New Colorado Potash Project
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Red Metal has applied for 21 potash prospecting permits covering a total of 166 square kilometres of the potash-rich Paradox Basin, of Colorado (see figures). The decision to secure this large acreage follows the completion of a detailed study commissioned for the Company by the leading international potash consultants, Agapito Associates Inc. The study identified multiple potash-rich horizons within the application area and concluded that there was high potential for defining economically significant potash resources.
The study predicts the likely presence of potash strata that could be amenable to extraction using standard solution mining methods. Based on this the Company is targeting economic resources capable of producing between 200,000 and 2 million tonnes of potash per year.
Importantly, the prospecting permit applications cover areas that are predominantly federal government owned public land which has had a long history of oil, gas and uranium exploration and development. Red Metal understand the applications fall outside of known potash leasing areas and as a consequence are subject to a “priority in time” rather than an “open tender” granting procedure. Grant of the applications is dependent upon the Bureau of Land Management’s assessment of Red Metal’s proposed exploration plan and a decision is expected within about six months.
The basinal stratigraphy of the Paradox Basin has similarities to that which hosts major potash solution mining operations to the north in the sedimentary basins of Saskatchewan, Canada, where BHP Billiton has recently invested. It contains a large number of laterally extensive salt horizons several of which contain beds where potash-rich salts predominate. Drilling logs from earlier regional oil exploration indicate that some of these beds reach economically viable widths and, importantly, primarily consist of the soluble potassium-rich salt, sylvite (potassium chloride).
The structural characteristics of the basin appear very favourable for the establishment of solution mining operations. The Red Metal applications are centred on potash horizons in flat lying strata over the crests of the regional Dolores anticline. Regional oil exploration data which included seismic surveying provides strong evidence that this anticline is a very broad feature with particularly gentle dips: a key requirement for the preparation of the cavity leach systems used in most major solution mining operations.
Of particular significance is the oil log data from two wells situated over 17 kilometres apart and central to the project area. Although no direct potash assays were taken during the oil drilling our consultants have used standard industry practice calculations based on natural gamma data from radiometric logs to determine best estimate potassium grades for contained potash. These logs reveal a series of potash beds with encouraging grades and widths at depths at which solution mining can be contemplated with the most encouraging being the Potash 5 Bed.
Intercepts calculated for the Potash 5 Bed include 6.7 metres estimated at 27.2% sylvite (17% K2O) from 1697.7 metres in the first hole and 3.7 metres estimated at 30.4% sylvite (19% K2O) from 1861.7 metres in the second. Another target bed of particular promise is the Potash Bed 9 which occurs at a depth of 1934 metres in the first hole and 2112 metres in the second hole. This bed returned widths of 9.1metres at 16% sylvite in the first hole and 3.7 metres at 38.4% sylvite in the second.