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Potash Ridge Corporation – Developing Essential Resources for Global Food Supply

Potash Ridge

Overview

Potash Ridge Corporation (OTCQX:POTRF, TSX:PRK) is a Canadian-based mining company with an advanced-stage development project. Blawn Mountain is a premium quality sulphate of potash (SOP) deposit strategically located in the mining-intensive state of Utah and in close proximity to well-established infrastructure. The Company is led by a highly qualified and proven management team with significant financial, project management and operational experience and the ability to take projects into production. A completed Preliminary Economic Assessment shows a NPV of $1.3 bilion at 10% and an IRR of 21.3%, after tax. The Company is targeting a production rate of 680,000 tonnes per year SOP by mid-2016.

Investment Highlights

  • Large mineral deposit containing premium-quality potash
  • Strategically located in a mining-friendly jurisdiction with established infrastructure nearby
  • State-owned land allows for an efficient permitting process
  • Historical work expedites project development
  • Lower risk surface mining deposit; expected lowest cost producer
  • 30 year mine life, with upside potential
  • PEA completed: $1.3 billion NPV at 10%; 21.3% after tax IRR

Key Property

Blawn Mountain Potash Project – Utah, United States

The Blawn Mountain Project is located in Beaver County, Utah in the Wah Wah Mountains. The property is comprised of four areas of alunite mineralization covering approximately 11,550 acres of state-owned land licensed to Potash Ridge. Operating on state-owned lands involves a more streamlined permitting process with the support of both the municipality and the state.

Utah boasts significant production with four potash operations currently producing. As a mining-intensive state, Utah is also home to an experienced labor force, mining-friendly regulations, and well-developed infrastructure. The Blawn Mountain project is near transportation and energy infrastructure including the Union Pacific Railroad, several key state and interstate highways and two energy corridors. Necessary services are also located in the surrounding area including those that supply construction materials, heavy equipment, industrial supplies and mining support services.

Sulphate of Potash is a premium quality form of potash necessary for various crops including many varieties of vegetables, fruits, nuts, tea and tobacco. Between 2012 and 2016, global demand for SOP products — which historically has fetched a premium of 30 percent to 61 percent over conventional Muriate of Potash (MOP) — is expected to grow 5 percent annually.

During the 1970’s, extensive development work was completed on the the Blawn Mountain project including completion of permitting the project, drilling to prove up resources, a feasibility study, mine plan, and a pilot plant which operated for 3 years. By the early 1980′s, however, the project lost momentum as a collapse in commodity prices and economic conditions made financing the project difficult. As the new owner of the property, Potash Ridge holds all of the data acquired during the past operations.

After acquiring the property and historic data in 2011, Potash Ridge conducted a 34-hole drill program on the property in order to validate historical resource estimates.

Exploration work on Area 1 has delineated NI 43-101 compliant resources of 162Mt combined measured (66%) and indicated (34%) resources carrying an average grade of 3.22 K2O and 13.90% Al2O3, at a cut-off of 1% K2O. The calculated potassium sulfate grade (K2SO4) at a 1% K2O cut-off grade is 5.96%.

Between July 2012 and September 2012, drill program in Area 2 resulted in a NI 43-101 compliant resource estimate of 464Mt combined measured and indicated resources carrying an average grade of 3.07 K2O and 13.16% Al2O3, at a cut-off of 1% K2O. The calculated potassium sulfate grade (K2SO4) at a 1% K2O cut-off grade is 5.68%.

A Preliminary Economic Assessment on the project was completed in October 2012, the results of which show a Capital Cost of $1.075 billion, production Cash Cost of $101/tonne, a Net Present Value of $1,331 million at 10% after tax and an unlevered Internal Rate of Return after tax of 21.3%.

Potash Ridge plans to use low-cost surface mining extraction methods. The PEA determined a mine life of 30 years using NI 43-101 compliant resources, with a two-year ramp-up period. Production at Blawn Mountain will begin from Area 1 and transition to Area 2 once the identified alunite has been exhausted from Area 1. The Company is targeting a production rate of 680,000 tpy SOP by mid-2016.

Summary

Potash Ridge Corporation’s advanced-stage development project, Blawn Mountain, is a an alunite deposit strategically located in the mining-intensive state of Utah and in close proximity to well-established infrastructure. Global demand for SOP products is expected to grown 5 percent annually between 2012 and 2016. A completed Preliminary Economic Assessment shows a NPV of $1.3 bilion at 10% and an IRR of 21.3%, after tax. The Company is targeting a production rate of 680,000 tpy SOP by mid-2016.

Management

Guy Bentinck – President and CEO 
Mr. Bentinck has more than 20 years experience working in the resource and mining sectors.

Mr. Bentinck previously worked for Sherritt International Corporation, where he held a number of senior executive positions. Between March 2004 and November 2007 he served as Sherritt’s Senior Vice President and Chief Financial Officer. During this period, he played a major role in executing Sherritt’s value-creation strategy through organic growth, strategic acquisitions and balance sheet management. Subsequently, he became Senior Vice President, Capital Projects, where he led a team that oversaw Sherritt’s major projects, comprising a portfolio of early-stage development and construction projects ranging between $200 million and $4 billion. He is a Chartered Accountant and holds a M.A. in Accounting and Economics from the University of Aberdeen, Scotland.

Jeff Hillis – Chief Financial Officer
Mr. Hillis has 10 years of experience in the mining sector in senior financial positions of TSX or TSX Venture Exchange reporting issuers. From 2009 to 2012, he was the Chief Financial Officer and Vice-President of Iberian Minerals Corp., a mid-tier producer of copper and zinc concentrates with operations in Spain and Peru. Mr. Hillis executed both senior debt and equity placements ranging from $50 to $100 million. He also led the development of the finance structure from a construction phase through to commercial production. From 2007 to 2009, Mr. Hillis was the Chief Financial Officer of Excellon Resources Inc., a TSX listed junior silver producer with operations in Mexico. Prior to this, Mr. Hillis spent two and a half years with Falconbridge Limited as unit controller of the zinc business whose principal asset was Brunswick Mining and Smelting Corporation Ltd. He was also responsible for the financial evaluation of brown-field zinc projects.

Mr. Hillis is a Chartered Accountant (Ontario) and holds a Bachelor of Commerce from the Queen’s University School of Business.

Ross Philips – Chief Operating Officer
Mr. Philips has 10 years of experience in the resource and energy sectors, much of which has involved working on large-scale capital projects. From 2009 to 2011, Mr. Philips was Senior Manager, Financial Analytics and later Director of Business Development at Capital Power Corporation, one of Canada’s largest power generation companies. Prior to that time, from 2003 to 2009, Mr. Philips held various senior roles at Sherritt International Corporation, a diversified resource company that produces thermal coal, nickel, cobalt, oil and electricity.

Mr. Philips has a Master of Arts in Resource Economics and a Master of Business Administration from the University of Alberta and is a CFA Charterholder and Certified Management Accountant.

Paul Hampton – Vice President of Project Management
Mr. Hampton is an extractive metallurgical engineer with approximately 30 years of global experience in the engineering, design, operation and management of mineral processing and hydrometallurgical systems and facilities. Mr. Hampton’s primary experience relates to the processing of metals and fertilizers, including as Manager of Metallurgy with SNC Lavalin – Kilborne Engineering Pacific, Ltd. in Vancouver, British Columbia from 1993 to 2002, three years as General Manager, Minearl Processing with Washington Group International Inc. in Denver, Colorado, from 2002 to 2005, four years as General Manager of Outotec (USA) Inc., in Denver, Colorado from 2005 to 2009 and two years as Principal of KSN Mineral Process Associates, LLC, in Denver, Colorado from 2009 to 2012.

Mr. Hampton has a Bachelor of Science in Geology from Southern Illinois University and a Master of Science in Metallurgical Engineering from the University of Idaho. Mr. Hampton is a Professional Engineer with the Association of Professional Engineers and Geoscientists of British Columbia and a professional member of the Society of Mining, Metallurgy and Exploration Inc.

Laura Nelson – Vice President of Government and Regulatory Affairs
Dr. Nelson has significant experience in government relations, permitting, power planning, communications and budget management. Dr. Nelson was the Vice-President of Energy and Environment at Red Leaf Resources, Inc. from 2007 until November 2012. While at Red Leaf Resources, Dr. Nelson oversaw the successful permitting of the Red Leaf oil shale project in Utah in 2011. From 2005 to 2007, Dr. Nelson served as the Energy Advisor to Utah Governor Jon Huntsman. During this time, Dr. Nelson participated on numerous boards and committees, including the Federal Task Force on Unconventional Fuels, the Western Interstate Energy Board, the Western Renewable Energy Generation Information System Board and was the Utah lead for the Governor’s Frontier Line transmission initiative. Dr. Nelson has worked extensively on energy policy matters, including those related to emerging technologies and cross-cutting environmental issues. Dr. Nelson has considerable knowledge of energy markets and the regulatory and political environment for energy development.

Dr. Nelson holds a Doctor of Philosophy in Economics and a Bachelor of Science in Economics from the University of Utah.

O. Jay Gatten – Geological Advisor
Mr. Gatten has more than 40 years experience in mineral resource exploration and development. He is a graduate geologist and a professional geologist registered in the State of Utah, Wyoming, Texas and Virginia. He is also a member of the American Institute of Professional Geologists, the Society of Mining, Metallurgy and Exploration and the Society of Exploration Geologists.

Mr. Gatten has worked for Phillips Petroleum, Rio Tinto and Cerro Corporation, and has been a consultant geologist since 1975. He is the owner of North American Exploration and of Contract Geological Services Inc. Mr. Gatten has experience in identifying, evaluating and putting into production several mineral resource projects in North America.

Matthew Bower – Director of Business Development
Mr. Bower has over 10 years of combined business development and project management experience in the energy industry. Previously, Mr. Bower has held a number of roles at Capital Power Corp. and TransCanada Pipelines Ltd.

At Capital Power Corp., Mr. Bower was tasked with providing project management and project controls in the acquisition and development of large power production facilities in Canada and the United States. Recent experience includes the acquisition of three New England power plants totaling over 1,000 MW with a value of approximately $678 million and supporting the development of a 270 MW wind power project in Ontario with an expected capital cost in excess of $800 million.

Mr. Bower holds a Bachelor of Arts, with a double major in Geography and Political Science from Saint Mary’s University.