Western Potash Corp. Delivers Robust Preliminary Economic Assessment at Milestone

                

                 NPV10 = CAD$ 5.22 Billion and IRR = 27.3%

                 Annual Production of 2.5 MTY for >40 years.

 

Vancouver, September 20, 2010 - WESTERN POTASH CORP. , (the “Company”) (TSX Venture: WPX) is pleased to announce the receipt of a positive Scoping Study (the “Study”) from AMEC Americas Limited (“AMEC”) on its 100% owned Milestone property in southern Saskatchewan.  The Milestone property hosts a potash resource which consists of 41 million tonnes of Measured Resource (contained KCl), 133 million tonnes of Indicated Resource, and 560 million tonnes of Inferred Resource.  The Scoping Study was based on, and supported by, the NI43-101 Technical Report titled “Technical Report Concerning Mineral Resource Estimate, Subsurface Mineral Permit KP 408 and KP 409, Saskatchewan”, dated July 12, 2010 and filed on SEDAR on July 16, 2010 (the “Report”).  The Report was prepared by Agapito Associates Inc. and reported via news release dated June 3, 2010.  The Qualified persons for the Report were Dr. Michael P. Hardy, P.E, P.Eng., P.G.,Dr. Douglas F. Hambley, P.E., P.Eng., P.G. and Dean Pekeski, P.Geo. 

This Study confirms that the Milestone resource shows significant positive economics and that the asset is of sufficient size and grade to support solution mining for more than forty years at a production rate of 2.5Mt/yr.  The annual production rate can be expanded to a higher annual production rate, achievable through a higher level of capital expenditure.  The Company cautions that mineral resources that are not mineral reserves do not have demonstrated economic viability. 

Highlights of the Study include:

·         Initial Mine Life

·         40 years

·         Annual Potash Production (primary and secondary)

·         2.5 million tonnes per year KCl

·         Total Estimated Project Capital Cost

·         CAD$2.51 Bn

·         Project Unit Operating Costs

·         CAD$ 62.90/t

·         Estimated Net Present Value (NPV10)

·         CAD$5.22 Bn

·         Estimated after-tax and royalty Internal Rate of Return (IRR)

·         27.3%

·         After-tax payback period

·         7.3 years

 

·         High formation temperatures at Milestone (60 to 65 0C) reduce operating costs by 8.5%  when compared with other solution mining projects in Saskatchewan accessing lower (50 to 55 0C) formation temperatures  

·         Long Term Potash Gate Price: The CRU Group provided average yearly potash price estimates for the period from 2015 through 2025.  The average for those years, equating to $US 511/t, was used for the 2025 to 2055 period.

·         Other assumptions: Assumes a flat US$ exchange rate. Construction is assumed to take place over a two year period, production beginning in project year three. CAPEX based on 100% equity. Tax and royalties were calculated using a flat rate of CAD$28.90/t.

·         Since the analysis is based on a cash flow estimate, it should be expected that actual financial results may vary from these predictions. An accuracy assessment of the cost estimates was completed as part of this study and is estimated to be ±35%.

The Study recommends immediate commencement of a pre-feasibility study based on the attractive economic assessment presented in this report.  Management is now studying the possibility of consolidating the pre and final feasibility processes, and producing and publishing only a final feasibility suitable for reaching a production decision and for attracting project debt finance.  Management will be making recommendations to the board as to the scope of the formal studies yet to be completed. 

AMEC is a leading engineering firm that currently manages multiple potash expansion projects in Saskatchewan with a capital value of several billion dollars.  AMEC was chosen to carry out Milestone’s preliminary economic assessment because of their technical expertise as engineers and EPCM contractors, as well as their experience in potash mine construction, potash processing and their expertise in producing potash feasibility studies. The AMEC Study was authored by Ryan Leyland, P. Eng. from AMEC.  

Patricio Varas, CEO and President commented “We are pleased that the Scoping Study confirms that the Milestone Potash project is an economically robust, stand alone project capable of delivering significant value for our shareholders.  Not only does the Study show that the project is technically feasible and economically positive, it also shows that our favorable formation temperatures contribute to reduce our production costs by approximately 10%. We believe these features identify Milestone as one of the largest and best Tier 1 potash, greenfield, solution deposits, still available in the world today, that are ready for development.  Our team has already started planning further studies that will further “de-risk” the project and allow for the construction of a mine at Milestone. The receipt of this positive Scoping Study is a significant milestone on the path towards building Saskatchewan’s most efficient potash solution mine”

The Company will file an executive summary of the Study on the Milestone potash solution mining project with Canadian securities regulators within 45 days of this release. The Summary will be available on SEDAR at www.sedar.com, and also on the Company's website at www.westernpotash.com.

The 100% owned Milestone property, comprising 500 square kilometers, is located 30 kilometers southeast of Regina, and southeast of Mosaic’s Belle Plaine Mine, one of the largest producing potash solution mines in the world.

Western Potash Corp. is a mineral exploration company engaged in the evaluation, exploration and development of potash mineral properties in Western Canada. The Company intends to define and develop a world-class potash deposit in an ecologically sustainable, economically efficient and socially responsible manner.

 The in-house qualified persons for the purposes of NI 43-101 guidelines are J. Patricio Varas, P. Geo and Dean Pekeski, P. Geo, both of whom have reviewed and approved the contents of this news release.

For more information on Western Potash Corp.’s projects, please visit the Company’s website at: www.westernpotash.com

 

ON BEHALF OF THE BOARD OF DIRECTORS

 

“J. Patricio Varas”     
J. Patricio Varas
President and CEO

This news release contains Forward Looking Statements regarding our intentions and plans. Forward looking statements in this news release include that this Preliminary Economic Assessment confirms that the Milestone resource shows significant positive economics and that the asset is of sufficient size and grade to support solution mining for more than forty years at a production rate of 2.5Mt/yr; mineral resources that are not mineral reserves do not have demonstrated economic viability until they are upgraded; that the annual production rate can be expanded to a higher annual production rate given a higher level of capital expenditure; that the Scoping Study recommends immediate commencement of a pre-feasibility study; that Management is studying the possibility of consolidating the pre and final feasibility processes, and producing and publishing only a final feasibility suitable for reaching a production decision and for attracting project debt finance; that management will be making recommendations to the board as to the scope of the formal studies yet to be completed; that since the analysis is based on a cash flow estimate, it should be expected that actual financial results would vary from these predictions; that an accuracy assessment of the cost estimates was completed as part of this study and is estimated to be ±35%; that Patricio Varas, CEO and President commented  “We are pleased that the Scoping Study confirms that the Milestone Potash project is an economically robust, stand alone project capable of delivering significant value for our shareholders.  Not only does the Study show that the project is technically feasible and economically positive, it also shows that our favorable formation temperatures contribute to reduce our production costs by approximately 10%. We believe these features identify Milestone as one of the largest and best Tier 1 potash greenfield deposits, still available in the world today, that are ready for development.  Our team has already initiated the definition and execution of a feasibility study plan that will further de-risk and allow for the construction of a mine at Milestone. The receipt of this positive Scoping Study is a significant milestone on the path towards building Saskatchewan’s most efficient potash solution mine”; that the Company will file an executive summary of the Scoping Study on the Milestone potash solution mining project with Canadian securities regulators on or before 45 days from the date of this news release.  That the Summary will be available on SEDAR at www.sedar.com, and also on the Company's website.  It is the Company’s policy not to update forward-looking statements other than as required by applicable securities laws and regulations. Various factors may prevent or delay our plans, including but not limited to, contractor availability and performance, weather, access, mineral prices and success and failure of the exploration and development carried out at various stages of the program.  Readers should review risk factors applicable to junior mining exploration companies generally to understand the variety of risks that can affect the Company.  

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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