By Teri Walker–
Passport Potash Inc. has signed a letter of intent with the Fitzgerald Family Trust to acquire the Fitzgerald Ranch outside of Holbrook, bringing its total land holdings intended for potash exploration in the Holbrook Basin to 121,000 acres.
“This is a terrific advancement for Passport,” said Passport President Joshua Bleak. “Not only have we more than doubled our private land holdings, we have also increased our exposure to the infrastructure needed for transportation of finished product.”
The price of the 41,000-acre land deal is not being disclosed at this time, but Passport officials are pleased to have picked up the parcel without a royalty agreement.
“It is significant to note this acquisition was made without entangling the company in a royalty agreement, thereby maximizing the potential for future revenue,” said Bleak.
Passport, a publicly traded company, has a mixture of ownership rights across the 190 square miles in the area it claims. Some private property has been purchased outright, while for other parcels the company has entered into royalty agreements, allowing the landowners to continue their surface use of the property. For those holdings with associated mineralization agreements, Passport has made either lump sum cash payments for royalty fees, entered into long-term payment agreements or a combination of both. The company has acquired holdings comprising private, state and Hopi tribal lands.
The new property, which abuts the Twin Buttes Ranch property already owned by Passport, provides access to the company’s holdings to the south of state Highway 180 and private lands owned by the Hopi Tribe, for which Passport has mining agreements. The land also provides additional railway frontage along the north side of the property. The 13 miles of Highway 180 that run through the Fitzgerald Ranch property provide frontage access for Passport’s holdings on the north and south sides of the highway.
Immediate access to rail and highways is a critical economic advantage in mining operations, greatly increasing a company’s competitiveness on the world market, according to Ken Bond of Passport’s corporate development division.
“We believe we could sell all of the potash we pull out of the Holbrook Basin within a 350- to 500-mile radius,” said Bond.
“It’s a little bit of a Cinderella story in Holbrook,” said Bond, who described the existing railway, highway and Interstate 40 access as providing ideal speed to market conditions. The temperate climate is also a boon. Major potash operations in Canada, Russia and Belarus must shut down for months at a time during harsh winters, but the mild high desert climate in the Holbrook area would allow construction and mining operations to continue year-round.
The geographic and political stability of Arizona and the U.S. aids in the feasibility of mining the Holbrook Basin.
“There are some tremendous potash deposits around the world that may never get mined because the region is too weak, unstable or volatile, and building the infrastructure necessary to power the mining operation and transport the mineral to market is simply out of the reach of some of these poorer countries,” said Bond.
He said that while he believes Passport is poised to be able to sell any potash it mines from the Holbrook Basin within a maximum 500-mile radius, the company has already garnered interest from China and India, countries with rapid agricultural expansion, the industry that uses the bulk of the world’s potash stores. Bond said both countries have expressed interest in securing long-term contracts for minerals eventually mined from the Holbrook Basin.
Currently, the North American demand for potash hovers in the 9.5 million to 10.5 million tons range. The three potash mining operations presently operating in the U.S. combined meet about 1.5 million tons of that demand, said Bond, with the rest being met by potash imported from other countries.
According to Bond, preliminary estimates, some of which are based on historic exploration of the region, show Passport Potash could draw one to two tons per year from its holdings (the estimate was provided prior to this week’s land acquisition announcement). American West Potash, a company also exploring the Holbrook Basin for potential mining with about 100,000 acres in current holdings, estimates it could draw two million tons from its holdings annually.
“Even if just one of our operations comes on line, we could effectively double the current U.S. production of potash,” said Bond.
Even if both operations come on line, Bond said, they could expect to sell all of their product within the U.S., but the BNSF railroad line adjacent to Passport’s property travels directly to the port of Long Beach in California, 550 miles away, providing easy access to international distribution.
Bond could not estimate when the sale of the Fitzgerald Ranch would be finalized. He said explorations on the new parcel have not begun.
Map courtesy of Passport Potash Inc.
Passport Potash has signed a letter of intent to purchase the 41,000-acre Fitzgerald Ranch, located west of Twin Buttes Ranch and Petrified Forest National Park. This brings the company’s land holdings in the Holbrook Basin to 121,000.