re: Ann: PARADOX BASIN POTASH PROJECT UPDATE ... Thanks GregNZ...

re: Ann: PARADOX BASIN POTASH PROJECT UPDATE ... Thanks GregNZ and mitis for confirmation about the use of oil and gas drilling results in determining the JORC resource.

I feel I should expand on something I wrote earlier. I wrote -

"IMHO, State Holes 1 and 2 were unlikely to ever return great results, but State Hole 3 was, IMHO, reasonably placed."

To add to that -

State Hole 1 was high risk, but still had the potential to return something good. It all depended on, for example -
(1) the angle of dip of the fault at the edge of the graben,
(2) the amount of movement along that fault,
(3) the thickness of the rock that was affected by the fault (i.e. the thickness of rock that had reduced potash bed thickness and grade due to the effects of the fault),
(4) the amount of fluid movement along that fault,
(5) the location of the fault relative to the drill hole, (i.e. the precise underground location where the drill hole intersected that fault).

There were a lot of unknowns.

It could have been possible that the drilling would have gone straight through the region affected by the faulting, and intersected Potash Beds 18 Upper and Lower below the region affected by the faulting, and could have revealed something like the thick beds and high grades revealed at HUSKY FED 6-15, which is just on the other side of the graben. It all depended on the factors listed above, and it was interesting to see how the graben affected the potash beds. But as the drill results demonstrated, it appears that the potash beds were within the zone that was affected by the faulting.

POK State Hole 2 was further from the areas that were known to have thick beds and high grades, which were further to the west (to the west of THREEMILE 43-18H) - so it was higher risk.

POK State Hole 3, IMHO, ideally would have been placed a little further north west (but not in the graben of course), and perhaps the results would have been closer to HUSKY FED 6-15 and HATCH POINT 1. But, of course, given that the company was restricted to the state blocks, the location of this drill hole was, IMHO, well chosen.

It is interesting to note that the company will no longer proceed with POK State Hole 4. IMHO, it would have been useful to drill a forth state hole, but not in the location marked on the map on page 11/35 of the presentation released to the ASX on the 27th of September, 2011. This location, IMHO, would have only returned average results. Proceeding with a better placed State Hole 4, in my opinion, would have been a good idea whilst waiting for federal permits, as a well placed State Hole 4 could confirm the results of previous gas drilling that showed thick beds and high grades in some locations.

Thanks GregNZ, mitis, sbah and donwijeratne for sharing your views - much appreciated.

donwijeratne - agreed - drilling in the state block between FEDERAL HATCH 1 and HATCH POINT 1 would also be a very good location. If I were deciding which locations to drill, I would certainly include this location. By trying to get an average between the results from those two oil/gas wells, perhaps drilling in that state block in the south west corner as you suggested, could return results of maybe Potash Bed 18 Upper at around 4m at 30-35% KCl (just my guess).

Though I think that the state block west of POK State Hole 3 could have the advantage of a thick, high grade Potash Bed 18 Lower in addition to a thick, high grade Potash Bed 18 Upper. But both are in locations that I think have good potential.


PLEASE READ - Although I have done my best to accurately compile the above information, I cannot guarantee that it is free of error. Do your own research and only invest what you can afford to lose.