1.48 <0.01 <0.01 0.11 <0.01 Quality Control - Replicate (R) sample and standard reference material (SY4) analyzed with samples 1(R) 0.99 3.94 14.1 43.1 0.10 5.18 0.34 4.18 8.61 0.58 0.04 5.83 0.04 SY4-XRF 7.23 0.75 20.7 48.1 0.13 <0.05 0.64 1.74 8.45 0.32 0.11 5.54 0.04 SY4-known 7.10 0.54 20.7 49.9 0.13 0.01 ---- 1.66 8.05 0.29 0.11 6.21 0.04

------------------------------------------------- PPM ---------------------------------------------------IDENT V Cr Co Ni W Cu Zn As Sn Pb Mo Sr U

1 98 67 16 25 <10 33 76 <20 <50 22 <10 968 <20 2 <10 <10 <10 10 <10 <10 17 25 <50 21 <10 1267 <20 3 <10 <10 <10 <10 <10 <10 117 20 <50 34 <10 1608 <20 4 <10 24 <10 14 <10 <10 25 <20 <50 19 <10 1270 <20 5 <10 <10 <10 12 <10 10 11 21 <50 24 14 116 <20 Quality Control 1(R) 98 66 15 26 <10 31 74 <20 <50 21 <10 963 <20 SY4-XRF <10 10 <10 <10 15 <10 98 <20 <50 13 <10 1204 <20 SY4-known 8 12 3 9 -- 7 93 <20 7 10 <10 1191 <20

--------------- PPM ------------- ------ Sample Labels ------Ident Th Nb Zr Rb Y Ident 1 <20 12 121 99 16 1 British American 122435 1965' 2 27 12 35 10 <10 2 Buckles State #1-35 3523533E 1575' 3 <20 <10 79 10 <10 3 Brininstad #1 Quasar Petro 2023533E 1535' 4 <20 12 52 18 <10 4 Stricklin #1 Whitton 52436 1965' 5 <20 <10 <10 <10 <10 5 Texaco State #1 17-235-33E 2990'Quality Control 1(R) <20 13 119 102 20 1(R) British American 122435 1965' SY4-XRF <20 18 498 60 118 SY4-known <20 13 517 55 119


1.00

44.4

14.5 43.6

19.6

18.6

15.9

51.7

33.3

31.7

29.6

33

10

Intercontinental Potash Corp. April 2, 2009XRD Results for Five Samples Lab no. 209179Complete sample labels given below

Approx. Wt %

Mineral Name Chemical Formula 1 2 3 4 5

Anhydrite CaSO4 16 83 54 59 <5

Gypsum CaSO4�2H2O <3? — 20 — —

Polyhalite K2Ca2Mg(SO4)4�2H2O 7 — — — <5

Quartz SiO2 23 7 7 10 <3

Mica/Illite (K,Na,Ca)(Al,Mg,Fe)2(Si,Al)4O10(OH,F)2 36 <5 <5 <5 —

Plagioclase feldspar (Na,Ca)Al(Si,Al)3O8 8 — — <2? —

Kaolinite Al2Si2O5(OH)4 — — — <3? —

Halite NaCl — — <2 — 87

Dolomite Ca(Mg,Fe)(CO3)2 — — 11 19 —

Magnesite (Mg,Fe)CO3 — <3? <1? — —

Hematite Fe2O3 <5 — — — —

“Unidentified” ? <5 <5 <5 <5 <5

Sample Labels:1. Biritish American 122435 1965'2. Buckles State #1-35 3523533E 1575'3. Brininstad #1 Quasar Petro 2023533E 1535'4. Stricklin #1 Whitton 52436 1965'5. Texaco State #1 17-235-33E 2990'


23

36

7 <5

87

May 19, 2009Lab no. 209283


Dear Mr. Muller:

Enclosed are the x-ray diffraction (XRD) results for the “Tray Sample” received last week. Thisreport will be mailed and emailed to you.

The white powder was scraped from the plastic tray, ground to approximately -400 mesh in anagate mortar, packed into a well-type holder and then scanned with the diffractometer over therange, 3-61° 2� using Cu-K� radiation. The results of the scan are summarized as approximatemineral weight percent concentrations on the enclosed table. Estimates of mineralconcentrations were made using our XRF-determined elemental composition and the relativepeak heights/areas on the XRD scan. The detection limit for an average mineral in this sampleis ~1-3% and the analytical reproducibility is approximately equal to the square root of theamount. "Unidentified" accounts for that portion of the XRD scan which could not be resolved.


Sincerely,

Peggy Dalheim

Intercontinental Potash Corp. May 19, 2009XRD Results for “Tray Sample” Lab no. 209283

Mineral Name Chemical Formula Approx. Wt %

Picromerite K2Mg(SO4)2�6H2O 62

Syngenite K2Ca(SO4)2�H2O 12

Hexahydrite MgSO4�6H2O 15

Gypsum CaSO4�2H2O 6

Halite NaCl <3

“Unidentified” ? <5


July 8, 2009Lab no. 209358


Dear Mr. Muller:

Enclosed are the x-ray fluorescence (XRF) and x-ray diffraction (XRD) results for eight “H-17-14" core samplesreceived last week. This report will be mailed and emailed to you.

Each sample was crushed to -1/4" size before grinding and analysis. A representative portion of each crushedsample was ground to approximately -400 mesh in a steel swing mill and then analyzed by our standard XRFprocedure for 31 major, minor and trace elements. The relative precision/accuracy for this procedure is ~5–10%for major–minor elements and ~10–15% for trace elements (those elements listed in ppm) at levels greater thantwice the detection limit in samples of average geologic composition. A replicate sample and a standard referencematerial ("SY4", a CANMET standard rock) were analyzed with the samples to demonstrate analyticalreproducibility for your samples and analytical accuracy for a geologic standard, respectively. The accepted("known") values for the quality control standard are listed with the XRF results.

A representative portion of each ground sample was packed into a well-type holder and then scanned with thediffractometer over the range, 3-61° 2� using Cu-K� radiation. The results of the scans are summarized asapproximate mineral weight percent concentrations on the enclosed table. Estimates of mineral concentrationswere made using our XRF-determined elemental compositions and the relative peak heights/areas on the XRDscans. The detection limit for an average mineral in these samples is ~1-3% and the analytical reproducibility isapproximately equal to the square root of the amount. "Unidentified" accounts for that portion of the XRD scanwhich could not be resolved and a “?” indicates doubt in both mineral identification and amount.

Thank you for the opportunity to be of continuing service to Intercontinental Potash Corp.

Sincerely,

Peggy Dalheim

Intercontinental Potash Corp. July 8, 2009XRF Results for, “H-17-14" Samples Lab no. 209358Page 1 of 2 (Sample labels listed on Page 2)

----------------------------------------------------- Wt % -------------------------------------------------IDENT Na2O MgO Al2O3 SiO2 P2O5 S Cl K2O CaO TiO2 MnO Fe2O3 BaO 1 0.33 8.46 0.05 0.48 <0.05 19.5 0.04 14.0 16.1 <0.01 <0.01 0.03 <0.01 2 0.39 8.48 0.07 0.44 <0.05 19.3 0.02 13.6 16.2 <0.01 <0.01 0.05 <0.01 3 0.26 8.90 0.07 0.46 <0.05 19.4 0.03 13.7 16.6 <0.01 <0.01 0.03 <0.01 4 0.23 8.35 0.07 0.46 <0.05 19.1 0.03 12.9 16.9 <0.01 <0.01 0.03 <0.01 5 0.25 7.84 0.08 0.59 <0.05 19.6 0.05 12.3 18.8 <0.01 <0.01 0.05 <0.01 6 0.37 6.35 0.15 1.48 <0.05 19.9 0.18 5.79 28.2 <0.01 <0.01 0.07 <0.01 7 0.33 5.82 0.13 1.47 <0.05 19.8 0.16 3.96 30.2 <0.01 <0.01 0.07 <0.01 8 0.47 8.65 0.19 2.20 <0.05 18.8 0.30 3.65 28.9 <0.01 <0.01 0.08 <0.01 Quality Control - Replicate (R) sample and standard reference material (SY4) analyzed with samples 1(R) 0.31 8.41 0.06 0.47 <0.05 19.4 0.03 13.9 16.0 <0.01 <0.01 0.03 <0.01 SY4-XRF 6.96 0.76 20.6 47.9 0.14 <0.05 0.52 1.75 8.49 0.32 0.11 5.51 0.04 SY4-known 7.10 0.54 20.7 49.9 0.13 0.01 ---- 1.66 8.05 0.29 0.11 6.21 0.04

------------------------------------------------- PPM ---------------------------------------------------IDENT V Cr Co Ni W Cu Zn As Sn Pb Mo Sr U 1 <10 <10 <10 <10 <10 <10 <10 <20 <50 26 17 3844 <20 2 <10 <10 <10 <10 <10 <10 <10 <20 <50 25 18 3788 <20 3 <10 <10 <10 <10 <10 <10 17 <20 <50 29 19 4003 <20 4 <10 <10 <10 <10 <10 <10 <10 <20 <50 26 24 4078 <20 5 <10 <10 <10 <10 <10 <10 18 <20 <50 25 20 4901 <20 6 <10 <10 <10 <10 <10 <10 <10 <20 <50 28 19 4588 <20 7 <10 <10 <10 <10 <10 <10 <10 <20 <50 24 15 3791 <20 8 <10 <10 <10 <10 <10 <10 <10 <20 <50 24 22 5759 <20 Quality Control 1(R) <10 <10 <10 <10 <10 <10 <10 <20 <50 26 17 3828 <20 SY4-XRF <10 <10 <10 <10 13 <10 96 <20 <50 15 <10 1193 <20 SY4-known 8 12 3 9 -- 7 93 <20 7 10 <10 1191 <20

Initial _________

Date ___________


Intercontinental Potash Corp. July 8, 2009XRF Results for, “H-17-14" Samples Lab no. 209358Page 2 of 2 (Sample labels listed on Page 2)

--------------- PPM -------------Ident Th Nb Zr Rb Y Ident Sample Label

1 <20 <10 <10 11 17 1 H-17-14-2, 646.00-646.40 2 <20 <10 10 <10 15 2 H-17-14-3, 645.60-646.00 3 <20 <10 <10 10 16 3 H-17-14-4, 645.10-645.60 4 <20 <10 13 <10 17 4 H-17-14-5, 644.70-645.10 5 <20 <10 <10 11 16 5 H-17-14-6A, 644.45-644.70 6 <20 <10 <10 <10 21 6 H-17-14-6B, 644.15-644.45 7 <20 <10 10 <10 17 7 H-17-14-7, 644.00-644.15 8 <20 <10 <10 <10 20 8 H-17-14-8, 643.60-644.00Quality Control 1(R) <20 <10 <10 <10 15 1(R) H-17-14-2, 646.00-646.40 SY4-XRF <20 11 487 62 112 SY4-known <20 13 517 55 119

Initial _________

Date ___________


Intercontinental Potash Corp. July 8, 2009XRD Results for “H-17-14" Core Samples Lab no. 209358Page 1 of 2

Approx. Wt %

Mineral Name Chemical Formula -2646.00-646.40

-3645.60-646.00

-4645.10-645.60

-5644.70-645.10

Polyhalite K2Ca2Mg(SO4)4�2H2O >90 >90 >90 >85

Anhydrite CaSO4 — — — 5

Magnesite MgCO3 <5 <5 <5 <5

Halite NaCl — — — —

“Unidentified” ? <5 <5 <5 <5

Initial ________

Date _________


Intercontinental Potash Corp. July 8, 2009XRD Results for “H-17-14" Core Samples Lab no. 209358Page 2 of 2

Approx. Wt %

Mineral Name Chemical Formula -6A644.45-644.70

-6B644.15-644.45

-7644.00-644.15

-8643.60-644.00

Polyhalite K2Ca2Mg(SO4)4�2H2O >85 36 25 23

Anhydrite CaSO4 8 52 63 60

Magnesite MgCO3 <3? 8 8 13

Halite NaCl — <1? <1? <1?


Initial ________

Date _________


July 21, 2009Lab no. 209386


Dear Mr. Muller:

Enclosed are the x-ray fluorescence (XRF) results for four “H17" core samples and the x-ray diffraction (XRD) resultsfor the four core samples plus the white deposit scraped from two of the core samples received last week. This reportwill be mailed and emailed to you, as usual.

Each core sample was crushed to -1/4" size before grinding and analysis. A representative portion of each crushedsample was ground to approximately -400 mesh in a steel swing mill and then analyzed by our standard XRF procedurefor 31 major, minor and trace elements. The relative precision/accuracy for this procedure is ~5–10% for major–minorelements and ~10–15% for trace elements (those elements listed in ppm) at levels greater than twice the detection limitin samples of average geologic composition. A replicate sample and a standard reference material ("SY4", a CANMETstandard rock) were analyzed with the samples to demonstrate analytical reproducibility for your samples and analyticalaccuracy for a geologic standard, respectively. The accepted ("known") values for the quality control standard are listedwith the XRF results.

A representative portion of each ground sample was packed into a well-type holder and then scanned with thediffractometer over the range, 3-61° 2� using Cu-K� radiation. The two white deposits were scraped from the coresamples, ground to approximately -400 mesh in an agate mortar, packed into well type holders and then scanned withthe diffractometer over the range, 3-61° 2� using Cu-K� radiation. The results of the scans are summarized asapproximate mineral weight percent concentrations on the two enclosed tables of XRD results (one table for coresamples and one table for white deposits). Estimates of mineral concentrations were made using our XRF-determinedelemental compositions and the relative peak heights/areas on the XRD scans. The detection limit for an averagemineral in these samples is ~1-3% and the analytical reproducibility is approximately equal to the square root of theamount. "Unidentified" accounts for that portion of the XRD scan which could not be resolved and a “?” indicates doubtin both mineral identification and amount.


Sincerely,

Peggy Dalheim

Intercontinental Potash Corp July 20, 2009XRF Results for, “H17" Samples Lab no. 209386(Complete Sample Labels Listed Below)

----------------------------------------------------- Wt % -------------------------------------------------IDENT Na2O MgO Al2O3 SiO2 P2O5 S Cl K2O CaO TiO2 MnO Fe2O3 BaO H17-14-1A 0.24 7.96 0.04 0.41 <0.05 20.0 0.02 12.9 15.1 <0.01 <0.01 0.02 <0.01 H17-14-1B 0.18 7.47 0.06 0.42 <0.05 19.0 <0.02 12.4 14.4 <0.01 <0.01 0.03 <0.01 H17-12A 0.91 10.6 0.38 2.81 <0.05 18.3 1.04 1.04 29.1 0.01 <0.01 0.14 <0.01 H17-12B 2.08 2.62 0.09 0.77 <0.05 21.1 2.37 0.04 35.1 <0.01 <0.01 0.04 <0.01 Quality Control - Replicate (R) sample and standard reference material (SY4) analyzed with samplesH17-14-1A(R) 0.24 7.89 0.04 0.40 <0.05 19.8 0.04 12.8 15.0 <0.01 <0.01 0.02 <0.01 SY4-XRF 7.01 0.79 19.6 48.3 0.15 <0.05 0.54 1.68 8.27 0.32 0.10 5.39 0.04 SY4-known 7.10 0.54 20.7 49.9 0.13 0.01 ---- 1.66 8.05 0.29 0.11 6.21 0.04

------------------------------------------------- PPM ---------------------------------------------------IDENT V Cr Co Ni W Cu Zn As Sn Pb Mo Sr U

H17-14-1A <10 <10 <10 <10 <10 <10 <10 <20 <50 15 22 3953 <20 H17-14-1B <10 <10 <10 <10 <10 <10 <10 <20 <50 12 20 3668 <20 H17-12A <10 <10 <10 <10 <10 <10 <10 <20 <50 10 20 1171 <20 H17-12B <10 <10 <10 <10 <10 <10 <10 <20 <50 16 16 1134 <20 Quality Control H17-14-1A(R) <10 <10 <10 <10 <10 <10 <10 <20 <50 13 23 3939 <20 SY4-XRF <10 <10 <10 <10 17 <10 97 <20 <50 12 <10 1168 <20 SY4-known 8 12 3 9 -- 7 93 <20 7 10 <10 1191 <20

--------------- PPM ------------- ------ Complete Sample Labels -----Ident Th Nb Zr Rb Y Ident

H17-14-1A <20 <10 <10 <10 11 H17-14-1A 646.70'-647.00' H17-14-1B <20 <10 <10 <10 <10 H17-14-1B 646.40'-646.70' H17-12A <20 <10 <10 <10 <10 H17-12A 651.10'-651.40' H17-12B <20 <10 <10 <10 <10 H17-12B 651.40'-651.80'Quality Control H17-14-1A(R) 20 <10 <10 <10 15 H17-14-1A 646.70'-647.00'(R) SY4-XRF <20 15 494 60 112 SY4-known <20 13 517 55 119

Initial

Date


Intercontinental Potash Corp. July 21, 2009XRD Results for “H17” Core Samples Lab no. 209386

Approx. Wt %

Mineral Name Chemical Formula 14-1A646.7-647.0

14-1B646.4-646.7

12A651.1-651.4

12B651.4-651.8

Polyhalite K2Ca2Mg(SO4)4�2H2O >90 >90 6 —

Magnesite MgCO3 <5 <5 20 <5

Anhydrite CaSO4 — — 68 >85

Halite NaCl — — <3 <5


Initial _______

Date ________


Intercontinental Potash Corp. July 21, 2009XRD Results for White Deposits on “H17” Core Samples Lab no. 209386

Approx. Wt %Mineral Name Chemical Formula H17-14-1A H17-14-1B

Gypsum CaSO4�2H2O 48 55

Polyhalite K2Ca2Mg(SO4)4�2H2O 45 38

Magnesite MgCO3 <5 <3

“Unidentified” ? <5 <5

Initial ________

Date ________


July 31, 2009Lab no. 209418


Dear Mr. Muller:

Enclosed are the x-ray fluorescence (XRF) and the x-ray diffraction (XRD) analytical results for eleven samplessubmitted yesterday, July 30 by RDI on your behalf. These samples were analyzed on a rush basis (one businessday to the next turnaround) so this report will be emailed to you on Friday, July 31.


A representative portion of each ground sample was packed into a well-type holder and then scanned with thediffractometer over the range, 3-61° 2� using Cu-K� radiation. The results of the scans are summarized asapproximate mineral weight percent concentrations on the enclosed table of XRD results. Estimates of mineralconcentrations were made using our XRF-determined elemental compositions and the relative peak heights/areason the XRD scans. The detection limit for an average mineral in these samples is ~1-3% and the analyticalreproducibility is approximately equal to the square root of the amount. "Unidentified" accounts for that portion ofthe XRD scan which could not be resolved and a “?” indicates doubt in both mineral identification and amount.


Sincerely,

Peggy Dalheim

Intercontinental Potash Corp July 31, 2009XRF Rush Results for Samples Received Thursday, July 30 Lab no. 209418Page 1 of 2 ----------------------------------------------------- Wt % -------------------------------------------------IDENT Na2O MgO Al2O3 SiO2 P2O5 S Cl K2O CaO TiO2 MnO Fe2O3 BaO

IP HEAD 0.96 8.15 0.86 4.20 <0.05 18.1 0.95 7.97 19.7 0.03 <0.01 0.56 <0.01 +8 MESH 0.70 6.83 0.06 0.77 <0.05 19.8 0.74 9.23 20.8 <0.01 <0.01 0.05 <0.01 8X14 MESH 0.54 6.74 0.11 1.04 <0.05 19.0 0.52 8.88 19.7 <0.01 <0.01 0.07 <0.01 14X28 MESH 0.92 7.87 0.33 2.20 <0.05 18.2 0.86 8.08 19.8 0.01 <0.01 0.16 <0.01 28x48 mesh 0.96 7.71 0.53 2.88 <0.05 18.9 1.02 8.61 19.9 0.02 <0.01 0.35 <0.01 48X65 MESH 1.17 7.67 1.07 4.83 <0.05 18.3 1.26 8.34 19.0 0.04 <0.01 0.82 <0.01 -65 MESH 1.04 7.78 2.02 8.60 <0.05 17.6 1.11 7.10 19.3 0.08 0.02 1.70 <0.01 1 AFTERWASH 0.08 4.69 0.77 4.03 <0.05 18.9 <0.02 0.37 30.5 0.03 <0.01 0.62 <0.01 1 AFTERLEACH 0.13 4.81 0.80 3.95 <0.05 18.8 0.02 1.45 29.0 0.03 <0.01 0.65 <0.01 2 AFTERWASH 0.08 5.14 0.80 4.25 <0.05 18.9 <0.02 0.35 30.4 0.03 <0.01 0.71 <0.01 2 AFTERLEACH 0.08 4.11 0.73 3.72 <0.05 18.9 <0.02 0.95 29.8 0.03 <0.01 0.73 <0.01 Quality Control - Replicate (R) sample and standard reference material (SY4) analyzed with samples IP HEAD(R) 0.93 8.06 0.82 4.11 <0.05 17.9 0.92 7.75 19.2 0.03 <0.01 0.55 <0.01 SY4-XRF 7.19 0.70 21.4 48.9 0.10 <0.05 0.52 1.67 8.34 0.30 0.10 5.38 0.04 SY4-known 7.10 0.54 20.7 49.9 0.13 0.01 ---- 1.66 8.05 0.29 0.11 6.21 0.04 ------------------------------------------------- PPM ---------------------------------------------------IDENT V Cr Co Ni W Cu Zn As Sn Pb Mo Sr U

IP HEAD <10 <10 <10 <10 <10 47 68 28 <50 75 14 3399 <20 +8 MESH <10 <10 <10 <10 <10 <10 <10 <20 <50 18 12 4009 <20 8X14 MESH <10 <10 <10 <10 <10 <10 <10 <20 <50 15 12 3705 <20 14X28 MESH <10 <10 <10 <10 <10 <10 <10 <20 <50 14 13 3493 <20 28x48 mesh <10 <10 <10 <10 <10 35 43 28 <50 57 16 3675 <20 48X65 MESH <10 <10 <10 <10 <10 55 113 44 <50 106 17 3460 <20 -65 MESH <10 <10 13 <10 <10 238 287 57 <50 329 17 2908 <20 1 AFTERWASH <10 <10 <10 10 <10 62 88 30 <50 91 12 4755 <20 1 AFTERLEACH <10 <10 <10 10 <10 70 99 33 <50 104 12 4755 <20 2 AFTERWASH <10 <10 <10 10 <10 75 107 41 <50 94 13 4640 <20 2 AFTERLEACH <10 <10 <10 11 <10 80 109 30 <50 116 13 4891 <20 IP HEAD(R) <10 <10 <10 <10 <10 46 66 26 <50 73 17 3343 <20 SY4-XRF <10 <10 <10 <10 15 <10 95 <20 <50 12 <10 1167 <20 SY4-known 8 12 3 9 -- 7 93 <20 7 10 <10 1191 <20Initial

Date Analysis Performed By The Mineral Lab, Inc

Intercontinental Potash Corp July 31, 2009XRF Rush Results for Samples Received Thursday, July 30 Lab no. 209418Page 2 of 2

--------------- PPM -------------Ident Th Nb Zr Rb Y

IP HEAD <20 <10 12 <10 15 +8 MESH <20 <10 <10 <10 14 8X14 MESH 23 <10 <10 <10 13 14X28 MESH <20 <10 <10 <10 11 28x48 mesh 26 <10 <10 <10 17 48X65 MESH <20 <10 10 <10 16 -65 MESH <20 <10 32 14 19 1 AFTERWASH <20 <10 <10 <10 19 1 AFTERLEACH <20 <10 12 <10 18 2 AFTERWASH <20 <10 10 <10 20 2 AFTERLEACH <20 <10 10 <10 19 Quality Control IP HEAD(R) <20 <10 15 <10 14 SY4-XRF <20 12 477 62 113 SY4-known <20 13 517 55 119

Initial

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APPENDIX C Metallurgical Test Results from RDI

AppendixProject: Int. PotashDate:

Screen Assay Test No. 1

Purpose: To determine the distribution of polyhalite in the sample.

Sample: Approximately 1 kilogram of the Composite sample crushed to a nominal 6 mesh.

Procedure: The sample was dry screened and a representative portion from each screen fraction removed, thenpulverized and submitted for chemical analysis by XRF/XRD

Results:Product Weight

Mesh Microns Direct Cumm Analysis % Dist. Cumm % Assay, % Polyhalite in(Retained) grams % % Retained % Polyhalite Polyhalite Polyhalite Passing screen undersizeFeed (Analyzed) 1000.0 52Feed (Calculated) 999.6 100.0 58.78 100.0

+ 8 3,350 120.6 12.1 12.1 62 12.72 87.28 58.348 x 14 1,180 320.4 32.1 44.1 64 34.90 52.38 55.10

14 x 28 600 206.1 20.6 64.7 58 20.34 32.03 53.4028 x 48 300 138.4 13.8 78.6 62 14.60 17.43 47.8448 x 65 212 43.8 4.4 83.0 55 4.10 13.33 46.00

- 65 212 170.3 17.0 100.0 46 13.33 0.00 0.00

29-Jul-09

708090

100

Weight Percent and Percent Passing

0102030405060708090

100

10 100 1,000 10,000

Perc

ent

Screen Size, Microns

Weight Percent and Percent Passing

Weight % Passing

Percent of polyhalite passing

AppendixAgitated Leaching Test 1 RDi Project:

Date:

Purpose: To examine the solubility of polyhalite.

Sample: Approximately 500 g of Composite sample.

Procedure: The composite material was staged ground until it passed a 20 mesh screen. It was then heated for one hour in an oven at 450oC.The material was then transferred to a beaker and quenched with water at 210oF at a solids of 25%.The slurry was maintained at 210oF under agitation for 50 minutes. After 50 minutes, a sample of solution was removed for ICP analysis. The slurry was filtered, repulped, and washed three times with 1.5 liters of water (4.5 L Total). The combined wash water was sampled for ICP analysis. After washing, the slurry was filtered and dried. After drying, a representative sample of the solids was submitted for XRF/XRD and ICP analysis.

Conditions: Grind Leach Time % Solids100% minus 20 mesh 50 minutes 25% Solids

Summary of Results:

Parameter K Ca Mg Min. K Ca Mg

Total Extraction, % (1) 97.9 5.1 67.8 50 97.9 5.1 67.8Extraction before wash, % (1) 93.1 0.8 63.5Assayed Head, % (XRF) 6.6 14.1 4.9Calculated Head, % 14.19 14.60 4.19 % solids of composite sample 95.8%Final Tail Assay, % 0.33 23.00 2.31 % solids of leach cake after filtration 69.0%

Detailed Results:

A. Leach Conditions

Net Pulp Net Soln Reagents Added, gTime Weight Volumemin g ml

0 1977 175050 2100 1873

Total

B. Products and Analyses

Weight Volume K Ca Mg Sulfate SulfurLeach Product g ml % ppm % ppm % ppm %

Feed (analyzed by XRF) 500 6.6 14.1 4.9Feed (computed) 14.19 14.60 4.19

50 min Preg 1873 35274 323 7113Dry Residue before Wash 72.7 1.01 23.40 2.06 14.41Wash 4916 696 632 184Dry Residue after Wash 227.2 0.33 23.00 2.31 13.13

(1) Based on calculated head assays.

Int. Potash29-Jul-09

Total Extraction, % (1)

AppendixAgitated Leaching Test 2 RDi Project:

Date:

Purpose: To examine the solubility of polyhalite.

Sample: Approximately 500 g of Composite sample.

Procedure: The composite material was staged ground until it passed a 20 mesh screen. It was then heated for one hour in an oven at 450oC.The material was then transferred to a beaker and quenched with water at 210oF at a solids of 25%.The slurry was maintained at 210oF under agitation for 50 minutes. After 50 minutes, a sample of solution was removed for ICP analysis. The slurry was filtered, repulped, and washed three times with 1.5 liters of water (4.5 L Total). The combined wash water was sampled for ICP analysis. After washing, the slurry was filtered and dried. After drying, a representative sample of the solids was submitted for XRF/XRD and ICP analysis.

Conditions: Grind Leach Time % Solids100% minus 20 mesh 50 minutes 25% Solids

Summary of Results:

Parameter K Ca Mg Min. K Ca Mg

Total Extraction, % (1) 97.8 5.2 60.3 50 97.8 5.2 60.3Extraction before wash, % (1) 95.1 0.7 58.4Assayed Head, % (XRF) 6.6 14.1 4.9Calculated Head, % 10.94 15.60 3.63 % solids of composite sample 95.8%Final Tail Assay, % 0.30 25.42 2.47 % solids of leach cake after filtration 68.2%

Detailed Results:

A. Leach Conditions

Net Pulp Net Soln Reagents Added, gTime Weight Volumemin g ml

0 1981 174650 1851 1616

Total

B. Products and Analyses

Weight Volume K Ca Mg Sulfate SulfurLeach Product g ml % ppm % ppm % ppm %

Feed (analyzed by XRF) 500 6.6 14.1 4.9Feed (computed) 10.94 15.60 3.63

50 min Preg 1616 32198 352 6556Dry Residue before Wash 69.3 0.73 20.44 2.00 15.08Wash 4555 325 759 77Dry Residue after Wash 235.2 0.30 25.42 2.47 13.58

(1) Based on calculated head assays.

Int. Potash29-Jul-09

Total Extraction, % (1)

Sample Label Total Wt (g) Wt in Composite (g) Wt %H 17 - 1 697.5 348.7 9.1%H 17 - 2 675.4 337 8.8%H 17 - 3 763.1 381.6 9.9%H 17 - 4 634 317.1 8.3%H 17 - 5 888.6 444.3 11.6%H 17 - 6 868.1 433.9 11.3%H 17 - 7 71.2 35.6 0.9%H 17 - 12A 212.7 106.3 2.8%H 17 - 12B 290.7 145.4 3.8%H 17 - 14 - 1A 239 119.5 3.1%H 17 - 14 - 1B 125 62.5 1.6%H 17 - 14 - 2 235 117 3.0%H 17 - 14 - 3 429 214.5 5.6%H 17 - 14 - 4 156.5 78.1 2.0%H 17 - 14 - 5 434.4 217.1 5.7%H 17 - 14 - 6A 249.2 124.6 3.2%H 17 - 14 - 6B 279.8 139 3.6%H 17 - 14 - 7 89.9 45 1.2%H 17 - 14 - 8 338.2 169.2 4.4%Total 3836.4 100%

July 31, 2009 Lab no. 209418


Dear Mr. Muller:

Enclosed are the x-ray fluorescence (XRF) and the x-ray diffraction (XRD) analytical results for eleven samplessubmitted yesterday, July 30 by RDI on your behalf. These samples were analyzed on a rush basis (one businessday to the next turnaround) so this report will be emailed to you on Friday, July 31.


A representative portion of each ground sample was packed into a well-type holder and then scanned with thediffractometer over the range, 3-61° 22 using Cu-K" radiation. The results of the scans are summarized asapproximate mineral weight percent concentrations on the enclosed table of XRD results. Estimates of mineralconcentrations were made using our XRF-determined elemental compositions and the relative peak heights/areason the XRD scans. The detection limit for an average mineral in these samples is ~1-3% and the analyticalreproducibility is approximately equal to the square root of the amount. "Unidentified" accounts for that portion ofthe XRD scan which could not be resolved and a “?” indicates doubt in both mineral identification and amount.


Sincerely,

Peggy Dalheim

Intercontinental Potash Corp July 31, 2009XRF Rush Results for Samples Received Thursday, July 30 Lab no. 209418Page 1 of 2 ----------------------------------------------------- Wt % -------------------------------------------------IDENT Na2O MgO Al2O3 SiO2 P2O5 S Cl K2O CaO TiO2 MnO Fe2O3 BaO

IP HEAD 0.96 8.15 0.86 4.20 <0.05 18.1 0.95 7.97 19.7 0.03 <0.01 0.56 <0.01 +8 MESH 0.70 6.83 0.06 0.77 <0.05 19.8 0.74 9.23 20.8 <0.01 <0.01 0.05 <0.01 8X14 MESH 0.54 6.74 0.11 1.04 <0.05 19.0 0.52 8.88 19.7 <0.01 <0.01 0.07 <0.01 14X28 MESH 0.92 7.87 0.33 2.20 <0.05 18.2 0.86 8.08 19.8 0.01 <0.01 0.16 <0.01 28x48 mesh 0.96 7.71 0.53 2.88 <0.05 18.9 1.02 8.61 19.9 0.02 <0.01 0.35 <0.01 48X65 MESH 1.17 7.67 1.07 4.83 <0.05 18.3 1.26 8.34 19.0 0.04 <0.01 0.82 <0.01 -65 MESH 1.04 7.78 2.02 8.60 <0.05 17.6 1.11 7.10 19.3 0.08 0.02 1.70 <0.01 1 AFTERWASH 0.08 4.69 0.77 4.03 <0.05 18.9 <0.02 0.37 30.5 0.03 <0.01 0.62 <0.01 1 AFTERLEACH 0.13 4.81 0.80 3.95 <0.05 18.8 0.02 1.45 29.0 0.03 <0.01 0.65 <0.01 2 AFTERWASH 0.08 5.14 0.80 4.25 <0.05 18.9 <0.02 0.35 30.4 0.03 <0.01 0.71 <0.01 2 AFTERLEACH 0.08 4.11 0.73 3.72 <0.05 18.9 <0.02 0.95 29.8 0.03 <0.01 0.73 <0.01 Quality Control - Replicate (R) sample and standard reference material (SY4) analyzed with samples IP HEAD(R) 0.93 8.06 0.82 4.11 <0.05 17.9 0.92 7.75 19.2 0.03 <0.01 0.55 <0.01 SY4-XRF 7.19 0.70 21.4 48.9 0.10 <0.05 0.52 1.67 8.34 0.30 0.10 5.38 0.04 SY4-known 7.10 0.54 20.7 49.9 0.13 0.01 ---- 1.66 8.05 0.29 0.11 6.21 0.04 ------------------------------------------------- PPM ---------------------------------------------------IDENT V Cr Co Ni W Cu Zn As Sn Pb Mo Sr U

IP HEAD <10 <10 <10 <10 <10 47 68 28 <50 75 14 3399 <20 +8 MESH <10 <10 <10 <10 <10 <10 <10 <20 <50 18 12 4009 <20 8X14 MESH <10 <10 <10 <10 <10 <10 <10 <20 <50 15 12 3705 <20 14X28 MESH <10 <10 <10 <10 <10 <10 <10 <20 <50 14 13 3493 <20 28x48 mesh <10 <10 <10 <10 <10 35 43 28 <50 57 16 3675 <20 48X65 MESH <10 <10 <10 <10 <10 55 113 44 <50 106 17 3460 <20 -65 MESH <10 <10 13 <10 <10 238 287 57 <50 329 17 2908 <20 1 AFTERWASH <10 <10 <10 10 <10 62 88 30 <50 91 12 4755 <20 1 AFTERLEACH <10 <10 <10 10 <10 70 99 33 <50 104 12 4755 <20 2 AFTERWASH <10 <10 <10 10 <10 75 107 41 <50 94 13 4640 <20 2 AFTERLEACH <10 <10 <10 11 <10 80 109 30 <50 116 13 4891 <20 IP HEAD(R) <10 <10 <10 <10 <10 46 66 26 <50 73 17 3343 <20 SY4-XRF <10 <10 <10 <10 15 <10 95 <20 <50 12 <10 1167 <20 SY4-known 8 12 3 9 -- 7 93 <20 7 10 <10 1191 <20Initial

Date Analysis Performed By The Mineral Lab, Inc

Intercontinental Potash Corp July 31, 2009XRF Rush Results for Samples Received Thursday, July 30 Lab no. 209418Page 2 of 2

--------------- PPM -------------Ident Th Nb Zr Rb Y

IP HEAD <20 <10 12 <10 15 +8 MESH <20 <10 <10 <10 14 8X14 MESH 23 <10 <10 <10 13 14X28 MESH <20 <10 <10 <10 11 28x48 mesh 26 <10 <10 <10 17 48X65 MESH <20 <10 10 <10 16 -65 MESH <20 <10 32 14 19 1 AFTERWASH <20 <10 <10 <10 19 1 AFTERLEACH <20 <10 12 <10 18 2 AFTERWASH <20 <10 10 <10 20 2 AFTERLEACH <20 <10 10 <10 19 Quality Control IP HEAD(R) <20 <10 15 <10 14 SY4-XRF <20 12 477 62 113 SY4-known <20 13 517 55 119

Initial

Date


Intercontinental Potash Corp. July 31, 2009XRD Rush Results for Samples Received July 30 Lab no. 209418Page 1 of 2

Approx. Wt %

Mineral Name Chemical Formula IP Head +8 Mesh 8x14 Mesh 14x28 Mesh 28x48 Mesh 48x65 Mesh

Polyhalite K2Ca2Mg(SO4)4C2H2O 52 62 64 58 62 55

Anhydrite CaSO4 28 27 26 28 25 23

Alunite (K,Na)Al3(SO4)2(OH)6 <3? — — — — —

Gorgeyite K2Ca5(SO4)6CH2O — — — — — —

Magnesite MgCO3 10 6 5 8 6 8

Halite NaCl <2 <2 <1 <2 <2 <3

Quartz SiO2 <5 <1? <2? <2 <3 <5

Mica/illite (K,Na,Ca)(Al,Mg,Fe)2(Si,Al)4O10(OH,F)2 — — — — — <5

Chlorite (Mg,Fe,Al)6(Si,Al)4O10(OH) — — — — — —

“Unidentified” ? <5 <5 <5 <5 <5 <5

Note - Sr and Mg probably substitute for Ca in the sulfate minerals. The hydration may be more or less than indicated in the above general formulae.

Initial _______

Date ________


Intercontinental Potash Corp. July 31, 2009XRD Rush Results for Samples Received July 30 Lab no. 209418Page 2 of 2

Approx. Wt %

Mineral Name Chemical Formula -65 Mesh 1 AfterWash 1 AfterLeach 2 AfterWash 2 AfterLeach

Polyhalite K2Ca2Mg(SO4)4C2H2O 46 — <5? — —

Anhydrite CaSO4 29 79 72 80 75

Alunite (K,Na)Al3(SO4)2(OH)6 — — — — —

Gorgeyite K2Ca5(SO4)6CH2O — — 5 — 7

Magnesite MgCO3 10 9 10 10 9

Halite NaCl <3 — — — —

Quartz SiO2 <5 <5 <5 <5 <5

Mica/illite (K,Na,Ca)(Al,Mg,Fe)2(Si,Al)4O10(OH,F)2 <5 <5 <3? <3 <3

Chlorite (Mg,Fe,Al)6(Si,Al)4O10(OH) <3? — — — —

“Unidentified” ? <5 <5 <5 <5 <5

Note - Sr and Mg probably substitute for Ca in the sulfate minerals. The hydration may be more or less than indicated in the above general formulae.

Initial _______

Date ________


LABORATORY FAS_CLIENT COMPANY FAS_WORK_O FAS_SAMPLE CLIENT_SAMFlorin Analytical Services, LLC F-174 Resource Development, Inc. 092040 1 IP #1 After LeachFlorin Analytical Services, LLC F-174 Resource Development, Inc. 092040 2 IP #2 After LeachFlorin Analytical Services, LLC F-174 Resource Development, Inc. 092040 3 IP #1 After WashFlorin Analytical Services, LLC F-174 Resource Development, Inc. 092040 4 IP #2 After Wash

Florin Analytical Services, LLC 7950 Security Circle - Reno, Nevada 89506 - Phone (775) 677-2177 - FAX (775) 972-4567

Submitted By: Resource Development, Inc Laboratory No.: 09204011475 West I-70 Frontage Road Client Number: F174North Wheat Ridge, CO 80033 Date Received: 08/31/2009Attention: Mr. Deepak Malhotra Date Completed: 08/07/2009Method: 4 Acid digestion, ICP Analysis. Lab code: 7045Element: Al As Ba Bi Ca Cd Co Cr Cu Fe K Mg Mn Mo Na Ni Pb Sr Ti V W ZnDetection Limit: 0.01 10 1 10 0.01 1 1 1 2 0.01 0.01 0.01 1 5 0.01 5 10 5 0.01 1 10 2Reporting Unit: % ppm ppm ppm % ppm ppm ppm ppm % % % ppm ppm % ppm ppm ppm % ppm ppm ppm

IP #1 After Leach 0.39 <10 52 <10 23.40 2 2 5 28 0.46 1.01 2.06 51 <5 0.06 9 163 3553 0.01 2 <10 117IP #2 After Leach 0.43 <10 62 <10 20.44 2 1 8 39 0.43 0.73 2.00 50 <5 0.06 8 143 4643 0.01 <1 <10 161IP #1 After Wash 0.48 <10 65 <10 23.00 2 3 8 32 0.47 0.33 2.31 56 <5 0.06 7 103 4553 0.01 <1 <10 153IP #2 After Wash 0.51 <10 62 <10 25.42 2 2 4 43 0.49 0.30 2.47 62 <5 0.04 8 148 4462 0.01 <1 <10 84

Certificate of Analysis

Richard A. Grondin QC Manager

Nevada Assembly Bill No. 519.130 requires the following statement: The results of this assay were based solely upon the content of the sample submitted. Any decision to invest should be made only after the potential investment value of the claim or deposit has been determined based on the results of assays of multiple samples of geologic materials collected by the prospective investor or by a qualified person selected by him/her and based on an evaluation of all engineering data which is available concerning any proposed project.

Page 1 of 1

Florin Analytical Services, LLC 7950 Security Circle - Reno, Nevada 89506 - Phone (775) 677-2177 - FAX (775) 972-4567

Submitted By: Resource Development, Inc Laboratory No.: 09204011475 West I-70 Frontage Road Client Number: F174North Wheat Ridge, CO 80033 Date Received: 08/31/2009Attention: Mr. Deepak Malhotra Date Completed: 08/07/2009Method: LECO CS-400Lab code: 7036Element: Sulfate SulfurDetection Limit: 0.01Units: %

IP #1 After Leach 14.41IP #2 After Leach 15.08IP #1 After Wash 13.13IP #2 After Wash 13.58

Certificate of Analysis

Richard A. Grondin QC Manager

Nevada Assembly Bill No. 519.130 requires the following statement: The results of this assay were based solely upon the content of the sample submitted. Any decision to invest should be made only after the potential investment value of the claim or deposit has been determined based on the results of assays of multiple samples of geologic materials collected by the prospective investor or by a qualified person selected by him/her and based on an evaluation of all engineering data which is available concerning any proposed project.

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D-1

APPENDIX D

Polyhalite Density Calculations

Polyhalite Density Calculations

7‐13‐09 (revised 8‐19‐09‐SCM)

Chris Brus

There are two different methods normally used to calculate the density of solid bodies such as rock samples. The first method uses a ratio between a directly measured mass and a calculated volume of a rock sample. The second method used to determine the density of a rock sample is to compare the mass of the sample in air versus the mass of the sample while suspended in a fluid of a known density, in this case water. The materials and procedures for each method are discussed below.

Materials Needed:

1. Mass Balance, preferably one on which you can suspend the desired below the scale. (Triple beam balance used in these measurements.)

2. Fishing line, or other string which does not absorb liquid and has a negligible mass. 3. Container large enough to completely hold sample to be measured 4. Water ( preferably distilled, ρ=1) 5. Graduated Cylinder 6. Towel or Paper Towels 7. Rock Sample

The procedure for the water displacement method is as follows.

1. Measure and record the mass of the rock sample you wish to know the density of. Mass=m 2. Fill a graduated cylinder partially with water and record the volume. Make sure there is enough

to completely submerse the sample. Initial volume =Vi 3. Drop rock sample into the graduated cylinder and record the volume. Final volume =Vf 4. Calculate the density of the rock sample using the following formula: ρ=m/(Vf‐Vi) 5. Dry the sample after it is removed from the water. 6. Because polyhalite is water soluble, make sure the sample spends as little time in the water as

possible.

The procedure for the water suspension is as follows.

1. Measure the mass of the rock sample. (Ma) 2. Using the fishing line, suspend the sample from the scale platform so it is both completely

submersed and suspended in the water making sure it does not touch the bottom of the container. Measure the mass of the sample. (Mw)

3. Dry the samples after they are removed from the water. 4. Calculate the density of the rock sample using the formula: ρ=Ma/(Ma‐Mw) 5. Because polyhalite is water soluble, make sure the sample spends as little time in the water as

possible.

Results and Data:

Table 1: Polyhalite Density Measurements Using Water Suspension Method

Sample Trial Ma (g)±0.05

Mw (g)±0.05 Density (g/cc) Average Density

(g/cc)

H17 14‐2 1 67.45 43.00 2.759

2.803 2 67.50 43.30 2.789

3 67.50 43.90 2.860

H17 14‐4 1 51.80 33.00 2.755

2.788 2 51.90 33.40 2.805

3 51.60 33.20 2.804

H17 14‐6S 1 11.80 7.70 2.878

2.856 2 11.90 7.70 2.833

3* 12.00 7.55 2.697

H17 14‐6L 1 24.50 15.75 2.800

2.832 2 24.45 15.90 2.860

3 24.40 15.80 2.837 H17 14‐8 1 51.00 33.00 2.833 2.833

H17 14‐8S 1* 9.8 6.05 2.613

2.607* 2* 9.75 6 2.600

H17 14‐2C 1 315.1 201.9 2.784

2.777 2 314.75 201.3 2.774

3 314.55 201.15 2.774

H17 14‐4C 1 279.3 178.3 2.765

2.764 2 279.4 177.85 2.751

3 279.2 178.65 2.910

H17 14‐8L 1 41.5 26.85 2.833

2.835 2 41.7 27 2.837

* Indicates Outlier Average Density

2.783

Density Formula: ρ=Ma/(Ma‐Mw) Average Density w/out Outliers

2.805

Table 2: Polyhalite Density Using Water Displacement Method Total Mass (g)±0.05

Vi (ml)±1.0

Vf (ml)±1.0 ΔV Density (g/cc)

87.95 146 178 32 2.7484375

Density Formula: ρ=m/(Vf‐Vi)

2.550

2.600

2.650

2.700

2.750

2.800

2.850

2.900

1 2 3

Den

sity (g/cc)

Trial

Polyhalite Density

H17 14‐2

H17 14‐4

H17 14‐6S

H17 14‐6L

H17 14‐8

H17 14‐8S

H17 14‐8L

H17 14‐2C

H17 14‐4C

2.550

2.600

2.650

2.700

2.750

2.800

2.850

2.900

0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00

Den

sity (g/cc)

Mass (g)

Plot of Mass vs. Density of Polyhalite

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

1 2 3

Mass (g)

Trial

Mass of Sample in Each Trial

H17 14‐2

H17 14‐4

H17 14‐6S

H17 14‐6L

H17 14‐8

H17 14‐8L

275

280

285

290

295

300

305

310

315

320

1 2 3

Mass (g)

Trial

Sample Masses in Each Trial

H17 14‐2C

H17 14‐4C

Analysis:

Based on the data gathered, three different data points were found to be invalid due to significantly large deviation from median of the data set. These points are indicated with a (*) and were not included in the final polyhalite average density. The average density of the polyhalite using the water suspension method was found to be 2.805 g/cc while the average polyhalite density calculated using the water displacement method was found to be 2.748. The water suspension methods is likely the most accurate method for determining the density of a rock sample do to the lesser amount of measurements and the smaller amount of error in these measurements.

The density of polyhalite calculated in this report can be used for a number of applications. It can be used to help identify polyhalite in subsurface well logs when looking at gamma ray and density logs. If the grade of the ore is known and the volumetric extent of the deposit is mapped, this value can be used to estimate the tonnage of polyhalite that lies within the company’s lease area. I recommend that the polyhalite density value of 2.805 g/cc calculated using the water suspension method be used in the future for any necessary applications.

APPENDIX E

Mining Support Documents

Intercontinental Postash, Conceptual Study Economic Model (Annual Values in 1,000s)

Basis Units Year ‐4 Year ‐3 Year ‐2 Year ‐1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 Year 22 Year 23 Year 24 Year 25 Year 26 Year 27 Year 28 Year 29 Year 30 TotalsPRODUCTION

Tons Feed tons 3,060 4,120 4,180 4,240 4,300 4,360 4,420 4,480 4,540 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 4,600 134,300 Tons Product K2SO4 tons 678 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 904 26,894

Tons Product Polyhalite tons 50 100 150 200 250 300 350 400 450 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 12,750

REVENUESale Price K2SO4 (FOB Mine) $750 $/TON 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750 750

Sale Price Polyhalite (FOB Mine) $250 $/TON 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250 250

Total Revenue $ 520,996 702,994 715,494 727,994 740,494 752,994 765,494 777,994 790,494 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 802,994 23,357,822

CASH PRODUCTION COSTS

Controllable CostsLabor (000's)

Plant $11,848 $000's 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 11,848 189,572 Mine $20,981 $000's 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 20,981 335,702 G&A $2,964 $000's 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 2,964 88,906

Total Labor $35,793 $000's 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 35,793 1,073,794

Equipment, Facilities & Supplies $28,403 $000's 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 28,403 852,091

Process Cost K2SO4 $121.18 $/ton K2SO4 82,159 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 109,546 3,258,986 Process Cost Polyhalite $10.00 $/ton Polyhalite product 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 127,500

Total Controllable Costs (K2SO4) $ 143,332 168,528 166,057 163,672 161,367 159,138 156,982 154,896 152,875 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 150,918 4,477,324

Total Controllable Costs (Polyhalite) $ 3,511 6,179 9,106 11,933 14,664 17,305 19,860 22,332 24,726 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 27,046 707,548 $/TON FEED 46.84 40.90 39.73 38.60 37.53 36.50 35.52 34.57 33.67 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 32.81 33.34

$/SALES TON (K2SO4) 211.41 186.43 183.69 181.05 178.50 176.04 173.65 171.35 169.11 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.95 166.48$/SALES TON (Polyhalite) 70.23 61.79 60.71 59.66 58.66 57.68 56.74 55.83 54.95 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 54.09 55.49

NON‐CONTROLLABLE COSTS

Royalty Payments 5.0% % of Revenue 26,050 35,150 35,775 36,400 37,025 37,650 38,275 38,900 39,525 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 40,150 1,167,891 Production Royalty $1.00 per ton of product 728 1,004 1,054 1,104 1,154 1,204 1,254 1,304 1,354 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 1,404 39,644 Land Cost $000s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ‐ General Insurance $000s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ‐ Other $000s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ‐

Total Non‐Controllable Cash Costs $ 26,778 36,154 36,829 37,504 38,179 38,854 39,529 40,204 40,879 41,554 41,554 41,554 41,554 41,554 41,554 41,554 1,207,535

Total Non Controllable Costs (K2SO4) $ 25,425 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 33,900 1,008,516

Total Non Controllable Costs (Polyhalite) $ 625 1,250 1,875 2,500 3,125 3,750 4,375 5,000 5,625 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 6,250 159,375 $/TON FEED 8.75 8.78 8.81 8.85 8.88 8.91 8.94 8.97 9.00 9.03 9.03 9.03 9.03 9.03 9.03 9.03 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 7.91 8.99

$/SALES TON (K2SO4) 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 37.50 $/SALES TON (Polyhalite) 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50

TOTAL CASH COSTSSubtotal $ 173,621 210,860 211,992 213,108 214,210 215,297 216,371 217,431 218,480 219,517 219,517 219,517 219,517 219,517 219,517 219,517 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 177,964 5,919,482 Contingency 0% % of Cash Costs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ‐

Total Controllable Costs (K2SO4) $ 169,456 203,361 200,881 198,472 196,130 193,853 191,638 189,484 187,387 185,346 185,346 185,346 185,346 185,346 185,346 185,346 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 150,260 5,131,727

Total Controllable Costs (Polyhalite) $ 4,166 7,499 11,111 14,637 18,080 21,444 24,732 27,948 31,093 34,172 34,172 34,172 34,172 34,172 34,172 34,172 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 27,703 787,755 $/SALES TON (K2SO4) 249.94 224.96 222.22 219.55 216.96 214.44 211.99 209.61 207.29 205.03 205.03 205.03 205.03 205.03 205.03 205.03 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 166.22 190.81

$/SALES TON (Polyhalite) 83.31 74.99 74.07 73.18 72.32 71.48 70.66 69.87 69.10 68.34 68.34 68.34 68.34 68.34 68.34 68.34 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 55.41 61.78

Total EBITDA $ 347,374 492,134 503,502 514,886 526,284 537,697 549,123 560,563 572,014 583,477 583,477 583,477 583,477 583,477 583,477 583,477 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 625,030 17,438,340 Net Profits Royalty (3%) 3% ‐10,421 ‐14,764 ‐15,105 ‐15,447 ‐15,789 ‐16,131 ‐16,474 ‐16,817 ‐17,160 ‐17,504 ‐17,504 ‐17,504 ‐17,504 ‐17,504 ‐17,504 ‐17,504 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 ‐18,751 (523,150) Totat EBITDA after NPR 336,953 477,370 488,397 499,439 510,496 521,566 532,650 543,746 554,853 565,972 565,972 565,972 565,972 565,972 565,972 565,972 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 16,915,190Total EBITA (K2SO4) $ 328,869 460,394 462,799 465,137 467,408 469,617 471,765 473,855 475,889 477,869 477,869 477,869 477,869 477,869 477,869 477,869 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 511,902 14,587,437

Total EBITA (Polyhalite) $ 8,084 16,976 25,598 34,302 43,087 51,949 60,885 69,891 78,965 88,103 88,103 88,103 88,103 88,103 88,103 88,103 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 94,378 2,327,753 $/TON FEED 110.12 115.87 116.84 117.79 118.72 119.63 120.51 121.37 122.21 123.04 123.04 123.04 123.04 123.04 123.04 123.04 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 131.80 129.85

$/SALES TON (K2SO4) 485.06 509.29 511.95 514.54 517.05 519.49 521.87 524.18 526.43 528.62 528.62 528.62 528.62 528.62 528.62 528.62 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 566.27 542.41

$/SALES TON (Polyhalite) 161.69 169.76 170.65 171.51 172.35 173.16 173.96 174.73 175.48 176.21 176.21 176.21 176.21 176.21 176.21 176.21 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 188.76 182.57

NET INCOME BEFORE FINANCIALS

Net Income Before Financials $ 336,953 477,370 488,397 499,439 510,496 521,566 532,650 543,746 554,853 565,972 565,972 565,972 565,972 565,972 565,972 565,972 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 16,915,190

CAPITAL Facilities and Equipment $000s

Mine Equipment and Development $143,284 $000s 71,642 71,642 80,000 36,000 259,284 Surface Facilities $18,050 $000s 9,025 9,025 36,000 5,000 36,000 36,000 131,050 Process Plant $428,550 $000s 214,275 214,275 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 728,550 EPCM $94,381 47,191 47,191 94,381 Owner's Cost $17,697 8,848 8,848 17,697 Contingency $175,491 $000s 87,745 87,745 20,000 195,491

‐ ‐ ‐ Exploration and Permitting $000s ‐

Preliminary Drilling $1,000 $000s 1,000 1,000 Development Drilling $2,500 $000s 2,500 2,500 Prefeasibility Study $2,000 $000s 2,000 2,000 Feasibility Study $4,000 $000s 4,000 4,000 Permitting $750 $000s 375 375 750 Contingency $0 $000s ‐ ‐ ‐ ‐

Total Initial Capital $887,703 $000s 3,875 6,375 367,084 438,726 71,642 887,703

‐

Sustaining & Replacement Capital (Years 2 ‐ 30) $549,000 $000s 10,000 10,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 10,000 10,000 115,000 46,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 549,000

Total Capital 1,436,703 $000s 3,875 6,375 367,084 438,726 81,642 10,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 10,000 10,000 115,000 46,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 1,436,703

CASH FLOW & NPV

Net Income before Financials 336,953 477,370 488,397 499,439 510,496 521,566 532,650 543,746 554,853 565,972 565,972 565,972 565,972 565,972 565,972 565,972 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 606,279 16,915,190 Less Capital 3,875 6,375 367,084 438,726 81,642 10,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 10,000 10,000 115,000 46,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 10,000 10,000 46,000 10,000 10,000 10,000 1,436,703

Year ‐4 Year ‐3 Year ‐2 Year ‐1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 TotalsNet Cash Flow (3,875) (6,375) (367,084) (438,726) 255,311 467,370 478,397 489,439 500,496 511,566 522,650 497,746 544,853 555,972 555,972 555,972 555,972 450,972 519,972 555,972 596,279 596,279 596,279 596,279 560,279 596,279 596,279 596,279 596,279 596,279 560,279 596,279 596,279 596,279 15,478,487 Cumulative Net Cash Flow (3,875) (10,250) (377,334) (816,061) (560,750) (93,380) 385,017 874,456 1,374,952 1,886,518 2,409,168 2,906,914 3,451,767 4,007,740 4,563,712 5,119,684 5,675,657 6,126,629 6,646,602 7,202,574 7,798,853 8,395,133 8,991,412 9,587,692 10,147,971 10,744,251 11,340,530 11,936,810 12,533,089 13,129,369 13,689,648 14,285,928 14,882,207 15,478,487

$/TON FEED 83.43 113.44 114.45 115.43 116.39 117.33 118.25 111.10 120.01 120.86 120.86 120.86 120.86 98.04 113.04 120.86 129.63 129.63 129.63 129.63 121.80 129.63 129.63 129.63 129.63 129.63 121.80 129.63 129.63 129.63 115.25 $/SALES TON 350.70 465.51 453.89 443.34 433.71 424.89 416.79 381.71 402.41 395.99 395.99 395.99 395.99 321.21 370.35 395.99 424.70 424.70 424.70 424.70 399.06 424.70 424.70 424.70 424.70 424.70 399.06 424.70 424.70 424.70 390.44

NPV 10% $2,890,822IRR 43%Payback from Year ‐2 Years 5.1

Payback Calc

1(3,875) (10,250) (377,334) (816,061) (560,750) (93,380) 385,017 874,456 1,374,952 1,886,518 2,409,168 2,906,914 3,451,767 4,007,740 4,563,712 5,119,684 5,675,657 6,126,629 6,646,602 7,202,574

0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18(3,875) (10,250) (377,334) (816,061) (560,750) (93,380) 385,017 874,456 1,374,952 1,886,518 2,409,168 2,906,914 3,451,767 4,007,740 4,563,712 5,119,684 5,675,657 6,126,629 6,646,602

Equipment operating costs

Overhaul Maintenance Wear Total operating Hours dollars/daysupplies Parts Parts Fuel / Power Lube Tires Parts per hour units per day Total

Koepe Hoist / skip / cage 17.98 33.39 83.32 14.56 0.00 0.00 $149.25 1 18 $2,687Double drum hoist/skip cage 17.98 33.39 83.32 14.56 0.00 0.00 $149.25 1 12 $1,791Loading Station 10.39 19.29 9.26 4.21 0.00 3.26 $46.41 2 18 $1,671Feeders/conveyor to loading pocket 3.98 2.88 3.47 1.65 0.00 0.00 $11.98 2 18 $431Refuge Station $1.00 2 24 $48Underground Shop $10.00 1 20 $200Mine transformer and switch gear 7.90 14.65 0.00 0.00 0.00 0.00 $22.55 1 24 $541Main Vent Fans 1500 3.92 7.27 82.13 2.11 0.00 0.00 $95.43 2 24 $4,581Communication system $20.00 1 24 $480

$0Production Equipment $0panel transformer 0.74 1.37 0.00 0.00 0.00 0.00 $2.11 8 20 $338Continuous Miner - Joy 12 HM 33.83 41.35 42.59 14.21 0.00 25.80 $157.78 8 18 $22,720Feeder Breaker 6.17 5.05 8.33 2.12 0.00 2.22 $23.89 8 18 $3,440Sub - conveyor 48" 23.90 17.31 23.14 9.89 0.00 0.00 $74.24 8 18 $10,691Main - conveyor 72" 76.18 55.16 83.32 31.52 0.00 0.00 $246.18 4 18 $17,725shuttle car 6.71 12.45 1.85 3.02 10.37 2.70 $37.10 8 18 $5,342Man trip 1.46 2.71 10.37 1.52 0.16 0.00 $16.22 8 3 $389Rock bolter 18.9 1.71 1.40 1.85 0.88 0.04 6.95 $31.73 8 18 $4,569Vent Fans 25 hp 0.99 1.84 1.36 0.53 0.00 0.00 $4.72 20 24 $2,266Vent tube $0

$0trash pump - pipe 0.15 0.12 0.41 0.05 0.00 0.00 $0.73 3 3 $7Electrical - Wire/switch gear 0.14 0.26 0.00 0.00 0.00 0.00 $0.40 3 3 $4

SurfaceHoist house $7.50 1 24 $180Mine Admin building $10.00 1 10 $100Shop - Plant Maintenance $20.00 1 24 $480Dry $5.00 1 24 $120Mine Warehouse $7.50 1 24 $180Assay Lab $10.00 1 10 $100Security $3.00 1 24 $72

$81,152

Operating Cost Per Hour

Mining

4 million tons per year for K2SO20.6 million tons per year for Polyhalite product350 days per year

13,143 tons per day1,000 tons per crew shift

6 production crews per shift2 development crews per shift

170 pounds per cubic ft. in place100 pounds per cubic ft. broken87% panel extraction

Hoisting20 hrs per day20 tons per skip1.5 minutes / half cycle657 tons per hour

Processing903,992 tons K2SO4 per year500,000 tons per year polyhalite22.60% K2SO4 equivalent basis as feed

92% recovery of contained K2SO4

Pricing$750.00 per ton K2SO4

$250.00 per ton polyhalite