Red Metal (ASX: RDM) is a mineral explorer with base metal and uranium exploration tenements covering more than 30,000 square kilometres in Australia's most productive mineral provinces.
Red Metal shares surge on new Colorado potash project
Red Metal (ASX: RDM) has applied for 21 potash prospecting permits covering a total of 166 square kilometres of the potash-rich Paradox Basin of Colorado, USA.
The decision to secure this large acreage follows the completion of a detailed study commissioned for the company by the leading international potash consultants, Agapito Associates Inc.
The study identified multiple potash-rich horizons within the application area and concluded that there was high potential for defining economically significant potash resources.
The study predicts the likely presence of potash strata that could be amenable to extraction using standard solution mining methods.
Based on this the company is targeting economic resources capable of producing between 200,000 and 2 million tonnes of potash per year.
Importantly, the prospecting permit applications cover areas that are predominantly federal government owned public land which has had a long history of oil, gas and uranium exploration and development.
Red Metal understand the applications fall outside of known potash leasing areas and as a consequence are subject to a “priority in time” rather than an “open tender” granting procedure.
The company said grant of the applications is dependent upon the Bureau of Land Management’s assessment of Red Metal’s proposed exploration plan and a decision is expected within about six months.
The basinal stratigraphy of the Paradox Basin has similarities to that which hosts major potash solution mining operations to the north in the sedimentary basins of Saskatchewan, Canada, where BHP Billiton has recently invested.
Intercepts calculated for the Potash 5 Bed include 6.7 metres estimated at 27.2% sylvite (17% K2O) from 1697.7 metres in the first hole and 3.7 metres estimated at 30.4% sylvite (19% K2O) from 1861.7 metres in the second.
Another target bed of particular promise is the Potash Bed 9 which occurs at a depth of 1934 metres in the first hole and 2112 metres in the second hole. This bed returned widths of 9.1metres at 16% sylvite in the first hole and 3.7 metres at 38.4% sylvite in the second.
Agapito’s assessment validated the significant intercepts calculated from oil well log data and confirmed the large tonnage potential for potash on the project with the calculation of a JORC code compliant Exploration Target for the Potash Beds 5, 6, 9 and 19.
The study concluded that the Potash Bed 5 to be the most favourable solution mining target. The deeper beds, in particular Bed 9, are considered potentially significant because if they can be solution mined along with Bed 5 they could have the advantage of significantly lowering the drilling cost per tonne of potash produced.
The Agapito review found no fatal flaws with the project and concept at this early stage and recommended advancing the project by assessing existing seismic data and drilling a single exploration core hole located midway between the two old oil holes mentioned above.
Red Metal said the hole would seek to confirm the positive data gleaned from the old logs and allow a more accurate assessment of the potassium content and the relative proportions of potassium salt types and impurities of the beds.
Red Metal shares rose 14% to 15 cents in trading this morning.
