Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Potash West's Dinner Hill Resource Area Gets Bigger And Bigger

Potash West (ASX: PWN) is encouraged by aircore drilling at its Dandaragan Trough Project in Western Australia, which increased the Dinner Hill mineralised area by a massive 16 square kilometres.

Drilling also confirmed significant phosphate intercepts reported from historical exploration at the Dambadjie and Attunga prospects and identified further shallow potash and phosphate targets.

"These results are very encouraging as they confirm the potential of the Dinner Hill area to host a very large resource. On 7th May the company announced an exploration target at Dinner Hill of 1 to 1.5 Billion tonnes," managing director Patrick McManus said.

"It is also clear that the Dandaragan Trough contains a significant quantity of phosphate, some of which is close to the surface. Our current work, looking to optimise the recovery of Phosphates in our process flowsheet, should be completed in the September quarter.

"There is a very significant value upside if we are successful in this endeavour as the phosphate makes up 25% of the project revenue stream and has the potential to increase substantially by recovering phosphate previously lost to tailings streams.

"The region has been investigated several times for its phosphate potential and recent developments in commodity prices warrant further investigations of this potential."

Dinner Hill

At Dinner Hill, the new drilling of 44 holes on 800 metre centres has demonstrated continuity of this unit 4 kilometres to the east and 5.5k kilometres to the south, extending the mineralised area by some 16 square kilometres, or 160%.

Mineralisation remains open in both directions.

Notably, the thickness of the Molecap Greensand - where the potash and phosphate mineralisation is contained - in the extended zones varies from 10 metres to 17 metres averaging about 12 metres compared with an average thickness of 8 metres in the area of the Mineral Resource.

Potash West is confident that the increased thickness of the Molecap Greensand within the newly defined areas will result in a major addition to the already substantial mineral inventory of the Project.

It had previously defined a JORC Resource of 122 million tonnes at 4.6% K2O and 1.8% P2O5 within the Molecap Greensand at Dinner Hill.

A JORC Resource for the Dinner Hill Extended area is expected by the third quarter of this year.

Dambadjie and Attunga E70/4137

Potash West has recently completed a 10 hole, 4km traverse through the Dambadjie and Attunga prospects, located about 20km south of the Dandaragan, that confirmed the existence of phosphate rich horizons within the stratigraphy.

Importantly, these holes also show the target Molecap Greensand is up to 58 metres thick, with low overburden ratios, presenting favourable potential mining parameters.

Phosphate mineralisation at both Attunga and Dambadjie was typically intersected in the lower 10 metres of the Poison Hill Formation proximal to the contact with the underlying Gingin Chalk.

The best intersection from Attunga was 10 metres at 3.07% P2O5 from 32m and from Dambadjie, 8 metres at 4.02% P2O5 from 40 metres.

Historical drilling was undertaken in the area in the period from 1980 to 1984 and more recently in 2008. This was directed at the evaluation of nodular, phosphate bearing horizons occurring in sedimentary units of the Poison Hill Formation, Gingin Chalk and the Molecap Greensand.

Reconnaissance Drilling E70/4139

Road verge exploration drilling was conducted along under-explored areas within exploration license E70/4139.

The drilling from higher elevations within the tenement defined a thick, deeply oxidised Poison Hill unit, underlain by about 40 metres of Gingin chalk.

A shallow intercept of the Molecap Greensand was returned from drilling at a lower elevation in the south east of the tenement returning an encouraging intercept of 32 metres at 2.99% K2O from 16 metres.

Shallow Molecap-hosted phosphate mineralisation was intersected in the southwest of the tenement, returning 12 metres at 3.24% P2O5 from 22 metres.

Ongoing exploration is being planned to investigate both occurrences.

Dandaragan Trough project

The Dandaragan Trough project is Potash West's flagship project in the Perth Basin and is believed to be one of the world's largest glauconite deposits. Potash West holds exploration licences and applications in 15 tenements covering an area of 2,905 square kilometres.

Last October it defined a JORC compliant Indicated Resource of 241 Mt at 3.0 % K2O including 120 million tonnes at 4.6% K2O.

The project has access to infrastructure with the scoping study assuming the processing facility to be sited between the towns of Moora and Dandaragan, both 170 kilometres north of Perth.

Both towns are well positioned for rail and road access and located within 30 kilometres of natural gas (Dampier-Bunbury gas pipeline) and electricity corridors.

Western Power's Mid West Energy project is likely to expand electrical capacity in the mid west from the current 150 megawatts to 680 megawatts by 2018, which could provide additional power for future expansion of plant capacity.

Analysis

The extension of the mineralised area and thicker Molecap Greensand intersected by the new drilling at Dinner Hill is a strong indicator that a substantial resource upgrade is on the cards when the JORC Resource for the Dinner Hill Extended area is released next quarter.

Potash West may see further resource upgrades from the Dambadjie and Attunga, where the combination of favourable mining conditions and a phosphate rich horizon is encouraging.

The new exploration area also lay the foundation for further discoveries to be made.

With the Dandaragan Trough Project's proximity to local markets where fertiliser is in much demand and exports markets are readily tapped thanks to access to transportation infrastructure, Potash West is making good progress towards developing the project.

Potash West also enjoys a unique location advantage in terms of excellent connectivity to transport facilities, infrastructure and proximity to the local markets.

As Australia currently imports most of its potash and phosphate fertiliser requirements providing Potash West with a competitive advantage over producers that have to transport the product to Australia.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.