Potash and Polyhalite.

Potash is the collective term for a potassium-bearing, chemical sedimentary mineral deposit that is the result of low-temperature chemical processes, governed by evaporative concentration of a fluid such as seawater or freshwater. Bedded potash deposits commonly occur in sedimentary basins that have restricted connection to more dilute fluid. Diagenetic processes play an important role in evaporite mineral alteration and the production of specific potash ore minerals.

Potash mineralization occurs as assemblages of predominantly potassium chloride or predominantly potassium sulfate minerals. These assemblages may be interbedded or adjacent to one another, but rarely occur as a mixed assemblage in a single sedimentary bed. Individual potash mineral deposits can typically be correlated with geophysical logs and mapped over large areas. Evaporites are formed from evaporating seawater and brines. Bodies of seawater, such as coastal lagoons and embayments, are characterized by restricted circulation with the open ocean, which allows evaporation of water and resulting concentration of salts in the residual solution. Once the concentrations are high enough, precipitation occurs. The precipitation sequence of minerals from seawater generally starts with the least soluble calcium and magnesium carbonates, such as limestones and dolomites, followed by calcium sulfates (gypsum and anhydrite), halite, the magnesium sulfates, potassium chloride (sylvite), and the magnesium chlorides. Evaporites can form thick repetitive sequences of minerals as seen in the Carlsbad, New Mexico area.

Polyhalite is a hydrated potassium, calcium and magnesium sulfate salt, described by the following formula: K2SO4 • 2MgSO4 • 2CaSO4 • 2H2O. It is usually white, colorless or gray, but may also be red or pink if iron oxides are present. Polyhalite has a hardness of 3.5 on the Mohs scale and a specific gravity of approximately 2.8 grams per cubic centimeter (g/cc). It exhibits a triclinic crystal habit, although it is commonly extremely fine-grained or aphanitic. Polyhalite may be formed from primary precipitation or as a secondary mineral produced by the replacement of anhydrite. Both origins of polyhalite occur through reaction of gypsum or anhydrite with potassium and magnesium-rich solutions.

Ochoan Stratigraphic Mapping Units

Potash in the Salado Formation occurs as interbeds within both the anhydrite and halite units of the cyclic units. Potash occurs as polyhalite in the anhydrite and sylvite; langbeinite or carnallite in the halite units. The Salado Formation in the northern Delaware Basin is divided into three units; the middle zone, known as the McNutt potash zone, varies in thickness between 120 feet in the northwestern part of the Delaware Basin to over 590 feet in the eastern part of the basin. Within the McNutt potash zone, there are 11 distinct potash cycles five of which have been commercially developed in the Carlsbad, New Mexico area. The McNutt potash zone has not yet been evaluated in the Ochoa project area; however, IC Potash Corp. does intend to pursue this opportunity. Structure A simple structural setting and conformable stratigraphic sequences characterize the geology of the Ochoa Project. The stratigraphic section of interest, the Rustler Formation, is present in its entirety throughout the ICP project area. In general, the Ochoa project overlies a gentle, symmetrical synform with a northwest-southeast axial orientation. The synform appears to have full closure to the northwest and dips slightly to the southeast. Borns and Shaffer (1985) completed a regional correlation of 276 borehole geophysical logs to identify the horizons of the Ochoan-age rocks in the Delaware Basin. Correlation of the additional geophysical logs, carried out by ICP, has improved the understanding and resolution of the subsurface geology in the Ochoa project area. The horizon of interest in the project area is interpreted to have accumulated in a shallow marginal marine setting, specifically a lagoon environment.

Mineralization

The target horizon of ICP’s Ochoa project is the polyhalite within the Tamarisk Member of the Rustler Formation. The Rustler Formation is predominantly made up of marine anhydrite and dolomite and represents the transition from the halite-bearing evaporites of the Salado Formation to the continental red beds of the Dewey Lake Formation. There are five recognized Members of the Rustler Formation, from oldest to youngest: the Los Medaños, Culebra, Tamarisk, Magenta and Forty-Niner Members. The Los Medaños Member consists of siliciclastic rocks, halitic mudstones and muddy halite, and sulfate minerals, principally anhydrite (Powers and Holt 1999). The Culebra Member consists of pinkish gray dolomite. The Tamarisk Member comprises three sub-units that are a lower-basal anhydrite, a middle mudstone, and an upper anhydrite. Polyhalite occurs within the upper anhydrite. The thickness of the Tamarisk Member principally varies, as a function of the thickness of the middle halite unit. The Magenta Member is predominantly dolomite, with minor amounts of gypsum. The Forty-Niner Member has a similar general stratigraphy to the Tamarisk Member. It is made up of a lower and an upper anhydrite with a middle siltstone.

The structural surfaces of the top of the Salado Formation (i.e., base Rustler Formation), the top of the Rustler Formation and the polyhalite bed are subparallel to each other. The polyhalite bed within the Tamarisk Member of the Rustler Formation was correlated over several hundred square miles throughout the Ochoa project area. The polyhalite in the area of the Ochoa project Mine Plan is very flat lying and 1,500 feet to 1,600 feet below the surface. Polyhalite thickness ranges from 4 feet to 6 feet and averages approximately 5 feet. The polyhalite bed has homogenous thickness throughout most of the mineralized area; with thinning from 4 feet to 0 feet, restricted to a narrow zone at the periphery of the mineralized area. Only a few zero-thickness spots are interpreted within the main mineralized area.