Western Potash files Updated Technical Report on SEDAR, advances EIS, and Updates the Measured Indicated and Inferred Potash Resource at Milestone

Vancouver, December 16th, 2011, Western Potash Corp. (the “Company”) (TSX WPX, FSE: AHE) is pleased to announce the receipt of an updated NI 43-101 Technical Report titled “NI 43-101 Technical Report Summarizing the Preliminary Feasibility Study for a Potash Solution Mine on the Milestone Project (Subsurface Mineral Lease KLSA 008), Saskatchewan.” The Company confirms that this Report has been filed on SEDAR on December 15, 2011. The Technical Report includes an updated resource estimate, and a summary of the Company’s Pre-Feasibility Study announced via news release dated October 31, 2011. The Prefeasibility Study (the “Study”) was completed by AMEC Americas Limited (“AMEC”). AMEC is a leading international engineering and project management company that currently manages multiple potash expansion projects in Saskatchewan with a capital value of several billion dollars. 

The updated resource estimate slightly increases the Milestone recoverable Potash Resource (Patience Lake, Belle Plaine, and Esterhazy Members including the upper halite interbed) to 66.6 million tonnes of Measured Resource (contained KCl), 186.9 million tonnes of Indicated Resource, and 708.2 million tones of Inferred Resource. Inferred Resource around the  Milestone Project plant site land and associated infrastructure have been removed from the estimate.  Purchase of the plant site land was announced via news release dated June 21, 2011. Mineral Reserves were not reported within this updated Technical Report. Mineral reserves have not been estimated because the Company is negotiating to obtain mineral leases for all the Freehold mineral rights within the Indicated and Measured resource areas.  These negotiations are expected to be completed within the next few months.  Mineral reserves will be presented when acquisition of these mineral leases is substantially complete. The updated resource estimate at Milestone was prepared by Agapito Associates Inc. (“AAI”) of Grand Junction, Colorado. The Qualified persons for the Resource Estimate were Dr. Michael P. Hardy, P.E (US), P.Eng. (SK), P.G. (US), and Dr. Douglas F. Hambley, P.E. (US), P.Eng. (SK), P.G. (US).

A detailed summary of the Measured, Indicated and Inferred Mineral Resource within Crown and Leased Freehold Areas is presented in Table 1, 2 and 3 respectively.

Table 1. Measured Mineral Resource within Crown and Leased Freehold Areas Only*

Bed

Average KCL
Grade (%)

In-Place
Tonnage (Mt)

In-Place KCL
Tonnage (Mt)

KCL
Resource**(Mt)

Patience Lake

28.68

320.37

91.87

30.2

Halite Interbed

4.72

144.20

6.81

2.24

Belle Plaine

30.16

131.52

39.67

13.04

Esterhazy

33.70

190.71

64.27

21.13

Total

25.75

786.80

202.63

66.60

* Search Radius of 800 m used; Mt = million tonnes; K2O grade > 15%; Density = 2.08 t/m3, KCl = 1.58303 K2O.
** Resource accounts for geologic anomalies (5%), and extraction ratio (34.6%).

Table 2. Indicated Mineral Resource within Crown and Leased Freehold Areas Only*

Bed

Average KCL
Grade (%)

In-P lace
Tonnage (Mt)

In-Place KCL
Tonna ge (Mt)

KCL
Resource**(Mt)

Patience Lake

28.60

935.65

267.58

84.25

Halite Interbed

4.76

385.38

18.33

5.77

Belle Plaine

30.00

392.59

117.79

37.09

Esterhazy

33.64

538.76

181.23

59.57

Total

25.97

2,252,38

584.93

186.68

* Search Radius of 1.6 km outside radius and 2.5 km inner radius (between drill holes) used; Mt = million tonnes; K2O grade > 15%; Specific Gravity = 2.08 t/m3, KCl = 1.58303 K2O.
** Resource accounts for geologic anomalies (9%), extraction ratio (34.6%).

Table 3. Inferred Mineral Resource within Crown and Leased Freehold Areas Only*

Bed

Average KCL
Grade (%)

In-Place
Tonnage (Mt)

In-Place KCL
Tonnage (Mt)

KCL
Resource**(Mt)

Patience Lake

28.63

4,261.37

1,220.01

316.59

Halite Interbed

4.66

1,793.31

83.59

21.69

Belle Plaine

30.07

1,972.32

593.02

153.89

Esterhazy

33.48

2,486.17

832.38

216.00

Total

25.96

10,513.16

2,729.00

708.18

* 8.0 km radius used; Mt = million tonnes; K2O grade > 15%; Density = 2.08 t/m3, KCl = 1.58303 K2O.
** Resource accounts for geologic anomalies (25%), extraction ratio (34.6%).

AAI have made estimates of the Measured, Indicated and Inferred Mineral Resources based on a Radius of Influence (ROI) similar to that applied by mine operators and peer group explorers working on solution mining properties in the region. Furthermore, the Measured, Indicated, and Inferred Mineral Resources were arrived at by discounting the overall calculated tonnage by Loss Factors of 5%, 9% and 25% respectively, to account for unknown geologic anomalies. The resulting potash quantity was further reduced using an extraction ratio factor of 34.6%, which is the estimated potash available to be extracted for the life of an envisioned operation leaving sufficient material to support cavern stability. The resource estimate was prepared in accordance with the requirements of NI 43-101 of the Canadian securities regulators.

The recently completed Prefeasibility Study confirms that the Milestone Project shows significant positive economics and that the asset is of sufficient size and grade to support primary and secondary solution mining for more than forty years at a production rate of 2.8Mt/yr.  The study concluded that there are no known limitations that may prevent a successful and profitable project outcome. The Feasibility Study is in progress, and will produce results which adhere to the AACE “Class 3” classification for projects.  Water sources are currently being evaluated for the project.

A summary of the assumptions and results of the Prefeasibility Study appears below:

Target Annual Production rate

2.8 Mt/yr

Life of Mine

>40 years

Years of Construction

3

Construction Start-up

2013

Production Start-up

2016

Years to Full Secondary Production

6

Long Term Potash Price (FOB Gate)

$511 US/tonne

Assumed Exchange Rate

US$/CAD$ 1.00

Taxes and Royalties

$28.90/tonne CAD

Sustaining CAPEX Rate %

2.0%

Base Case

100% Equity

Initial CAPEX

$2.458 Billion CAD

Port CAPEX

$300 Million CAD

Total Initial CAPEX

$2.758 Billion CAD

NPV (10)

$4.14 Billion CAD

IRR

22.7%

Payback Period

5 Years

 

Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Milestone EIS Update

The Company also reports that all environmental baseline data required for the preparation of the EIS has now been collected. On October 11, 2011, the Company submitted a "Project Proposal" to the Saskatchewan Ministry of Environment.  The Project Proposal provides a conceptual level description of the Milestone Project and formally initiates the regulatory review process under the provincial Environmental Assessment Act.  Upon review of the Project Proposal, the government of Saskatchewan will issue Project Specific Guidelines, which provide detailed information requirements to be included in the EIS.  The EIS remains on schedule and on budget, with an anticipated EIS submission date of Q3 2012. Golder Associates Ltd. (“Golder”) of Saskatoon, Saskatchewan continues to assist the Company with the preparation of the Environmental Impact Statement (“EIS”) for the Milestone project.  Golder is an employee-owned, global company providing consulting, design, and construction services in earth, environment, and related areas of energy.  Golder was chosen by the Company due to their commitment to technical excellence and their experience with environmental assessments for potash projects.  

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.

Brazil Update

On July 28 2008, the Company signed an agreement with Amarillo Gold Corporation (Amarillo”), a company related by a common director, to acquire potash mineral rights in Brazil. Amarillo, through its Brazilian subsidiary, submitted applications on behalf of the Company for 113 potash permits totaling 982,962 hectares within potash prospective portions of the Brazilian Amazon Basin. The Company is pleased to announce that these permits have now been granted by the Brazilian government. These potash permits are currently being transferred into the Company’s wholly owned Brazilian subsidiary, Potássio Ocidental Mineração Ltd. (the “Subsidiary”). The Subsidiary has also, since its incorporation in December 2008, submitted its own applications for an additional 53 potash permits totaling 91,245 hectares.  These additional permits are located in the Amazon Basin, and have been granted to the Subsidiary by the Brazilian government.  

About Western Potash

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. Dean Pekeski is also co-author of the updated NI 43-101 Technical Report on which this news release is based.

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

 

Cautions Regarding Forward-Looking Statements

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the effect and estimated timeline of the drilling and assay results on the Company, the estimation of mineral reserves and mineral resources; the timing and amount of estimated future exploration; costs of exploration; capital expenditures; success of exploration activities; permitting time lines and permitting; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; and title disputes or claims; Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements or forward-looking information. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except in accordance with applicable securities laws.

 

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