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Potash West Defines New Phosphate Resource At Dinner Hill

Potash West (ASX: PWN) has delineated a new Indicated Resource of 58 million tonnes at 3% P2O5 at the Dinner Hill Deposit in Western Australia following a recent evaluation of the phosphate mineralisation there.

Importantly the mineralisation remains open to the north and the east in an area that is favourable for the development of nodular phosphate within the Cretaceous Coolyena Group.

Preliminary metallurgical studies of Dinner Hill mineralisation has indicate high recovery using simple screening, magnetic separation and flotation processes with greater than 30% P2O5 grade concentrates produced.

Managing director Patrick McManus said a previous scoping study carried out in 2012 had looked at the K-Max process to produce a range of products from greensands in the Dandaragan Trough.

"The study highlighted the significant value of phosphate nodules present in the greensands sequence. This led to further work, looking at the possibility of producing phosphate products, either as an adjunct to the K-Max process, or independently," he added.

"This resource is the first step in evaluating that possibility and will underpin the phosphate scoping study, to be completed shortly.

"The low overburden, easy mining and available infrastructure, will allow low cost development and mining, which will offset the relatively low in-situ grade. The scoping study will address the viability of a stand-alone phosphate operation, based on this resource. It will also offer some indications as to the impact of a phosphate treatment plant on the economics of the K-Max process.

"We believe that the short, and long, term outlooks for phosphates are favourable, with very different market dynamics to the potash industry. A focussed phosphate operation would allow a low cost entry into production for Potash West."

The Dinner Hill potash resource occurs over an area of 10.3 square kilometres.

Results from a Scoping Study initiated in April 2013 to provide indicative technical and financial data on producing superphosphate from the greensands at Dinner Hill is scheduled to be completed in September 2013.

The phosphate mineralisation is predominantly fluoroapatite and nodular in nature. It is easily upgraded by screening, with initial test work results showing 63% P2O5 recovery to the coarse fraction at a grade of 11% P2O5.

High flotation recoveries and final concentrate grades have been achieved. The low mining costs and conventional processing route, coupled with low infrastructure and transportation costs, are expected to produce a positive scoping study result. Completion of the scoping study is
scheduled for September 2013.

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.

Dinner Hill

The project tenements cover two virtually horizontal greensand formations within the Cretaceous Coolyena Group: the Poison Hill Greensand, and the Molecap Greensand. Over most of the area of the deposit they are separated by the Gingin Chalk.

A thin pebble horizon containing phosphatic nodules underlies the Molecap Greensand. An average thickness of about 11m of surficial, mostly sandy, cover overlies the greensand units.

The greensands contain significant amounts of potash within the mineral glauconite and also significant phosphate contents.

An aircore drilling programme of 83 vertical holes was carried out in June 2012 over a 10 square kilometre area to enable the estimation of Resources within the greensand units. This was followed by a diamond core program of four holes in August 2012 to obtain core samples for bulk density determinations of the greensand units.

Metallurgical testwork is being carried out by Strategic Metallurgy and will form the basis for the Dinner Hill Phosphate Scoping Study to be released in September 2013.

Preliminary outcomes from this work suggest favourable economics are likely where the grade of the mineralisation averages close to 3% P2O5

Dandaragan Trough project

Dinner Hill is located within the Dandaragan Trough project which 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.

The recently completed 94 hole aircore drilling program had increased the size of the Dinner Hill Resource by 160% with drilling to the south and east of the deposit demonstrating positive continuity.

It also intersected the thickest sequences of the Molecap Greensand yet recorded within the project area and confirmed significant phosphate intercepts reported from historical exploration at the Dambadjie and Attunga prospects.

Near surface glauconite mineralisation has also been encountered in other areas.

Analysis

The new Resource at Dinner Hill further enhances the attractiveness of Potash West's Dandaragan Trough Project.

Given the project's proximity to local markets where fertiliser is in much demand as well as easy access to transport infrastructure for the export market, this marks yet another step towards development of the project.

In addition, phosphate is a key plank of the company's plans as it makes up 25% of the proposed revenue stream, with the potential to substantially increase revenues by recovering phosphate previously lost to tailings streams in the K-Max flowsheet.

Potash West had $1.16 million in cash as of 30 June 2013.

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