Selective Solution Mining Method 

The Company’s innovative selective solution mining process described under “COMPANY OVERVIEW-Patented Process & Technology” will give it the ability to produce potash at lower costs than its competitors who produce potash using conventional mining methods or traditional solution mining methods. 

Conventional Mining Methods 

Worldwide, most potash is mined using conventional mechanized underground mining methods, where the potash is manually dug out of the mines.  Conventional mechanized mining involves extracting potash through at least two different mine shafts.  One shaft moves people, materials and machinery by elevator.  Another shaft moves the potash to the ground surface, also by elevator, where minerals are separated using a water intensive process.  This method of mining is labor and energy intensive.  Moreover, conventional mines also have a depth limitation and are prone to natural gas intrusion and to flooding due to the porosity of the rock. 

Solution Mining Methods   

• Traditional:  Solution mining typically involves injecting fresh water through a well bore into underground caverns, where salt, potash, and other minerals are dissolved.  The mixture is then usually pumped to the surface as brine, where the minerals are recovered most often by evaporating the water in solar evaporation ponds or in vacuum systems and collecting the settled minerals from the bottom of the pond or the vacuum system. Solution mining offers significant advantages over mechanized underground mining such as lower up-front capital cost, a shorter ramp-up time, lower electrical usage, and increased mine safety.  Some drawbacks of solution mining may be higher water usage if evaporation is used and as with conventional underground mining, the problem of disposing of sodium chloride tailings to the extent selective solution mining is not utilized.  In addition, artificial cooling (using refrigeration) may also be used but it is energy intensive.  Finally, the injection fluids are often artificially heated, thus creating additional need for energy.
  

• PPI’s Selective Solution Mining:  PPI’s selective solution mining process will use a patented process that will eliminate many of the disadvantages of conventional mechanized underground mining and solution mining.  Selective solution mining capitalizes on the tendency for water that is fully saturated with sodium chloride to preferentially dissolve potash and leave the sodium chloride behind in the cavern.  When the potash-laden solution returns to the surface, a portion of the potash is removed and the solution is returned to the cavern for another extractive cycle.  The result of this selectivity is that the sodium chloride and impurities are either left in the cavern or returned to the cavern leaving very little waste (i.e., sodium chloride tailings”) on the surface.  Since there are no solar evaporation ponds, water consumption is limited to that used to initialize (undercut) a cavern, to fill the void space created by the removal of potash, and small amounts lost in cooling ponds or used in the product purification process.  See “COMPANY OVERVIEW-Patented Process & Technology-PPI’s Production Process.” 

The Natural Environment 

The cavern temperature, which is a function of the earth’s heat and the depth of the deposit, is expected to be [125 degrees Fahrenheit].  This compares to the ambient temperature at the surface of [60 degrees Fahrenheit].  This temperature differential and PPI’s patented process will help drive the leaching in the cavern and the dissolution of the potash in the processing plant and yield significantly lower energy use. 

PPI’s SITLA leases overlie the Mancos Shale, a formation which is [1,000 feet] deep and highly impervious.  This makes it ideal for cooling brine and for the ability to use cooling ponds without the need for pond liners.  

Magnesium Chloride 

PPI expects to produce carnallite which is a combination of potassium chloride and magnesium chloride.  The magnesium chloride is a byproduct of potash production and is produced at no additional costs but can be sold for its many valuable uses.  Magnesium chloride is a valuable product used as a feedstock to create magnesium metal and provides an environmentally friendly de-icer replacement for rock salt.  Magnesium chloride is currently used in only [3 percent] of de-icing applications.  State and local agencies have little choice but to apply rock salt, a mineral known for harmful effects on building infrastructure and the environment.  PPI’s low production costs and central US location will enable businesses and agencies to obtain magnesium chloride at competitive prices, protect the environment and better serve their customers and citizens.  See “INDUSTRY OVERVIEW-Intrudction to Potash-Magnesium Chloride.” 

Due to its geographic position, PPI will enjoy a competitive advantage over international importers due to its ability to offer lower shipping costs and shorter delivery lead times.   

The Company’s location in Crescent Junction is adjacent to Union Pacific’s Central Corridor at the intersection of Interstate 70 and US Highway 191 serving all main thoroughfares.  Compared to Potash Corporation of Saskatchewan, PPI’s Utah location is [205] miles closer to Kansas City, (heart of the Corn Belt) and [945] miles closer to Fresno (fruit and vegetable basket) than Saskatchewan.  This equates to a roughly [2,500] mile round-trip reduction for [8.3] million tons of product.  The US potash market currently relies primarily on Canadian and Russian imports. Thus PPI customers will enjoy shorter lead times and lower delivery costs. 

Specific location in the State of Utah also provides the following significant advantages: 

• Utah has a very friendly business climate.   It was recently reported in the Wall Street Journal, “Utah's flat, 5 percent corporate-tax rate is 1.6 points below the 50-state average, according to the Tax Foundation, and it is one of the lowest among states that levy corporate taxes.  Barriers to business creation are minimal. No wonder Utah ranked fourth among states in the Pacific Research Institute's last U.S. Economic Freedom Index (from 2008).” 
  

• PPI’s initial area of operations is located on lands owned by the State of Utah and managed by the School and Institutional Trust Lands Administration (“SITLA”).  SITLA was created in 1994 by the Utah Legislature and was structured as a business with a policymaking Board of Trustees and a Director who are charged to prudently and profitably manage the lands for Utah schools and institutions.  Like a private business, SITLA managers are paid bonuses based on performance.  No tax dollars are used for agency operating expenses because the agency is funded solely from the revenues generated by the lands.  All net revenue is saved in the permanent fund and is invested by the State Treasurer.  Annual dividends are distributed through the School Land Trust program.  Therefore, the royalties paid by PPI will be used to support Utah’s school children.  SITLA has been very supportive of PPI’s project and demonstrated a commitment to encourage PPI’s efforts of potash development.
  

• Most of the larger tracts of land in Utah, particularly in the Paradox Basin, are owned by either the State of Utah or by the U.S. Department of Interior and administered by the Bureau of Land Management (BLM).  And, other than national and state parks, most of these lands are interspersed with one another, although the BLM usually has more contiguous tracts.  Since PPI’s initial area of operations lies on a contiguous tract of [10,871 acres] owned by the State of Utah, many of the potential issues surrounding operations on or crossing BLM property will be avoided.  Only approvals from the State of Utah and SITLA will be necessary and impact most operations.  These approvals will include: 

• Drill sites 
• Easements, including pipelines, roadways, rail and plant site  
• Operating procedures, including environmental requirements. The lengthy and time-consuming requirements usually associated with projects on federal lands, such as Environmental Impact Statements and other requirements under NEPA (National Environmental Policy Act) will not be required