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Tackler

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Re: Rocketred post# 442

Tuesday, 02/26/2008 7:21:24 PM

Tuesday, February 26, 2008 7:21:24 PM

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The indicated and inferred are classified according to NI 43-101 in the report. In fact the authors took an even more conservative approach with thier estimates than Mosaic does with 35 yrs of solution mining experience there.

http://www.potash1.com/i/pdf/TechnicalReport20070208.pdf

Starting at bottom of page 55

This report classifies the potash mineralization in terms of Inferred Mineral Resource and Indicated Mineral Resource as defined by NI 43-101. This reflects the level of confidence in the identified sylvinite body and the location of the Permit adjacent to the operating Belle Plaine potash solution mine. In the vicinity of the cored drill holes, the evidence is sufficient to classify areas as Inferred and Indicated Mineral Resource. No Measured Mineral Resource is identified because no engineering studies have been completed. At the Belle Plaine lease area to the south of the Permit Area, the mine operator Mosaic classifies the “non-reserve” mineralization for the entire lease area as “Potentially Recoverable Tonnes” even though some locations are up to 14 miles (22.53 km) from cored drill holes. (The Mosaic Company Form 10-K Submitted to the US SEC, for year ended May 31, 2005).

The classification of resources as Inferred and Indicated Mineral Resource is as follows;
• Indicated Mineral Resource: Within 1 mile (1.60 km) of a cored and assayed drill hole
• Inferred Mineral Resource: Within 1 mile (1.60 km) minimum and 5 miles (8.05 km) maximum radius of cored and assayed drill hole

The rationale for this is based on “best practice” from the adjoining Mosaic Belle Plaine solution mining operations. In determining which portions of Permit KP 289 should be classed as “Inferred Mineral Resource” or “Indicated Mineral Resource,” it is suggested that the methods used by The Mosaic Company to define Proven Reserves and Probable Reserves in their Form 10 K submission to the United States Securities and Exchange Commission (US SEC) be considered for guidance. The Mosaic Form 10 K described their method of defining these two categories of reserve and is meaningful for application to the Permit KP 289 because the Belle Plaine solution mining operations are similar to the conceptual mine plan anticipated for the commercial extraction of potash from the Permit Area, the same beds are to be mined as at the Mosaic Mine, and the Mosaic solution mining operations are within 9 km of the permit’s southern boundary. In defining “Reserves,” Mosaic Form 10 K states that “Our
estimates of our potash reserves and non reserve potash mineralization are based on exploration drill hole data, seismic data and actual mining results over more than 35 years (more than 15 years in the case of Hersey). Proven reserves are estimated by identifying material in place that is delineated on at least two sides and material in-place within a half mile (0.804 km) radius or distance from an existing sampled mine entry or exploration core hole. Probable reserves are estimated by identifying material in place within a one mile radius or distance from an existing sampled mine entry or exploration core hole. Historical extraction ratios from the many years of mining results are then applied to both types of material to estimate the proven and probable reserves.” It is our opinion that the methodology applied to the calculation of “Proven” and “Probable Reserve” calculations are similar to those used to estimate the categories of “Measured” and “Indicated” Mineral Resource consistent with the nomenclature of NI 43-101. What is of value from the Mosaic 10 K submission to the US SEC is the definition of the radius from a cored drillhole that has been used to define Proven or Probable reserves. The authors suggest that this precedent can be used to establish the distance from a drill hole for inclusion of resource in the category of Measured and Indicated Resource. The “Indicated” class of Mineral Resource requires a higher level of confidence than the broader description of “Inferred Mineral Resource.” In the case of a bedded sedimentary deposit that is not revealed in outcrop but only testable through drilling, the key determinant that may increase the confidence of a mineral resource estimate from “Inferred” to “Indicated” is the proximity to a cored and assayed drill hole. It is the opinion of the authors that only those portions of Permit KP 289 that have been herein defined as “Area 2” and that are beyond 1 mile (1.60 km) of a cored drill hole may have the potential to be classed as “Inferred.” The radius of 5 miles (8.05 km) from a cored drill hole was selected to limit the extent of the inferred Resource even though Mosaic reports their “non-reserve” potentially recoverable tons extends to the extent of boundaries of the mineral rights owned or leased. Mosaic states that such boundaries are up to 14 miles (22.53 km) from the closest sampled mine entry or exploration core hole.

T

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