First Potash Corp. Announces Earn-In and Joint Venture, and Grant of Options Under New Corporate Stock Option Plan
First Potash Corp. (TSX-V:FSP) (OTCBB:SALTF) ("First Potash" or the "Company") is pleased to announce that it has entered into a Letter of Intent for a US$2.5 million Earn-In and Joint Venture agreement (the "Agreement") with MinexVentures VII,a Colorado limited liability company ("Minex") to develop one of the Company's 10 brine salar properties,at the Salar de Pedernales in Chile's Atacama Region III (the "Property").
To earn an undivided 45% interest in the Company's wholly-owned Salar de Pedernales potassium and lithium brines project,Minex must provide funding for Property expenditures totaling at least $2.5 million within two years of the date of the approval of the Agreement by the TSX Venture Exchange (the "TSXV") (the "Effective Date"). Minimum expenditures of US$900,000 are anticipated to be funded by Minexduring the first calendar year after the Effective Date.
The Agreement contemplates that Minexwill fund and earn project interests as per the following table:
MILESTONE EARN-IN EXPENDITURES paid to or for FPC
INCREMENTAL % INTEREST EARNED IN PROJECT February 12, 2013 US$100,000 5 March 15, 2013 US$100,000 5 Delivery of inferred resource estimate US$700,000 10
Delivery of pre-feasibility study ("PFS") or preliminary economic assessment ("PEA") US$1,600,000 25
TOTALS US$2.5 million 45
At completion of the Earn-In,First Potash will deliver 2 million fully-paid common shares of the Company to Minex,which shares will be subject to a hold period in accordance with applicable securities laws. If Minexwithdraws prior to full completion of Earn-In,First Potash shall deliver common shares to Minexpro-rata corresponding to the project interests Minex has earned. The parties have also agreed to reserve and convey to First Potash a 2% NSR production royalty capped at US$6 million,one-half of which can be repurchased by Minexfor US$2 million prior to commercial production. At Earn-In,the parties intend to enter into a more formal Joint Venture Agreement governing operations at Pedernales.
The Company anticipates that the joint venture's focus will be on developing the Salar de Pedernales property through exploration, geochemical and geophysical analyses,pre-feasibility studies,permitting,and drilling, among other related activities. It is anticipated that activities under the Earn-In will allow FPC to deliver a completed Technical Report under National Instrument 43-101 and a preliminary economic analysis ("PEA") with respect to the Property within two years of the Effective Date. The Agreement is subject to TSXV approval.
The Salar de Pedernales is the second largest salar in Chile and is located approximately 4 hours from the city of Copiapo. First Potash owns mineral concessions at Pedernales of 5,100 hectares and through its subsidiary and operating agent has submitted applications for water exploration rights covering approximately 15,000 hectares at the Property, making it the largest project in its portfolio of 10 brine salar projects.
"We are pleased that in such a difficult funding environment for junior-mining resource companies,an experienced,fundamental investor was able to analyze one of our projects and understand its full potential and partner with us in such a constructive way," said Andrew Brodkey,CEO of First Potash Corp. "We are excited that we will be able to deploy capital to move one of our core projects forward towards the eventual goal of producing potash (for fertilizer) at Salar de Pedernales. Minexentities have been indirect investors in the Company before,and we are grateful that they are showing their support for the Company's change of focus to commercialize potash (for fertilizer) from our Chilean properties."
The Company also announces that its shareholders approved a new 20% fixed stock option plan at its Annual General Meeting held on November 30,2012,which replaced the Company's previous 10% rolling plan. On December 13,2012,the Company granted a total of 5,550,654 options to management and directors in two tranches,the first half at a strike price of $0.10,and the second half at a strike price of $0.15. Exercise of such stock options are conditional upon prior approval of the TSXV.
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