The Potash Brine Ponds from Intrepid Potash Inc. in front of the Cane Creek Anticline in Utah.
Today, Prima Diamond Corp. (TSX.V: PMD) announced the acquisition of the Green Energy Lithium Project in Utah, USA. Historic well drilling showed extremely high lithium grades of 1,700 mg/L, with brines reaching the surface under the natural pressure of the aquifer (i.e. without pumps). Such a lithium grade would be 6 times more than one of Albemarle Corp.'s (ALB) best past wells in Nevada (~310 mg/L) and 17 times more than Pure Energy Minerals Ltd.'s (HMGLF) average resource grade (~102 mg/L). After the transaction, consolidation, debt settlement and a $500,000 financing, Prima would have ~35 million shares issued and outstanding.
A decrease in lithium grades and resources from Nevada's Clayton Valley brines is prompting juniors to look elsewhere in North America for exploitable resources of lithium. Moreover, the question arises of how many new lithium mines the state of Nevada would permit as water consumption may become problematic with more than one lithium mine in operation at the Clayton Valley. Rockstone opines Utah being a prime candidate to fill the emerging lithium mine supply deficit in the US.
Historic drilling at the Green Energy Property encountered brines at 1,833 meters ("m") depth and it was recorded that the artesian brine flow was so strong that drilling had to be suspended after penetrating only 2 m of the 9 m thick pay zone. It was stated that the well could flow at a rate in excess of 50,000 barrels of brine per day. The major advantage of a so-called"flowing artesian well": No pumping may be required as the brine flows to surface under the natural pressure of the acquifer.
Geological strata giving rise to an artesian well. An artesian aquifer is a confined aquifer containing groundwater under positive pressure. This causes the water level in a well to rise to a point where hydrostatic equilibrium has been reached. A well drilled into such an aquifer is called an artesian well. If water reaches the ground surface under the natural pressure of the aquifer, the well is called a flowing artesian well. (Source: Wikipedia)
According to today's press-release:
"The [Green Energy Lithium] Property exists over an extensive area with historic fluid analysis assays ranging from 81-1,700 mg/l lithium in saturated brines. The brine was discovered in the 1960's when over pressurized oil exploration wells encountered blow-outs upon drilling. Approximately 20 wells have been drilled on the Green Energy Property. Of these, 5 have analytical data for lithium. Historic exploration of the property was conducted by Fidelity Exploration and Production Co., U.S Borax, King Oil Co. and Amerada Co. since the 1960's. In March 2011, Mesa Exploration completed a NI 43-101 technical report which reviewed the geology and historic work performed on the property. This review concluded that there exists a historic resource estimate of 15 million barrels of brine containing:
• Lithium: 5,750 t (30,535 t Li-Carbonate)
Grade: 1,700 mg/L
• Calcium: 157,000 t
Grade: 46,700 mg/L
• Magnesium: 147,000 t (576,450 t MgCl2)
Grade: 43,600 mg/L
• Potassium: 158,000 t (302,400 t KCl)
Grade: 47,000 mg/L
• Sodium: 96,000 t
Grade: 28,500 mg/L
Lithium occurs at the project in an over saturated brine (40% minerals, 60% water) and was discovered during oil exploration when drill wells intercepted Bed #31 of the Paradox Formation. Bed #31 is approximately 6,000 feet deep and consists of 30 feet of shale, anhydrite and dolomite; the bed is not part of any oil reservoir. Engineering reports from the 1960s conclude that the brine reservoir is extensive (over 10 square miles) and is recharged from fresh in-flows as indicated by well pressure measurements, drawdown tests and oxygen-deuterium isotopes.
Prima intends to conduct a review of recent and historic well logs, along with chemical analysis in the area and reprocessing of seismic data focusing on mineral brine. Evaluation of reservoir potential will be done in preparation for the re-entry of shut in wells."
The authors of the 2011 Technical Report on the Green Energy Project came to the following conclusion and recommendation:
"The geology and controls of mineralization in the immediate area of the property are reasonably well known as a result of mapping and extensive oil and gas drilling. The presence of the adjacent Cane Creek mine which has been producing potash for 45 years using the same process envisioned for mining potash at Green Energy indicates that potash production there should be feasible. The recovery of lithium and other products from the supersaturated brines should also be feasible since similar brines are the primary source of the world's lithium. While not yet sufficiently well defined for mining purposes, both the lithium and the potash resources appear to be quite large, based on the oil and gas well data, and on brine studies from the 1960's."
"There is a substantial resource present in the Green Energy Project area as shown by the drilling, sampling and geologic modeling done by prior operators on the property. Historic resource estimates are not NI 43-101 compliant, but could perhaps be made compliant by additional drilling and examination of additional data by a "Qualified Person". As a result of a review of current prices and near-term market projections for the anticipated products, particularly lithium, as well as advances in recovery technology beyond the basic methods used at the adjacent Cane Creek mine, it is the author's opinion that this property has a reasonable likelihood of being profitably exploited. The available data from the area of the Green Energy Project is a strong indication of the potential for it to become a producer of lithium, potash and other products. In order to confirm those indications, additional work will be necessary."Conclusion
According to data collected by Benchmark Mineral Intelligence, the price of lithium carbonate so far in 2016 is 47% higher than last year's average. While the lithium price is going "parabolic", as Chris Berry recently noted, the lithium staking rush has been limited predominately to Nevada (Silver Peak / Clayton Valley), where North America's only lithium mine is in operation (since 1960s).
"Even Silver Peak is likely at the tail end of its days as a productive site, according to Anderson. With lithium production in the site starting in the 1960s, Silver Peak is basically running out of the material, he said. 'It was a good operation, but lithium concentrations have declined,' Anderson said. 'I'm actually surprised that Rockwood expanded operations because that site will be likely gone in 10 years. Silver Peak is even processing lithium brought in from Rockwood's South American operations these days.'... Nevada does not have the critical mass in lithium production necessary to supply all of Tesla's needs or attract other industries, for that matter... With most mining facilities in Nevada on federal land, getting approval can be a drawn-out process, according to Hill of the Governor's Office of Economic Development." (Reno Gazette-Journal)
In 2015, Albemarle Corp. (NYSE: ALB; market cap.: $5.5 billion USD) acquired Rockwood Holdings Inc., amongst others operator of the Silver Peak Lithium Mine, for around $6 billion USD. Production data from Silver Peak is proprietary and unpublished. However, the 2014 Annual Report from Rockwood cites production in 2013 at 870 t lithium. Previous production was reported by Price, Lechler, Lear and Giles (2000) at 25,600 t lithium through 1991. The historical lithium brine resource in Clayton Valley has been estimated at 3.7 million t lithium carbonate or 700,000 t lithium (Kunasz, 1975), 650,000 t lithium (Price et al., 2000) and 400,000 t lithium (Yaksic and Tilton, 2009). Clayton Valley's production brines averaged 400 mg/L initially, dropped to 300 mg/L in 1970 and 160 mg/L in 2001 (Garrett, 2004). According to "Industrial Minerals and Rocks: Commodities, Markets, and Uses - 7th Addition": Clayton Valley's formation waters contained an average of 400 mg lithium per litre in 1966. In 2006, those same brines tested at an average of 160 mg/L.
Nevada's leading lithium explorer, Pure Energy Minerals Ltd., reported in July 2015 that its inferred resource contains 816,000 t of lithium carbonate equivalents, whereas almost half of this resource contains a lithium grade of 37 mg/L, 30% of the total resource contains 102 mg/L, 20% contains 194 mg/L, 4% contains 370 mg/L, and 1% contains 102 mg/L (in the northern and southern parts of the Main Ash Aquifer and the Lower Aquifer System). Soon after the release of this maiden NI43-101 resource estimate, the company signed an offtake agreement with Tesla Motors Inc., whereafter Pure Energy's stock jumped to $1 CAD on the TSX.V. According to their latest Technical Report (July 2015):
"Given the proximity of several of Albemarle's production wells to Pure Energy's claim area, and the broadly consistent hydrogeology that is similar beneath the two properties, it is probable that drawdown from the Albemarle wells is affecting lithium brines beneath the Pure Energy claim area, especially in the most northerly part of the claims. The full extent of this likely effect is not known at this time...
Where data exist, they tend to show that the aquifers are closer to the surface in the northern part of Clayton Valley, and that they deepen in the southern half... It is most likely that the upper sequence of interbedded ashes and tuffs is consistent with the Main Ash Aquifer identified beneath the adjacent Albemarle production property (Zampirro, 2004). It therefore follows that the underlying lacustrine sequence is consistent with the Lower Aquifer System also identified beneath the adjacent Albemarle property (Zampirro, 2004). It is understood that both of these aquifers are used for lithium brine production from the adjacent property... It is most likely that they are broadly interconnected, and that pumping from one aquifer will yield a response relatively quickly in the other...
[There] are two factors that are worthy of additional discussion. The first relates to the effects that may or may not be observed on the Pure Energy Minerals Ltd claims from the pumping that takes place from the adjacent Albemarle production wells. It is recommended that this effect be investigated further... The effect, or not, from this pumping on the resource cannot be estimated at this time. The second relates to the existence of the sand dunes in the southern part of the claims. The drilling of extraction wells through these dunes is not permitted based on current protection levels as directed by the BLM... "
Lithium X Energy Corp. (ROCEF) announced recently to have acquired land positions both north and south of Albemarle's Silver Peak Mine (see Clayton Valley map here). Albemarle's wells are less than 91 m from Lithium X's property and current drilling by Pure Energy is estimated to be 244 m away. As Nevada is the most highly regulated state for water use in the US, any consumption of water in the Clayton Valley area requires valid water rights to meet state regulations. According to a report from an independent appraiser certified in the State of Nevada, the Clayton Valley basin is currently "over-appropriated", with Albemarle's Silver Peak Mine being the largest consumer of water in the area. The report, which was prepared for Nevada Sunrise Gold Corp. (OTCPK:NVSGD) and partly disclosed in a press-release on January 28, 2016, states that any new application for water use in an over-appropriated basin would be carefully reviewed by the Nevada Division of Water Resources, and it is uncertain if any new applications would be granted. According to Pure Energy's latest Technical Report (July 2015):
"Water supply is currently served by the Silver Peak municipal water supply... There is no permanent surface water in the Clayton Valley watershed, with the exception of the man-made evaporation ponds operated by Albemarle Corp. All watercourses are ephemeral and only active during periods of intense precipitation... [It] is not currently believed that permitting and building new evaporation ponds in Clayton Valley would be either feasible or desirable."
Goldman Sachs estimated that Gigafactory #1 could require the equivalent of 15,000 to 25,000 t of lithium carbonate annually at full capacity, which is ~17% of current lithium output globally. This massive lithium-ion battery-cell factory is projected to cost $5 billion, slated to be fully operational by 2017/2018. Additional lithium demand in Nevada may come from the new electric vehicle startup company Faraday Future ("FF"), which is investing $1 billion into phase-1 of its "groundbreaking", "state-of-the-art automotive production plant" in North Las Vegas. Both Tesla Motors (NASDAQ:TSLA) and FF will probably have to import most of their required lithium compounds from Mexican, South American and/or Asian sources. Nevada's neighboring state, Utah, may fill the emerging US mine supply deficit; since Clayton Valley is likely not capable of supplying the projected 15,000-25,000 t of lithium carbonate required annually by Tesla alone, starting next year. If the Silver Peak Mine produces annually 870 t lithium (which equates to 4,631 t of lithium carbonate), 2-4 more of such mines would be required to meet alone Gigafactory #1's projected lithium demand.
"Several Canadian and American companies are making claims about future production prospects in Nevada, though few analysts foresee large-scale production from that state." (New York Times)
"Severe weather, technical issues and political challenges in the 'Lithium Triangle' (Bolivia, Argentina & Chile) have plagued large Lithium producers there. It's impossible to anticipate future events and the potential ramifications from implicit or explicit actions taken against companies not only in the Lithium Triangle, but also in China and Australia. BOTTOM LINE, potential and existing evidence makes forecasting demand far easier than supply. This dynamic frequently results in supply shortages and over time." (Peter Epstein)
"Nonetheless, in August Bacanora (OTC:BCRMF), a Canadian firm, said it had signed a conditional agreement to supply Tesla with lithium hydroxide from a mine that it plans to develop in northern Mexico. Bacanora's shares jumped on the news -though analysts noted that shipping fine white powder across the United States border would need careful handling." (The Economist)
Utah's Green Energy Project area, where abundant water from rivers and flowing artesian wells exists, offers high lithium grades historically and a near-by successful evaporation operation presently (Intrepid Potash Inc.; NYSE: IPI; market cap: $155 million USD). As Pure Energy is demonstrating, the conventional solar evaporation production process may get increasingly substituted by innovative, sustainable and enhanced lithium extraction and metallurgical valorization processes for all kinds of brines, for example:
"POSCO's extraction technology, for which it has secured intellectual property rights, is in the detailed engineering stage, placing the company one step away from large-scale industrialization - and that much closer to its goal of becoming a leader in the global lithium industry both in terms of production and end-use applications. 'Our process eliminates the use of evaporation ponds, thus becoming more efficient, eco-friendly and non-dependent on climatic conditions,' Ohjoon Kwon, president and CTO of POSCO, told BNamericas in a recent interview. 'It should be a suitable alternative for any new brine project going forward.' POSCO's lithium extraction technology can be calibrated to work with different brine compositions, even so-called "dirty" brines with a large amount of impurities. The method allows for the recovery and recycling of magnesium, calcium, potassium and other elements that under conventional methods would impede the recovery process. These by-products can potentially be used for additional sales revenue."
• The Green Energy Project has historic lithium carbonate resources of 30,500 t (in-situ value:$379 million USD today at $13,000/t Li2CO3).
• The historic magnesium chloride resource stands at 576,450 t, (in-situ value: $432 million USD today at $750 /t MgCl2).
• The historic potassium chloride resource stands at 302,400 t (in-situ value: $88 millon USDtoday at $290/t KCl). The POSCO extraction process is also capable of producing potash.
• The historic sodium resource is 96,000 t and the calcium resource is 157,000 t.
There may be recoverable amounts of other metals not included in the historic analysis. Metallurgical recovery percentages are not considered in above historic resource estimates, which should not be relied upon. Overall, the potential for brine resources with multi-billion-dollar in-situ values exists on the Green Energy Property. Further work, such as confirmation and step-out well drilling, is necessary to prove the case and prepare for a maiden NI43-101-compliant resource estimate.
The POSCO Demo Plant at Lithium Americas' Cauchari Salar in Argentina is exceeding all initial performance targets. The plant is expected to be producing up to 2,500 t lithium carbonate per annum by year-end 2016 and ramping up to 20,000 t by year-end 2017. POSCO has agreed to finance the capital required for the initial phase of 2,500 t commercial production, ahead of the Joint Venture Company raising project financing for 20,000 t. This deal may have become the blueprint and starting shot for many more lithium brine deposits to be put into production on a global scale. Supersaturated brines should be on top of the list, both for new processing technologies and conventional solar evaporation.
Above figures sourced from Western Lithium USA Corp. (WLCDF)
"Geology & Mineral Resources of the Green Energy Project in Utah, USA"
Big Flat Looking South From The Knob, Green Energy Property, Grand County, Utah
Excerpts from the Technical Report "Geology & Mineral Resources of the Green Energy Project in Utah, USA" (March 14, 2011; an updated version for Prima Diamond's "Green Energy Lithium Project" should be available on Sedar shortly):Location, Access & Climate
The Green Energy Project is located in Grand County, Utah, 15 km west of the town of Moab, in southeastern Utah. The property can be reached via a steep narrow dirt road heading west from the Colorado River 1.5 miles north of the Intrepid potash mine site. The nearest commercial airport is at Grand Junction, Colorado, approximately 1.5 hours drive to the north and east.
The Green Energy Lithium Project is accessible to a point within a few miles by an all weather paved road from Moab, which becomes an access road to Dead Horse Point State Park. The center of the project area has numerous oil pump jacks and storage tanks, all of which are serviced by a network of all weather dirt roads.
The property is largely on the top of a large nearly flat plateau or mesa with an approximate elevation of 6000 feet (1850 m). In the northeastern portion of the property, there are several steep NE-trending narrow canyons cutting in to the plateau. Much of the plateau is open flats with sparse sagebrush and grasses. Approximately 30 % of the area is covered by open juniper-pinion forest typical of the region.
The climate is high semi-desert with about 10 inches (33 cm) of rainfall per year, mainly as sparse winter snow and summer thunderstorms. Summers are hot and dry although temperatures rarely exceed 100 degrees F (38 C). Winters are moderate with temperatures rarely less than 10 degrees F (-12 C) and modest snowfall accumulation. The area is suitable for year-round operations.
The Cane Creek potash mine [operated by Intrepid Potash Inc.] is immediately southeast of the Green Energy Project. It has been operating since 1965, initially as an underground room and pillar style mine. It was converted to a solution mining operation in 1970. It currently produces 700 to 1000 tons per day of potash. [Rockstone: According to USGS reports, the Paradox Basin contains up to 1.8 billion metric tonnes of potash, with the primary mine being the one at Cane Creek, where river water is pumped into the mine and dissolves the potash, after which the brine solution is pumped to evaporation ponds. Intrepid bought the mine in 2000 from Potash Corporation of Saskatchewan, which had bought Texas Gulf in 1995.]Land Ownership
Land in the area is predominantly owned by the public and managed by the federal government, administered by the U.S. Bureau of Land Management (BLM) and the National Park Service. For potash resources, federal leases are required. Initially exploration permit applications are filed; these are eventually approved and upon discovery and pending production, they may be converted to leases. Brine resources are not considered leasable commodities and have traditionally been reserved using association placer claims.
Geology and Mineralization
Green Energy Lithium Property map from Prima Diamond Corp. (incl. newly staked placer claims)
The Green Energy property is underlain by a thick series of Mesozoic and Paleozoic sedimentary rocks which make up the Paradox Basin of the north central Colorado Plateau. The Paradox Basin is a large sedimentary basin with a NW-SE long axis. Economic interest in this area has centered on oil and gas production from strata of Devonian, Mississippian and Pennsylvanian age. Regional subsidence in early Pennsylvanian time created a large sedimentary basin with a restricted marine environment, resulting in multiple thick deposits of evaporate minerals including salt and potash. This Pennsylvanian stratigraphic unit is named the Paradox Member of the Hermosa Formation, which contains salt and potash and interbedded dolomite, shale, siltstone. There are several salt and potash horizons in the Paradox, but only one potash mine has been developed, the Cane Creek Mine.
During oil and gas exploration there were several blow-outs caused by the intersection of brines under significant pressure within the Paradox unit. These brines were initially considered a nuisance to drilling but were found to often be super-saturated brines containing high amounts of potash, sodium chloride, magnesium chloride, lithium, bromine, boron and other potentially payable minerals. Only a few holes were drilled specifically to test these brines and all supported the conclusion that these brines could be an economically important resource. The Green Energy property could potentially produce from both the brines and from solution mining of the potash beds.Exploration and Mining History
The Paradox Basin area, which includes the Green Energy Project, has been explored for oil and gas for quite some time. The earliest discoveries of potash in the area were made in 1924 in oil and gas wells, but the correlation of the beds and the extent and richness of the deposits were not recognized until the 1950's. The Seven Mile, Salt Wash and White Cloud potash target areas, all west of Moab, were quickly identified, but the White Cloud area (now the Green Energy Project) was considered to be the most attractive target. Further exploration lead to the development of the Cane Creek potash mine in a lower elevation area adjacent to the Colorado River. Brines were commonly encountered in these wells, but none of the wells was of economic significance (for brines) until in 1962 when the Southern Natural Gas Company drilled a well(Long Canyon Unit #1 well) which encountered a most substantial flow of high density brine at a depth of 6,013 feet.
In 1964 the White Cloud #2 well was drilled by J. E. Roberts, 500 feet northeast of the Long Canyon #1 well, specifically for testing the "Brine Zone". Brine was encountered at 6013 feet and it was recorded that artesian brine flow was so strong that drilling had to be suspended after penetrating only 6 feet of the 28 foot thick pay zone. The hole was eventually deepened. Records show that the pressure at the bottom of the hole was 4953 pounds per square inch, or twice the normal hydrostatic pressure at that depth. Several other wells in the immediate area had similar pressures (Mayhew and Heylman, 1965).The brine temperature was 145 degrees Farenheit. It was stated by consultant Dr. John Garrett in a September 19, 1966 letter to J.E. Roberts that the well could flow at a rate in excess of 50,000 barrels of brine per day. He also said that the temperature differential "precludes the zone from which the brine is produced from being the host reservoir. It must be coming from some distant or deeper source of higher temperatures. While additional production and pressure performance history will be necessary to clearly establish the nature of the aquifer, the evidence available to date precludes the aquifer from being small."
Roberts, and later his widow, retained control of the White Cloud area through potash exploration lease applications well into the 1980‟s, but eventually the leases were allowed to lapse. Foster Wilson of Mesa Uranium recognized the potential of the brines and the potash in 2008 and began acquiring control of the Green Energy property, similar in location to the older White Cloud area.
The earliest discoveries of potash in the area were made in 1924, but the correlation of the beds and the extent and richness of the deposits were not recognized until the 1950's. In 1953 Delhi Oil Corporation explored the Seven Mile area, seven miles NW of Moab, drilling 10 holes on one-half mile centers and identifying a substantial potash resource. In 1956 Delhi identified an excellent potash target at Cane Creek, nine miles south of the Seven Mile area. They drilled 7 test holes there and decided that the Cane Creek target was thicker and higher grade. In 1957 a wildcat oil hole 10 miles west of the Seven Mile area intersected a 16-foot thick high grade potash bed at the same stratigraphic horizon as Cane Creek and Seven Mile. This became known as the McRae area. In 1961 Pan American Petroleum discovered the Salt Wash oil field, 16 miles northwest of the Seven Mile area. This drilling revealed a northwestern extension of the same "commercial thickness and grade" sylvite bed and other deeper ones.
In 1960 Texas Gulf Sulfur acquired the Delhi potash properties and was in full production from an underground mine by early in 1965. They announced that the Cane Creek potash bed was 11 feet thick and averaged 25 to 30% potash (Jackson, 1973).
J.E. Roberts also recognized the possibility of producing potash and other salts from the area in 1958 and subsequently acquired control of much of what was called the White Cloud area and is now the Green Energy Lithium land package. In 1959 he drilled the White Cloud #1 hole in Sec 14, T26S, R20E to a depth of 4074 feet, gaining an understanding of the "salt" or potash bearing zones. Other oil and gas drilling (including Delhi) passed through the same series of salt beds, at least 7 of which contain important deposits of potash and other "salts", and one of which became the Cane Creek Mine. Mayhew and Heylman's 1965 study provided brine analyses from 22 oil wells in the area. Unfortunately, these were only routine analyses for common elements in most cases. Most of the holes reported very high concentrations of potash, lithium carbonate, magnesium chloride, bromine and borates, all of which have significant value and may be recoverable. In 1991 US Borax re-entered the Roberts brine well to assess the brines for boron content.Historical Resource Estimates
There have been no formal resource estimates for the Green Energy property for either potash in situ or for the saturated brines. Regarding the brines, a letter from J. E. Garrett (petroleum engineer) to J.E. Roberts, dated November 22, 1968 (Gwynn, 2008) stated "When the White Cloud #2 well is completed in Clastic 31 Zone it should exhibit the same initial pressure [as White Cloud #1]. I calculate that it should produce 50,000 B/D through the proposed 8-5/8" casing."
Another letter from Garrett to Roberts, dated September 19, 1966 (Gwynn, 2008) stated that the brine "reserves may range all the way from a specific (finite) volume if the source is a closed aquifer to an unlimited amount if it is an actively replenishing aquifer. Assuming a closed aquifer, based on volumetric estimates limited to the six by eight mile area of established brine flows, in my opinion, the proved brine reserves are 15 million barrels.Here, proved reserves are used as in the petroleum industry to mean that they have an 85% chance, or more, of being recovered." This of course is quite different from current usage of the term "reserves" in the mining industry, thus these figures cannot be relied upon in that sense, and are not NI 43-101 compliant. Garrett went on to say "Statistically speaking, from the data developed in regard to the project, the „expected‟ natural water reserves are estimated to be 300 million barrels. I further estimate that there is a possibility that the water reserves will be at least 500 million barrels. This figure could be obtained from either a large closed aquifer or from a live aquifer of modest replenishment."
The White Cloud #2 brine contained the following amounts of metals (and presumably others such as bromine, boron, strontium, etc, which were not included in the analysis, but are present in other wells nearby) according to analyses done by the USGS Ozark.
Mahoning Laboratory (Gwynn, 2008):
• Sodium 28,500 ppm equal to 2.85% or 57 lb/ton
• Potassium 47,000 ppm equal to 4.70% or 94 lb/ton
• Lithium 1,700 ppm equal to 0.17% or 3.4 lb/ton
• Calcium 46,700 ppm equal to 4.67% or 93.4 lb/ton
• Magnesium 43,600 ppm equal to 4.36% or 87.2 lb/ton
A barrel of this brine weighs 450 pounds or 0.225 tons. Thus the hypothetical 15 million barrels would weigh 3,375,000 tons. By these figures, this "proved reserve" then represents 96,000 tons of sodium, 158,000 tons of potassium (302,400 tons of KCl), 5750 tons of lithium (30,535 tons of Li2CO3), 157,000 tons of calcium and 147,000 tons of magnesium (576,450 tons of MgCl2). As noted above, there may be recoverable amounts of other metals not included in the analysis.
Metallurgical recovery percentages are not considered. Once again, these are pre-2001 historical resource estimates and they do not include recovery factors or costs, thus readers are cautioned that a Qualified Person has not done sufficient work to classify the historical estimates as current mineral resources, the issuer is not treating the historical estimate as current mineral resources and this historical estimate should not be relied upon. This is more of an indication of the area‟s potential than an actual resource in mining industry terms.Drilling and Sampling
Mesa Uranium has done no drilling on the Green energy property. In the general 50 square mile area, there have been approximately 55 oil and gas wells completed over the years. At least 32 of them penetrated the Paradox Salt and intersected its potash beds and brines.Lithologic and geophysical logs and other data including pressures and temperatures for nearly all of these wells are available from the Utah Geologic Survey's log library. Very little information has been preserved regarding drilling or sampling techniques used in the drilling of these wells. However location data are well preserved.Metallurgical Testing
There has been no metallurgical testing done by Mesa Uranium. However, the Cane Creek potash mine, immediately southeast of the property, has been operation for 45 years using similar techniques for potash recovery. Lithium is readily recovered from similar brines in many locations around the world. No significant metallurgical problems are anticipated,but the commonly used methods may need to be adjusted slightly to meet the needs of these specific brines or solution mined fluids. The raw product resulting from either collecting the super-saturated brines or solution mining the potash beds will be nearly the same. It will be a fluid with a very high content of dissolved solids, principally potassium chloride, magnesium chloride, and calcium chloride along with lithium, boron, bromine and other minerals, with a total of perhaps as much as 30 to 40% total dissolved solids.
There are two basic standard approaches to recovery of the dissolved solids. In most potash operations worldwide, including the adjacent Cane Creek potash mine, the mineral-bearing water is pumped to large shallow ponds where most of the water is removed by solar evaporation. The precipitated salts are then harvested from the ponds using belly-scrapers. The salts are then ground finely and mixed with saturated brine, which is pumped in slurry form to the treatment plant. The material is then processed by selective flotation to produce a potash concentrate. This is dried and shipped. Alternatively, the individual minerals can be removed by chemical precipitation under controlled pressure and temperatures. Some of the elements such as bromine and boron may be collected from the concentrated brines using absorptive resins. It will be necessary to do metallurgical testing to determine the appropriate recovery techniques for the Green Energy project.Mineral Resource Estimate
There are no NI 43-101 compliant resources or reserves at the Green Energy Project.
There are over 30 oil and gas test wells in the project area that define the presence of a very large tonnage of potash in several beds underlying the area controlled by Green Energy. One 1964 letter suggests that there may be 9 million tons of K2O under the White Cloud (now Green Energy) area in just one of the several beds.
The geology and controls of mineralization in the immediate area of the property are reasonably well known as a result of mapping and extensive oil and gas drilling. The presence of the adjacent Cane Creek mine which has been producing potash for 45 years using the same process envisioned for mining potash at Green Energy indicates that potash production there should be feasible. The recovery of lithium and other products from the supersaturated brines should also be feasible since similar brines are the primary source of the world's lithium.
While not yet sufficiently well defined for mining purposes, both the lithium and the potash resources appear to be quite large, based on the oil and gas well data, and on brine studies from the 1960's.Recommendations
From his review of the available data, it is apparent to the author that the mineralization exists as has been represented by prior workers. There is a substantial resource present in the Green Energy Project area as shown by the drilling, sampling and geologic modeling done by prior operators on the property. Historic resource estimates are not NI 43-101 compliant, but could perhaps be made compliant by additional drilling and examination of additional data by a "Qualified Person". As a result of a review of current prices and near-term market projections for the anticipated products, particularly lithium, as well as advances in recovery technology beyond the basic methods used at the adjacent Cane Creek mine, it is the author's opinion that this property has a reasonable likelihood of being profitably exploited.
The available data from the area of the Green Energy Project is a strong indication of the potential for it to become a producer of lithium, potash and other products. In order to confirm those indications, additional work will be necessary.
The Green Energy Project is located in the north central part of the Colorado Plateau geologic province. On the west the province is separated from the Basin and Range province by a zone of normal faulting named the Watsatch Front. The Uintah Arch to the north is an anticlinal body cored by Precambrain rocks. The San Juan Mountains to the east are a sequence of Teriary age intermediate volcanic rocks including a series of calderas and smaller bodies of intrusive rocks.
The Colorado Plateau is a large area of relatively undisturbed, flat-lying to gently folded sedimentary units, largely of Upper Mesozoic age. Permian and older rocks are exposed in the more deeply eroded areas and lower Paleozoic to Precambrain rock units are exposed in the bottom of the Grand Canyon. In the area east of the Green Energy Project, the predominant structural trends are defined by NW-SE striking normal faults of moderate displacement. To the south of the project, fault trends are predominantly E-W. In Figure 7.1 the rock units appear nearly flat-lying at that scale. In a district or project scale, broad gentle folds are evident.District Geology
The portion of the Colorado Plateau underlying much of southeastern Utah and extending into southeastern Colorado is referred to as the Paradox Basin. A sequence of sedimentary rocks ranging in age from Precambrian to upper Cretaceous is present in the Basin. From Cambrian to Mississippian time the Paradox Basin was a foreland shelf where thick layers of limestone were deposited. Regional subsidence in early Pennsylvanian time created a large sedimentary basin, with a restricted marine environment, resulting in multiple thick deposits of evaporate minerals including salt and potash. This Pennsylvanian stratigraphic unit is named the Paradox Member of the Hermosa Formation, which contains interbedded dolomite, shale, siltstone, salt and potash.
The axis of the Paradox Basin trends northwest-southeast. It is an asymmetrical basin with a more steeply dipping and faulted eastern flank and a relatively gently dipping western flank. Local and regional gentle folding has occurred, combined with complex uplift and faulting related to the lateral and upward movement of salt and potash within the Paradox Basin. A series of long linear NW-trending anticlines formed in and near the project area, caused by flowage of the relatively plastic thick salt beds in the basin. Economic interest in this area has centered on oil and gas production from strata of Devonian, Mississippian and Pennsylvanian age. There are large salt and potash deposits in the Hermosa Formation, but only one potash mine has been developed, the Cane Creek Mine, about 6 miles southwest of Moab, Utah.
In the area of the Green Energy project, large potash and salt deposits occur within a cyclic sequence of evaporites and fine grained clastic sediments. These are not exposed at the surface, but have been intersected in the subsurface by at least 32 of the 55 oil and gas test wells in the area. Stratigraphic units exposed at the surface range from the Jurassic Kayenta formation which forms the top of the Big Flat mesa, downward through the Jurassic Wingate, Triassic Chinle and Moenkopi, to the Permian Cutler Formation near the Colorado River. The depths from the surface of Big Flat (12 miles west of Moab) to the tops of the formations are shown in Table 7.3.
Water is present in the subsurface almost everywhere. It occupies pore spaces, fractures and any other open spaces in the rock. Unless it is flowing rapidly through an open space such as a cavern, it is generally in chemical equilibrium with the surrounding rocks. Obviously the water in equilibrium with a clean sandstone will be quite different from that in a salt bed. Water generally moves laterally through more porous units such as sandstone rather than across less permeable units such as shale. The more permeable units through which water preferentially flows, bounded by less permeable units above and below, are referred to as aquifers. In most areas aquifers, such as the Oglallah aquifer in the Great Plains, are prolific sources of fresh water. If the water is under pressure, it may have natural artesian flow - otherwise it must be pumped.
Other aquifers, such as that intersected in the White Cloud #2 well, contain extremely saline water because they flow through and are in equilibrium with evaporite deposits of salt, potash or other minerals. These can contain high concentrations of "salts" and are generically referred to as brines. Brines derived from evaporate deposits are the principal source of the world's lithium production from such places as the salars in the Atacama Desert of Chile, Searles Lake and the Salton Sea in California and near Silver Peak in Nevada. Large amounts of salt, magnesium chloride, potash and other minerals are also produced worldwide from similar brines.Evaporite Deposits
Most of the world‟s salt and potash are mined underground from laterally extensive evaporite layers in the sedimentary sequence. Evaporite layers are commonly tabular in shape, but often are deformed by the pressure of overlying rocks into more equant shapes. In many places, such as the along the north side of the Gulf of Mexico, the lighter bodies of salt have been squeezed upward along faults to form diapiric salt domes, that may be hundreds of feet in diameter and thousands of feet in depth. Minable thicknesses range up to several tens of feet in the more tabular deposits and to hundreds of feet in salt domes. The more tabular deposits are commonly mined underground by room and pillar or longwall methods, similar to coal mines. In the past several decades, salt and potash producers have turned to solution mining as a less expensive and less hazardous means of mining. This consists of recovering existing water in equilibrium with the evaporites, injecting water to dissolve the salts, or a combination of the two. Individual deposits may be mined for decades.
The Cane Creek Mine adjacent to the Green Energy Project is a local example. It has been in constant operation since it opened in 1965. Initially a typical room and pillar underground mine, it was converted to a solution mining operation in 1971.
Both the potash deposits and the brines at the Green Energy Project are stratigraphically controlled. The major potash zones of the Paradox Member of the Hermosa Formation are confined to an oval region which extends 120 miles in a NW-SE direction and 45 miles in a NE-SW direction. In the Green Energy Project area there are at least seven significant potash beds within 6500 feet of the surface. Within the same stratigraphic interval as the deeper potash zones, the major brine flow in wells White Cloud #2 and Long Canyon #1 came from a clastic interval between two salt units called Clastic Zone 31.Lithium Bearing Brines
There are 55 oil and gas test wells in the vicinity of the Green Energy Project. A few of the early wells had blowouts upon striking the high pressure brine. Only two wells were drilled specifically for brines - the White Cloud #2 and the nearby Long Canyon #1. However in the Big Flat-Long Canyon area, brine flowed to the surface from clastic intervals in the Paradox salt at several wells. The brines were flowing from fractured zones of clastic rocks overlying salt beds.
Brine from several of the wells in the Green Energy Project area was analyzed for minerals of economic value. The highest values were in the eastern portion near the crest of the Cane Creek Anticline. Table 9.1b contains data from some of these wells. Clearly these data indicate that the interstitial brines in the permeable clastic units between and above evaporite units carry substantial quantities of lithium, potash and magnesium chloride. Table 9.1c indicates the content of minerals, other than lithium, in some brines from wells in the area. In addition to lithium it may be possible to recover bromine, boron, potash and magnesium chloride, and perhaps other elements, from the brines in commercial quantities.
The following is a quote from the concluding paragraph of Mayhew and Heylman‟s 1965 paper on concentrated brines in the Moab area:
"Supersaturated brines, containing substantial quantities of many elements, are present in the subsurface of southeastern Utah, particularly in the Moab region. The town of Moab is in the central part of the Paradox Basin where the salts are well developed and the brines are supersaturated.
Clastic breaks between various salt beds provide potential reservoirs for brine accumulation. Clastic break 31, a 5 to 30 foot zone separating Hite's salt beds 15 and 16, is brine productive throughout the Big Flat-Long Canyon area, with some flows gauged in excess of 150 barrels (6,300 gallons) per hour. In addition to the clastic breaks in the Paradox Formation, porous dolomites and limestones of Mississippian age are within reach of the drill under much of southeastern Utah.
With proper development of production techniques, concentrated brines could be commercially extracted in southeastern Utah."
All of the lithium, magnesium, sodium, potassium and calcium drill results and estimates are of historic resources. Prima is not treating the historical estimates as current mineral resources or reserves. Prima has not undertaken any independent investigation of the drill results or resource estimates nor has it independently analyzed the results of the previous exploration work in order to verify the resources. Prima is not treating the historical estimate as a current mineral resource or mineral reserves. Prima believes that these historical drill results and estimates provide a conceptual indication of the potential of mineral occurrences within the project and are relevant to ongoing exploration.
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