Potash Lease

[oneoff]

One last thought

From the responses to this thread it sounds like the market value that has been set is approx. $40,000 per quarter when full mineral rights are involved.

Its certainly possible to sell only the potash rights and retain the rest.
Buyers and speculators are also capable of accepting a deal with other assets thrown in for free.

So it appears that the going rate is $40,000 for potash rights; money supposedly upfront and no hidden costs.

The alternative is that over an approximate 80 year operating life of a mine you enter into a "pooling" agreement that you might as well be satisfied whatever the amounts are over the next several generations.

Your minerals and everyone else's are in a pot that as its mined... and priced... and sold to who knows whom..and if disasters are avoided at the mine and in potash business in general.......you're looking at the time value of $40,000 per quarter section of potash minerals.

Putting it into perspective is $40,000 really big money. Farm land values have increased that much in much shorter time periods; and like pipelines; there are costs and restrictions and affects that not all come to mind without some thought.

[mrossm3]

Potash Lease

When you consider a section yields about 6.75 million tonnes of product at about $300 US per tonne and subtract about 72% production costs there is still $567M profit in a section. $40,000 per section sounds pretty low ball as it represents significantly less that 4.5%

[mrossm3]

When you consider a section yields about 6.75 million tonnes of product at about $300 US per tonne and subtract about 72% production costs there is still $567M profit in a section. $40,000 per section sounds pretty low ball as it represents significantly less that 4.5%

[mrossm3]

The figures I quote are based on a report by "The Solution Mining Research Institute" titled "An Overview of the Geology of Solution Mining of Potash in Saskatchewan" prepared by
S. P. (Steve) Halabura P.Geo., North Rim Exploration Ltd., Saskatoon, Saskatchewan, Canada
and
Michael P. Hardy P.E., Agapito Associates, Inc., Grand Junction, Colorado, U.S.A.

for the Fall 2007 Conference 8-9 October 2007 in Halifax, Nova Scotia, Canada.

Page 16 of 18
"In calculating the mineral resource tonnages, the following procedures are recommended:
1. The total interval volume (mineral interval) for each area is calculated by multiplying the net area by the thickness of the potential solution mine interval for each of the mining cuts.

2. The volume thus calculated is then multiplied by a sylvinite tonnage actor of 1,980 kilograms per cubic meter to determine “gross sylvinite tonnage.”

3. A deduction of the area is then made to account for the presence of mining nomalies not detected by existing drill holes and seismic lines, this amount ranging from 25% to 35% depending upon the area and whether anomalies can be identified from existing historical data.

4. A deduction of “extraction ratio” is then made to account for the mineral resource that is left in the ground to provide support and reduce surface subsidence, this being in the form of pillars left around exploration drill holes and potash production caverns, in this paper proposed as being an extraction ratio of 40% for solution mining operations (i.e., 40% of the sylvinite is removed and 60% is left in place to support the mine).

5. An additional deduction of 10% is then applied to account for possible plant and cavern losses,including losses to purge and dust. The cavern losses are the potash remaining in the brine in the cavern.

After the above deductions an estimate of potash tonnage per “section” (square mile) may be made.

As an example, the following is a simple calculation of resource per square mile. Using a simple calculation of area (1 ‘section” is 640 acres or 1 square mile = 2.59 square kilometers) times average thickness (in this example an estimated 26 m) for the Patience Lake and Belle Plaine members times sylvinite density (1.98 tons per cubic meter) times the K2O grade (in this example an estimated 19%) less the 25% allowance for unidentified anomalies gives an estimated tonnage contained within the bounds of one section as being some 19 million tonnes of sylvinite. Using a weighted average grade for the two members of 17% K2O, a potential yield of potash expressed in terms of K2O is some 6.75 million tonnes per section (i.e., per 640 acre tract). This is equivalent to some 2.5 million tonnes per square kilometer. This number, which is based on estimated averages, will vary locally and from area to another."

[mrossm3]

One more question...does anyone know if the Stoney Beach lease area has been unitized?

[gofast]

How did you ever make out with them Parsley? I'm trying to find info out in regards to how much royalties are paying in the Elstow area, dad was approached to sell the rights. I read that the vein north east of Allan mine can be 150m thick.

A potash company offered me money to buy my mineral rights several years ago.
I ignored them.

The potash company then offered to lease my mineral rights.
I ignored them
The potash company then offered to both buy some of my mineral rights plus lease some of the mineral rights
I ignored them.

The potash company then asked me what I wanted.

I said I want to keep the rights to other minerals, for example oil, but perhaps would be willing to renegotiate leasing. perhaps.
We agreed they will wait for me to call them. Parsley

[beaverdam]

What would the yield of potash be (kgs), in 1sq meter of solid rock potash?

Interesting subject, sounds a bit like mineral owners are being screwed by co.'s using the same payment system the socialist NDP used back in the day???