Saturday, April 23, 2011

Potash exploration ramping up in Holbrook basin

Last week we reported that American West Potash has permitted 14 exploration core holes in the increasingly active Holbrook basin potash play. [right, the AWP locations are the easternmost in the basin so far. AZGS potash viewer]

More insights on this new player in the basin comes from the Form 8-K for Prospect Global Resources:

"Our principal business is conducted through our investment in American West Potash LLC, a Delaware limited liability company pursuant to an operating agreement with The Karlsson Group, Inc. American West Potash's objectives are to explore, develop and produce potash reserves located in the Holbrook Basin of eastern Arizona. The Karlsson Group has contributed to American West Potash leasehold positions consisting of approximately 32,000 gross acres in the Holbrook Basin in consideration for a 50% interest in American West Potash. We will provide to American West Potash technical resources, mining expertise and industry knowledge together with a cash investment of $11.0 million in consideration for a 50% equity interest. Pursuant to the operating agreement, we invested $2.2 million in January 2011 and must invest an additional $1.0 million by May 1, 2011 and an additional $7.8 million within 90 days of delivery of a N1 43-101 compliant mineral resource estimate report, a technical report issued by third party experts with respect to the potash reserves on the property. We also intend to prepare an Industry Guide 7. Pursuant to the terms of the operating agreement, we are the exclusive operators of the project. We and The Karlsson Group each designate two managers of American West Potash and a fifth manager is mutually selected by The Karlsson Group and Prospect."
Another online analysis reports that:
"In February 2011, the Company [Prospect Global Resources] commenced the acquisition of over 50 miles 2D seismic data and in the second quarter of 2011 plans to commence the drilling and coring of 10 to 14 holes. Prospect also contracted North Rim Exploration Ltd, a leading third party engineer, to supervise the seismic and drilling efforts and prepare the NI 43-101 mineral resource estimate report (“Reserve Report”), which they expect to receive during the second half of 2011."
The Form 8-K shows that AWP's president and CEO is Patrick L. Avery, who previously was president of Intrepid Potash, the world's 11th largest producer and the largest U.S. producer, with mines in Utah and New Mexico.

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