Sep 212011

By Teri Walker–

Exploration drilling operations continue in the Holbrook Basin potash deposits east of Holbrook, and as potash operators get close to publishing full results of their findings, one operator has disclosed information about some of its core samples.

Passport Potash Inc. announced last week the findings from five new holes completed in its recent core-drilling program. The company said each hole encountered potash at depths ranging from 1,123 to 1,590 feet, with various mineral concentrations found in each hole.

Passport reported finding concentrations of potassium chloride ranging from 4.4 percent to 41.1 percent in the samples analyzed, with deposits varying in thicknesses up to 10.5 feet.

“We are very impressed with the drill results we have received,” said Passport Potash President and CEO Joshua Bleak. “The substantial thickness and grade displayed in these drill holes demonstrates the potential of the potash deposits in the Holbrook Basin.”

Passport also announced last week that it has begun drilling on its holdings on the east side of the Holbrook Basin, where it plans to drill nine holes. The company has completed 50 miles of seismic analysis on its eastern holdings, which brings the total amount of seismic work the company has completed to 100 miles.

To round out its announcements for the week, the company said it has granted 1,690,500 incentive stock options to directors, officers, consultants and employees of the company. The options are exercisable at 42 cents and will expire on Sept. 12, 2016.

The flurry of announcements came on the heels of Passport being reprimanded by British Columbia Securities Commission (BCSC) for delays in reporting exploration results in the Holbrook Basin, and concerns over how the company has been presenting claims in its marketing and other corporate materials.

Ken Bond of Passport’s corporate development division explained the company was contacted by the BCSC with concerns about the length of time it is taking Passport to produce findings from its explorations near Holbrook. The assumption in the investment world, said Bond, is no news could signify findings are unsatisfactory.

Bond said the company responded to the BCSC that the reason Passport hasn’t issued the obligatory NI 43-101 resource report that is industry standard is because the company has continued to acquire new holdings, adding to the analysis requirements. Rather than issuing a series of NI 43-101 reports, Passport opted to keep expanding its initial report to encompass new holdings as they were acquired. Bond said the company’s resource report is nearly complete and he expects it will be published within the next three weeks.

The BCSC requested clarification from Passport regarding how the company refers to the potential of the Holbrook Basin. In materials, Passport referred to the basin containing up to 2.5 billion tons of potash, citing Arizona Geological Survey studies. BCSC expressed concern that Passport didn’t refer to the range of potential potash–0.7 billion tons to 2.5 billion tons–in the document it was reviewing, and that it felt it could appear Passport was claiming the company had access to the full volume of potash available in the basin.

Bond said the company felt it was clear in its representations about which holdings Passport controls, and there was no attempt to overstate the company’s holdings, but that it responded to the BCSC’s expressed concerns as required.

The BCSC also said it felt Passport is omitting some of the risks associated with the Holbrook project in its marketing materials. Specifically, the BCSC doesn’t believe Passport has adequately addressed risks associated with the proximity of the mining project to Petrified Forest National Park.

The company responded that it views the risks related to the park as minimal; however, risks that Passport sees as potentially material to the company include permitting issues, potential mining methods, and waste rock and tailings management.

Bond said Passport made modifications to its materials based on the BCSC’s concerns, and the regulatory agency was satisfied with the company’s response.

Passport Potash will report the full extent of its geologic findings in its NI 43-101 report in the coming weeks.