By Nick Worth
Passport Potash Inc. announced last Wednesday it has signed a further amendment to the option agree-ment with Twin Buttes Ranch, LLC.
This is the third time Passport and Twin Buttes have amended the option, which allows Passport to pur-chase the Twin Buttes Ranch. The original Aug. 28, 2009, option agreement was subsequently amended on Dec. 4, 2009, and again on Sept. 7, 2010.
This time the option to purchase Twin Buttes Ranch has been extended to Jan. 6, 2016. The ranch, which was one of Passport’s first real property option purchase agreements, is comprised of approximately 28,000 acres (11,332 hectares) of royalty-free private land with intact surface, mineral and water rights.
According to Passport’s Head of Corporate Development, Ken Bond, the Twin Buttes Ranch property has a strategic value to the potash company.
“It gives us a contiguous land block,” Bond said. “It’s significant for us because it’s all private land and some of the state land sections that were recently released are within that land block.”
Bond said the contiguous block of land provides several advantages important for the planned mine.
“When you start looking at mine planning, it’s crucial that you have that,” Bond said. “It also gave us the opportunity to start drilling on private land. The Fitzgerald Ranch and Twin Buttes Ranch combined give us almost 90 square miles.”
Bond also noted the Twin Buttes Ranch is located between the Fitzgerald Ranch and Petrified Forest Na-tional Park and so provides a buffer between Passport’s mining operations and the national park.
“We’re pretty excited about having this option extended,” Bond said. “Right now funding is critical and the markets are unsettled. Coming to an understanding on that option removes some of the uncertainty inves-tors might have.”
Bond described the investment climate as challenging.
“We’re continuing to pursue potential partners,” he said.
The key terms of the amendment include:
* The option is extended until January 6, 2016.
* A $250,000 payment is to be paid within thirty days of Passport closing its next round of financing, which is a minimum of $5 million, or Dec. 1, 2013, whichever comes first. This $250,000 payment is not an elective payment and became an obligation of Passport upon the signing of the amendment.
* A $250,000 payment to be paid by Aug. 28, 2014; and a $250,000 payment to be paid by May 1, 2015.
In addition to the amendment to the option agreement, Passport and Twin Buttes have signed an amend-ment to the Dec. 4, 2009, mining lease.
Under the amendment to the mining lease, the term of the lease will end on the expiration or earlier termi-nation of the option agreement. If Passport exercises its option, the term will end on the closing date of the option agreement.
“We are grateful to the Fitzgerald family for their willingness to work with us on extending the term of the option agreement,” commented Joshua Bleak, President and CEO of Passport. “This amendment will give us some necessary flexibility, and will allow us to focus our resources on meeting our planned timelines for the forthcoming pre-feasibility study.”
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By Nick Worth