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Potash West Inks Large Increase To Phosphate Target At Dinner Hill

Potash West (ASX:PWN) has increased by 50% the Exploration Target at the Dinner Hill Phosphate Project in Western Australia to 550 million to 800 million tonnes grading between 2% and 2.8% P2O5.

This follows the June 2015 increase in defined Indicated Phosphate Resources to 250 million tonnes (NYSE:MT) at 2.9% P2O, highlighting its world-class size.

It recently raised $1.8 million in an oversubscribed placement, ensuring it is well funded to advance the Dinner Hill Project.

The phosphate target partially overlaps a potash Exploration Target of 1.2 billion tonnes to 1.8 billion tonnes of greensand containing potash mineralisation at a grade of between 3.5% and 4% K2O.

This represents a 20% increase in tonnage and 15% in grade for the potash target.

Dinner Hill has Indicated and Inferred potash Resources of 195Mt at 3.8% K2O including 175Mt of Indicated Resources at 4.0% K2O in the target Molecap Greensand.

Patrick McManus, managing director, said:

"The increased resource reported to the ASX in early June 2015 will support a very long life project producing phosphate fertiliser from the Dandaragan Trough. These Exploration Targets indicate that the resource could increase significantly with further drilling.

"Western Australia and SE Asia imports the bulk of our phosphate requirements from overseas.

This is an opportunity to establish a fertiliser project in Western Australia, meeting the needs of local and regional farmers.

"We have commenced feasibility studies to confirm the commercial viability of the Phosphate Project, planned to produce single superphosphate."

Exploration Target

The updated Exploration Target estimate is based upon air-core drilling carried out by Potash West between 2011 and 2015 and the updated Mineral Resource estimate.

Within the central section of the Exploration Target, the contained potash mineralisation is of higher grade, between 4% and 4.6% K2O.

Towards the north, phosphate grades are higher, ranging from 4% and 5% P2O5, with an average thickness of about 9 metres.

The boundaries to the target area were set by the limits to the fresh Molecap Greensand encountered in the Potash West drill-holes.

Dinner Hill Phosphate Project

Dinner Hill is located in the Midwest wheat belt of Western Australia about 225 kilometres by road north of Perth.

This places it close to local markets in the state as well as proximity to ports that allow it to easily export fertiliser to markets in South East Asia.

In addition, the phosphate and potash mineralisation are largely contained in the same area and could be recovered by a single mining operation.

Other attractions include:

- Low capex, low risk route to cashflow through phosphate production first. Low impact mining.
- Great infrastructure already in place, while being less than 200 kilometres by existing rail to export ports.
- High operating margin potash, phosphate and alum project as Stage 2.
- The scale is large enough to be a significant fertilizer producer for many decades.

Analysis

Potash West's updated Exploration Target of 550 million to 800 million tonnes at between 2% and 2.8% P2O5, represents a 50% increase in tonnage and 5% in grade.

It clearly highlights the potential to increase resources at the Dinner Hill Phosphate Project through further drilling.

This adds to the long life supported by the existing resources, which was also upgraded recently to an Indicated Phosphate Mineral Resource of 250Mt at 2.9% P2O5 as well as Indicated and Inferred Potash Resources of 195Mt at 3.8% K2O.

Adding interest, the company has started feasibility studies to confirm the commercial viability of the Phosphate Project, which is planned to produce single superphosphate.

Potash West is funded to advance Dinner Hill, having recently raised $1.8 million in an oversubscribed placement, a strong achievement in the current difficult capital markets.

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