Nov 092011

By Teri Walker–

A second mining company is moving forward with the next stage of exploration of the Holbrook Basin for potash mining development, increasing the potential for a multi-billion dollar mining industry to emerge in the Holbrook area in the next few years.

Passport Potash LLC, a Vancouver, Canada, and Apache Junction-based company that has been exploring in the Holbrook Basin since 2009, received its NI 43-101 report last week, which contained the conclusion that there is sufficient justification for the company to proceed with additional exploration.

The 43-101 is an industry-accepted instrument used in mining to verify presence and grade of mineral resources.

SRK Consulting, a Vancouver, Canada, engineering group, prepared the report for Passport. Report authors said, “SRK concludes the Passport lands have the exploration potential for defining a potash resource in excess of 300 million metric tonnes of K2O at a grade in excess of 5.0 percent K2O.”

Passport Potash drilled 30 core holes across 127 square miles during its initial exploration phase, which lasted from 2009 until 2011.

“We’ve seen potash in every hole that we’ve drilled,” said Andy Bond of Passport’s Corporate Development Division.

The company’s drill hole data shows that evaporate layers containing potash range in thickness from 2.6 meters to 18.4 meters, with an average thickness of 6.4 meters.

“We’re trying to find the peaks and valleys across the lands we control; we have to figure out where the potash is, where it’s thickest and where it thins out,” said Bond, noting that the potash deposits vary in thickness across the landscape. Explaining why the company didn’t drill more holes in areas where historic records show thicker deposits of potash, which would presumably paint a more impressive picture of how much potash is under Passport’s lands, Bond said, “We’re taking a long-term approach to exploring and developing in the basin, not just looking for the ‘glory holes.’ As we continue our exploration, we’ll undoubtedly hit even more of those areas with higher grades of potash that historic records indicate are there. Right now, we’re pushing the limits to see the edges of the potash,” he said.

Bond said part of what determined where Passport conducted its initial exploration drilling was potential land acquisitions: the company drilled near land they were considering acquiring to determine whether potash was present in sufficient deposits to warrant securing the nearby land.

Based on SRK’s recommendations to move forward, Bond said the company will proceed with drilling additional holes across the 81,000 acres it currently controls.

SRK points out the exploration potential is not a resource estimate, adding that additional exploration work is necessary to determine exactly how much potash is in the land presently controlled by Passport Potash.

There is significant historic data available about the lands in the Holbrook Basin, an area believed to hold from 0.7 billion to 2.5 billion tons of potash. Passport is awaiting independent verification of the accuracy of the historic data, which was compiled by the United States Geological Survey (USGS).

Passport officials said the company’s own drill results have generally verified historical accounts of thickness and grade of potash mineralization in the lands it controls, adding that the company’s drilling and sampling programs have helped confirm analytical and stratigraphic data from “twinned” historic holes, which improved confidence in the historic holes. (Twinned holes are those drilled near historic drill sites to confirm data reported about the historic holes.)

SRK said further work toward a resource estimate and to determine whether establishing mining operations would be economically viable is justified.

“We are pleased to see that the project merits further exploration and development,” said Passport Potash President Joshua Bleak.

Responding to news that a second company is planning to extend its stay in the Holbrook Basin as a result of its initial exploration program, Holbrook Mayor Jeff Hill said, “It’s really good news. It’s what we’ve expected.”

Hill continued, “In everything you see the city doing–the sewer modeling, infrastructure upgrades, the extra wells–you see our efforts to be ready to respond to a mini-population boom when it happens.”

Last month, American West Potash announced its intention to move forward with additional exploration, economic assessments and preparations for mine development. HNZ Potash, a third operator exploring the Holbrook Basin, has not announced any of its findings.

“It’s exceptional news,” concluded Hill. “We’re committed to being ready for what’s coming.”