Inspiration Increases Interest in Potash Dragon
April 8, 2013 (Source: Marketwire) Toronto, ON — Further to its press release of June 25, 2012, Inspiration Mining Corporation (“Inspiration” or the “Company”) (TSX:ISM)(FRANKFURT:OI8) is pleased to announce that it exercised an aggregate of 2,187,500 warrants at an exercise price of $0.80 per share, increasing its interest in Potash Dragon Inc. (“Potash Dragon”) from 1,250,000 common shares to 3,437,500 common shares (or from 20% to 41% of the issued and outstanding securities of Potash Dragon). An aggregate of 1,562,500 warrants remain outstanding and the Corporation intends to exercise such warrants prior to their expiry date of May 15, 2013. Upon the exercise of the remaining warrants, the Corporation will own 50% of the issued and outstanding securities in the capital of Potash Dragon.
Potash Dragon is a private company incorporated under the laws of Barbados. Through its wholly owned subsidiary, Potash Dragon SpA, a private company incorporated under the laws of Chile, Potash Dragon holds various potash properties and applications covering an area of 24,492 Hectares in Region I of Northern Chile some 160km south east of the town of Iquique and adjacent to the Pan American (Ruta 5) highway. All the properties are located within the Pampa del Tamarugal area on the Salar de Llamara, and some of the tenements are situated adjacent to a brine extraction well field operated by Sociedad Química y Minera de Chile S.A. (“SQM”).
The following information regarding Potash Dragon’s Llamara Project in Northern Chile is derived from a report entitled “Exploration Potential and Mineral Resource Estimate for Potash Dragon Inc.’s Llamara Project, Salar de Llamara, Northern Chile. A document to conform to the Canadian National Instrument NI 43-101 for the disclosure of mineral deposit information Securities Act R.S.B.C. 1996 c. 418 B.C. Reg 86/2011” (the “Report”).
The Report was prepared by Dr. C Mortimer OBE, B.Sc., Ph.D, FIMMM, C.Eng., FRGS and is dated February 18, 2013 with an effective date of January 31, 2013. A copy of the Report will be available through the Corporation’s profile on the SEDAR website (www.sedar.com). The Report was prepared to declare a brine mineral resource estimate and exploration potential for Potash Dragon’s Llamara and Solida Properties (collectively, the “Properties”).
Property Holdings and Location
The Properties in Northern Chile are held by Potash Dragon’s wholly owned subsidiary, Potash Dragon SpA (Chile). The Properties are located across generally flat sections of the Salar (salt flat) de Llamara depression in the Atacama Desert of Northern Chile. Potash Dragon has applied to convert the free areas held as concessions of exploration to concessions of exploitation which cover an area of 4,690 ha of the Salar de Llamara.
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In December 2012 Potash Dragon submitted applications for exploration concessions covering a further 19,802 ha in the Llamara basin. The applications have been published and registered and the new properties under investigation cover an area of 10,954 ha of semi-contiguous Potash Dragon concessions in the central Llamara area and 13,538 ha which are adjacent and distal to the NE and SE of Potash Dragon’s extant holdings.
There is no record of any previous owner (other than the Republic of Chile Government) having formally made use of or claimed any of the Properties for short or long term residential or commercial reasons. Mining concessions (either of exploration or exploitation) are granted in Chile by virtue of a judicial resolution given in accordance with a special procedure established in the Chilean Mining Code.
Geology and Hydrology of the Salar de Llamara
The Andean ranges in northernmost Chile can be divided into a number of generally north – south orientated fault bounded physiographic provinces. An offshore Perú-Chile oceanic trench is bordered on the east by the Cordillera de la Costa. Further east is the variously termed Central Depression; Longitudinal Valley, or Pampa del Tamarugal/Salar de Llamara (“Pampa”) sloping up to the Precordillera and the volcanic Cordillera Occidental, which, with the Cordillera Oriental, contains the high plateau variously denominated as the Altiplano or Puna.
Precipitation that occurs at higher elevations of the Andes Mountains reports to Tertiary fluvial braided fans which ultimately feed significant aquifers that flow beneath the Central Depression. The alluvial fans are incised by ephemerally active canyons and the talus of the median and distal fans locally masks underlying lake sediment accumulations of numerous salars including the Salar de Llamara. The Cerro (peak) Soledad range is located within the Salar de Llamara. The Salar de Llamara is incised by the Río Loa river canyon forming the ultimate drainage outlet to the Pampa del Tamarugal aquifer.
The underlying lake sediments of the Salar de Llamara host a partly closed basin aquifer, which has a longitudinal axis of approximately 60 km in a NNW-SSE direction and 25 km in an E-W direction, bounded to the S and W by a sub outcrop of impermeable rocks. The present day submerged basin covers an area of approximately 1300 km2, exclusive of the area taken up by the impermeable basement (Mesozoic, 65-248 Mya) and older inliers of cerros Salar, Mogote, Hilaricos and Soledad, which protrude through the lacustrine sediments and form prominent hills above the Salar de Llamara. The Properties are situated within the western and central portion of the Salar de Llamara respectively at an elevation between approximately 750-800 m.a.s.l. in an area that has an exceptionally long geological history of aridity in the Atacama Desert, particularly during the post Oligocene period when the region has been continuously the most arid region on Earth with high evaporation and evapo-transpiration rates.
During a period spanning many decades the search for potable, irrigation and industrial quality water within the Pampa del Tamarugal has led to numerous exploration efforts and scientific studies of the upper portion of its vast, mostly saline, subterranean aquifers, including those of the Salar de Llamara by governmental and private institutions.
During 1994, the Department of Scientific and Technological Research of the Catholic University of Chile (“DICTUC”), who were consultants to Sociedad Quimica y Minera de Chile S.A. (“SQM”), in addition to work conducted by government on the Salar de Llamara aquifer (“SdLA”), published their initial estimates of the hydrology of the upper aquifer as part of an Environmental Impact Assessment (“EIA”). DICTUC further refined their hydrological model of the upper aquifer based on evaporation test work, ongoing borehole water level monitoring, pumping tests and transient electromagnetic surveys (“TEM”). Based on these studies, they produced further estimates of the recharge, evaporation, transpiration and discharge rates for three main upper aquifer sub basins.
The DICTUC study of the geology and hydrology of the Salar de Llamara basin led to the definition of an upper saline aquifer located between approximately 745 and 645 m.a.s.l. and a deeper saline aquifer of varying thickness located between an elevation of approximately of 645 and 300 m.a.s.l. The upper aquifer has been intensely explored by drilling, sampling and confirmatory TEM surveys while the deeper aquifer geophysical surveys have been tested by deep drilling in a few locations only.
Potash Dragon has validated the published sampling results obtained by the many scientific institutions for the surface and near surface aquifer. Potash Dragon has also duplicated and confirmed the TEM geophysical results relevant to the Properties.
Genesis of the Evaporite Minerals
The Pampa has been a basin for the deposition of non-marine sediments derived from the uplifting Andes to the E for much of the Neogene. The Cordillera de la Costa has blocked westward coastwise drainage of the Pampa until the relatively recent breakthrough to the coast of the Río Loa canyon. Prior to the overspill and development of the Loa canyon the Pampa was characterized by a huge lagoon of ponded Andean drainage, Lago Soledad, lying above the sedimentary fill of the Pampa including the Salar de Llamara. Prominent terraces with salt deposits marking high former lake levels occur around Cerro Soledad. The Tertiary continental sedimentary rocks in the Pampa are fluvial, lacustrine and evaporitic and the gypsiferous succession includes diatomite and highly soluble, but crystalline residues such as halite, associated potassium salts and, superficially, nitrates. These minerals were deposited following evaporation, particularly of Lago Soledad, in the hyper arid climate. Interspersed in this succession are horizons of volcanic tuff from eruptions in the Andes to the E. The sequence is estimated to be up to 1,000 m thick and has been shown to be 930 m thick in the drill hole Hilaricos No. 1, which is located on Potash Dragon’s southernmost property.
Continuous monitoring, geochemical sampling data, backed up by the public disclosure of independent assay certificates, for the upper aquifer, have been reported. Quarterly sampling of the aquifer since May 2010 reveals that the total dissolved solids (“TDS”) contained within the aquifer at a point vary between 3800 mg/L and 4200 mg/L.
The flow of the aquifer has been modelled and published. Flow directions of the aquifer are to the west and south towards puquios (small ephemeral lakes) that represent doline features within the karst (solution) topography where the aquifer becomes exposed on surface due to the dissolving of soluble salts. A north west – south east puquio trend extends over a distance of 21 km from the north west sub outcrop of the upper aquifer to its south east exposure. The zone of puquios effectively delineate the outcrop of the uppermost halite unit of the Soledad Formation which has an average west – east lateral width of approximately 5 km across the strike length of 21 km.
Potash Dragon has conducted seasonal validation sampling of the waters of the upper aquifer which show dramatic increases in the concentration of TDS within the puquios to between 100,000 to 230,000 mg/L through a combination of dissolution and evaporation. Sampling of a borehole located to the east of the intersection of the upper aquifer with the south east puquios shows a fourfold increase in TDS from between 3800 mg/L and 4200 mg/L to between 12,000 mg/L and 17,000 mg/L TDS.
Potash Dragon’s seasonal geochemical sampling together with the information available from neighbouring operations has confirmed the cyclical nature of the near surface water table. The fluctuation in water levels and TDS confirms the effect of variable flow into the system. The chemical composition of the brines also varies with the seasonal fluctuations in water level, evaporation rates, and ground temperature, which varies between 16ºC and 35ºC during summer months.
Aquifer Hydrology and Extractability (Specific Yield)
Various investigations by Potash Dragon have confirmed the horizontal and vertical differentiation in salinity of the Salar de Llamara aquifer (“SdLA”):
- Lower salinity upper aquifer: Andean precipitation ultimately feeds significant aquifers that flow beneath the Salar de Llamara. A near surface upper unit of the aquifer is generally low in salinity. This upper part of the aquifer is considered by Potash Dragon to be the conduit for seasonal fluctuations in flow rates where, on average, about 30% of the water inflow physically exits the hydrological system. The majority of the waters of the upper aquifer leave the Pampa via evaporation, and those waters that discharge from the basin have limited interactions with the deeper lying saline Soledad Formation, which provides one of the sources for solution concentration where the brines of increasing density gravitate into deeper parts of the aquifer.
- High salinity lower aquifer: The lower aquifer water is considered to be derived in part from salt dissolution of the Soledad Formation and brine densification action in the upper aquifer. The porous nature of the El Loa Formation acts as a reservoir for the more dense brines. In parts, the lower aquifer is in contact with, and in equilibrium with, the precipitated salts in the Soledad and El Loa Formations. This gives rise to the higher concentrations of sodium (Na), chlorine (Cl), calcium (Ca), potassium (K), magnesium (Mg) and sulphate (SO4) in the lower aquifer brine.
The results of environmental impact studies, water extractability pump testing and bi annual monitoring of the SQM pump field (adjacent to the Properties) have been published in numerous publicly available technical reports and returns to the Chilean environmental regulators. The analysis of these test results indicates a minimum 12.5% effective porosity yield for the stratigraphic unit that Potash Dragon has defined from geophysical results as the Upper Conductor Unit (“UCU”).
Geophysical and Geochemical Investigations
Geodatos SAIC of Santiago have conducted many geophysical surveys to define brine aquifers contained within salars in Chile and Argentina, and they undertook the close spaced TEM survey for Potash Dragon. Brines by their very nature are highly conductive and therefore receptive to three dimensional definitions by electromagnetic geophysical means. The conductivity is proportionally related to the content of the ions in solution. The higher the TDS content the lower the solution resistivity, and by experience developed by Geodatos, subterranean brine in the Pampa del Tamarugal region has a typical resistivity signature of between 0.5 Ω-m to 2 Ω-m. The only other rock types that have similar TEM signatures are graphite and highly conductive sulphide ore bodies that are not found in the Salar de Llamara evaporite basin. The TEM survey results have not been utilised as a basis to estimate the concentration of any elements or minerals contained within the waters of the Salar de Llamara aquifer. The TEM survey results have been used to define the size and shape of the brine conductor units.
Two hundred and eighty eight TEM survey stations, covering an area of approximately 14,400 ha were set up over the 4690 ha of the Properties as these stood at July 2012. The resulting geophysical surveys defined the three dimensional extents of the upper and lower conductor units within the aquifer. Geodatos determined the conductive unit volume based on various resistivity cut-offs, and developed sections that provide the basis for the definition of various conductor volumes. Potash Dragon has used this TEM data to define an upper conductor unit (“UCU”) and a lower conductor unit (“LCU”) that occur within the upper and lower SdLA on the Properties.
For data on the Mineral Resource Estimate please click here
Dr. C Mortimer OBE, B.Sc., Ph.D, FIMMM, C.Eng., FRGS, who is a Qualified Person as defined by NI 43-101, has reviewed and approved the scientific and technical content of this press release.
Forward Looking Statements
This news release contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “anticipated”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Inspiration is subject to significant risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements contained in this release. Inspiration cannot assure investors that actual results will be consistent with these forward looking statements and Inspiration assumes no obligation to update or revise the forward looking statements contained in this release to reflect actual events or new circumstances.
The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
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