Resources and Reserves.

Mineral Resources and Mineral Reserves

The Feasibility Study identified Measured and Indicated Resources of 1,017.8 million tons at an average grade of 83.9% by weight polyhalite. The Resource was constrained by a minimum polyhalite thickness of 4 feet and a minimum resource grade of 65% polyhalite. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Mineral Resources are summarized in the table below.

Mineral Resources (effective date May 31, 2013)
Category
Average
Thickness

(ft)
Resource Area
(acres)
In-Place Tons1,2,3 (millions)
Polyhalite (wt %)
Equivalent K2SO4
(wt %)7
Anhydrite
(wt %)
Halite
(wt %)
Magnesite
(wt %)
Measured4
5.2
26,166
511.7
84.5
24.4
4.02
3.27
7.94
Indicated5
5.0
26,698
506.0
83.3
24.1
4.00
3.30
8.61
Total M&I
5.1
52,865
1,017.8
83.9
24.2
4.01
3.28
8.27
Inferred6
4.8
15,634
284.0
82.6
23.9
4.11
3.37
8.82

1Average in-situ bulk density of 173.5 pounds per cubic foot.
2Bed thickness cutoff of 4.0 feet, composite grade cutoff of 65.0%, excluding out-of-seam dilution.
3Mineral Reserves are included in Mineral Resources.
4Measured resource located within 0.75-mile radius from an exploration core hole.
5Indicated resource located between 0.75-mile and 1.5-mile radius from an exploration core hole.
6Inferred resource located between 1.5-mile and 3.0-mile radius from an exploration core hole.
7Pure polyhalite grades 28.9% by weight K2SO4. This also equates to 15.6% by weight K2O.
Note: Gypsum weight percent negligible for all resource classifications.

In addition to defining the Mineral Resources and Mineral Reserves, the Feasibility Study specified a 50-year mine plan. Contained within the mine plan are approximately 182.4 million recoverable tons of Proven and Probable Reserves grading 78.05% by weight polyhalite. Mining was constrained to a minimum polyhalite grade of 66%, as well as a minimum polyhalite thickness of 4 feet. A summary of these Mineral Reserves is listed in the table below.

Mineral Reserves (effective date January 9, 2014)
Category
Average
Mined Thickness2 (ft)
50 Year Mine Plan Mined Area
(million sq ft)
ROM Mine Tons3,4 (millions)
Mining Recovery5
(%)
Polyhalite (wt %)
Equivalent K2SO4
(wt %)6
Anhydrite
(wt %)
Halite
(wt %)
Magnesite
(wt %)
Proven
5.9
246
125.0
47.1
78.42
22.66
11.29
3.66
7.79
Probable
5.9
113
57.4
64.8
77.20
22.31
11.60
3.65
8.30
Total P&P
5.9
359
182.4
51.5
78.05
22.55
11.39
3.66
8.08

1Mineral Reserves are included in Mineral Resources.
2Bed thickness cutoff of 4.0 feet, composite grade cutoff of 66.0%, including out-of-seam dilution.
3Average in-situ bulk density of 173.5 pounds per cubic foot.
4No inferred tons mined.
5Areal recovery (mined area) inside 50 year mine plan boundary.
6Pure polyhalite grades 28.9% by weight K2SO4.  This also equates to 15.6% by weight K2O.
Note: Gypsum weight percent negligible for all resource classifications.

Updates to the Mineral Resources and Mineral Reserves estimates are based on the results from the completion of ICP's Phase 3A exploration drilling program, a continuation of the exploration program included in the report dated December 30, 2011, and titled National Instrument 43-101 Technical Report Prefeasibility Study (PFS) for the Ochoa project in Lea County, New Mexico. Industry best practices were followed for the exploration program. The investigations, interpretation of exploration information, and the quality assurance and quality control measures for the Phase 3A program were as reported in the PFS.

Over 70,000 feet of exploration drilling has been completed to date. Additionally, 855 petroleum wells were incorporated into the model (for stratigraphy correlation and bed thickness only) through geophysical logging. A higher minimum polyhalite grade (66%) was defined for the Mineral Reserves to ensure compliance with the Mineral Resource cutoff grade (65%) when developing mine projections.

As compared to the PFS, Mineral Reserves increased over 30% from 139.5 million tons to 182.4 million tons while maintaining similar polyhalite grades (79.39% in the PFS to 78.05% in the Feasibility Study). Measured and Indicated Resources (4-foot minimum thickness) increased from 983.8 million tons to 1,017.8 million tons. The Feasibility Study is based on a mine life of 50 years.

Measured and Indicated Mineral Resources exist to the north, east, and west of the 50-year mine plan boundary and there is a reasonable expectation that those resources will be economically mineable, which would allow for an extension of mining operations beyond 50 years.