Epo Encanto Potash Corp 2010 Corporate Presentation Slides Deck Ppt



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TSX-V: EPO SAFE HARBOUR STATEMENT This presentation contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements made pursuant to the safe harbour provisions of the applicable securities laws. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “intends’, “will”, “should”, “expects”, “projects” and similar expressions are intended to identify forward-looking statements. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. These risks include, but are not limited to, those associated with the success of research and development programs, the regulatory approval process, competition, securing and maintaining corporate alliances, market acceptance of the Company’s products, the availability of government and insurance reimbursements for the Company’s products, the strength of intellectual property, financing capability, the potential dilutive effects of any financing, reliance on subcontractors and key personnel. The forward-looking statements are made as of the date hereof and the Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 22 WHAT IS POTASH? • Potassium is obtained from potash-bearing ores such as sylvanite. • Potash in mined from naturally occurring ore bodies which were formed as sea water evaporated. • Potash, or carbonate of potash, is in fact a mixture of potassium salt with impure form of potassium carbonate (K2CO3). In other words, it is the common term used for the fertilizer forms of the element potassium (K). Potassium occurs abundantly in nature, being the 7th most common element in the earth's crust. Some clay minerals which are associated with heavy soils are rich sources of potassium. 33 WHAT IS POTASH USED FOR? • 95% of Potash is used for fertilizer • Fertilizer (NPK) is a combination of Nitrogen (N), Phosphate (P) and Potassium (K) • Nitrogen, phosphorus, and potassium are three of the most essential nutrients that a plant needs to grow. 44 BENEFITS OF POTASH • Slows growth of crop diseases • Maintains cell resilience • Reduces wilting • Reduces water loss • Increases the protein available to plants • Assists in photosynthesis by activating more than 50 enzymes • Improves drought resistance • Builds cellulose • INCREASED CROP YIELDS Potash has no commercial substitute as a potassium fertilizer source 55 POTASH OR NOT Visual Comparison of Impact of Potash Without Potash Source: International Plant Nutrition Institute With Potash 66 POTASH OR NOT 77 POTASH OR NOT Improved Farmer Economics with Optimal Potash Application 88 MAJOR POTASH PRODUCERS Source: Fertecon • Only 12 countries currently produce potash • Canada accounts for 35% of world’s potash – 90% from Saskatchewan 99 MAJOR POTASH CONSUMERS Source: Fertecon 10 10 POTASH GENERAL • Annual World Potash Production 50 million (tpy) • Population 2010 • Projected Population 6 Billion 9 Billion • Annual Increase in Population • Projected Increase in Potash Production +75 million/year +3-4% year 11 11 WORLD ECONOMIC GROWTH PROFILE Annual % GDP Growth 2010-2014 • • • • Source: United Nations Approximately 75% of world’s population comes from countries with GDP growth >5% China, India and other Asia represent almost 60 percent of the world’s population. For most people in developing countries, the first priority when they have more money is to improve their diet. For the first time in history, a majority of the world’s population is in the process of attaining a greater ability to purchase higher-quality food. 12 12 GLOBAL MEAT CONSUMPTION kg/person Source: FAO Statistics • One tonne of BEEF requires feed corresponding to 7 tonnes of grain; • One tonne of PORK requires feed corresponding to 4 tonnes of grain; and • One tonne of POULTRY requires feed corresponding to 2 tonnes of grain. 13 13 CHINA & INDIA GDP/CAPITA US$ Source: IMF • Over the next several years, China’s GDP is expected to grow by more than 9%, while India and other Asian countries are expected to grow at more than 7% annually. 14 14 ENCANTO POTASH PROJECT LOCATIONS In the Heart of Potash Country 15 15 INVESTMENT ANALYSIS • Sovereign Component • Management Component • Permitting Component • Resource Component • Financial Component 16 16 BUSINESS FRIENDLY JURISDICTION • World’s established leading producers – Potash Corp, Mosaic Co and Agrium – in the heart of Saskatchewan potash country. • Potash reserves are typically flat and consistent over many kilometres • Resources and infrastructure well developed and highly accessible • INAC Support (Federal) • Federal Government wants economic benefits for First Nations 17 17 GLOBAL POTASH RESERVES SASKATCHEWAN IS POTASH CAPITAL Saskatchewan is the potash capital of Canada with more than 53% of production coming from this region Source: Fertecon 18 18 PROVEN MANAGEMENT James Walchuck CEO Gordon Keep Chairman • 30 Years in mining industry including diverse background in operations, feasibility, construction and finance • Mine manager at Bulyanhulu Mine for Sutton/Barrick • Extensive background in corporate finance and investment banking, and creating public natural resource companies Rod Hope Consultant & Director of Saskatchewan First Nations Business Development • Significant legal experience with First Nations Ross Moulton VP Exploration • 35 years of oil and gas experience with various private and public exploration and production companies North Rim • Top potash geological consultant Exploration • Well respected in the potash industry 19 19 FIRST NATIONS PARTNERSHIP Solid Alliance Fast Track Development Above: Muskowekwan Chief Reg Bellerose with Encanto President James Walchuck 20 20 20 PARTNERS WITH FIRST NATIONS Permitting Advantage • Two stake holders for permitting (INAC and the Chief & Council) Strong Community Support • Jobs • Training & Education Mutual Interests • Upon Production – 3% GORR • 2 M tpy (tonne per year) mine ~ $24 million/yr for FN (@$425/t FOB Vancouver) 21 21 FIRST NATIONS ADVANTAGE CONTINUOUS LAND PACKAGE Western Potash Leases 40% Freehold Potash One Leases 26% Freehold Freehold-Mineral rights owned by other parties – secondary negotiation required Encanto Muskowekwan Lease Owns 100% Continuous Mineral Rights 22 22 RESOURCE STEPS MUSKOWEKWAN PROJECT • 2D Seismic • Drill Hole(s) ~ Grade • 3D Seismic • In – Fill Drill Holes • Resource Calculation 23 23 2D SEISMIC PLAN VIEW MUSKOWEKWAN PROJECT • 1.5 km lines show good structure over large area • 36,000 of the 43,000 acres appear continuous • 2D results showed resource size potential • No large Collapse zones, Washouts or Leach zones 24 24 DRILL HOLE(S) MUSKOWEKWAN PROJECT 2009 Drill Hole 3.6 m of 25.2% K2O (39.9% KCl) 2.4 m of 25.5% K2O (40.4% KCl) Also: 6 surrounding drill holes show all 3 potash beds present (Chapman Report) 25 25 3D SEISMIC RESULTS AUGUST 2010 • Tight spaced 3D allows widely spaced drill holes (4 km) • Low cost exploration • 3D established geologic continuity (NI 43101) • Significant de-risking of resource exploration 26 26 3D SEISMIC MUSKOWEKWAN PROJECT 27 27 3D ANOMOLY MAP – BOYD PETROSEARCH REPORT AUG 2010 28 28 MUSKOWEKWAN PROJECT DRILL HOLES 29 29 LOW RESOURCE RISK MUSKOWEKWAN PROJECT • 2D Seismic – Completed • 36,000 acres good structure • Drill Hole(s) ~ Grade -- Completed • High grade hole by Encanto • Surrounding historical holes • 3D Seismic -- Completed • Significant de-risking August 2010 • In – Fill Drill Holes – Q4 2010 • Resource Calculation– Q1 2011 • Resource Q4 - Revaluation of Company 30 30 POTASH FUNDAMENTALS Growing World Population & Less Arable Land 31 31 FERTILIZER DEMAND IS GROWING Source: Ferticon 3232 32 ESTIMATED POPULATION GROWTH BY REGION (2050) In Millions Source: United Nations, Scotia Capital 33 33 MARKET VALUATION COMPARABLES COMPARABLE POTASH MINES AND DEPOSITS Operator Encanto Encanto Encanto Project/Mine Muskowekwan Muskowekwan Muskowekwan Project Status Exploration Exploration Exploration Potash Corp Athabasca Basin2 Rocanville Allan Burr Potash Vanscoy Production Production Feasibility Production Potash Corp Agrium Potash Member LPL LBP Esterhazy Esterhazy PL UPL UPL Depth 1194 1203 1238 960 1040 930-950 1000-1100 Total Resource1 ? ? ? 1921 5090 463 437.7 Ore Zone Thickness 3.6 2.4 5.3 2.59 3.35 3.44 3.1 25.2 25.5 12.4 23.5 27.6 23.2 24.7 Ore Grade % K20 % MGO 0.1 0.1 5.8 0.5 0 0.04-0.10 ? % Insets 10.2 5.4 1.4 0.9 5.24 7.5 4.75 % Carnallite <1% <1% <5% 5.68 0 trace trace Mining Technique ? ? ? Underground Underground Underground Underground MOP Production per Year ? ? ? 10-2.8Mt 0.7-1.75Mt ? 1.3-1.8Mt Note 1: Resources refer to current resources exclusive of historical production Note 2: Athabasca Potash was acquired by BHP in January 2010 Sources: Corporate filings of the above listed companies and Industrial Alliance Securities 34 34 SHARE STRUCTURE Issued & Outstanding 225,112,935 Options 19,400,000 Warrants 23,627,108 Fully Diluted 268,140,043 Symbol TSX-V: EPO Cash $4.1m CDN Warrants and Options $5.0m CDN 35 35 STRONG SHAREHOLDER GROUPS Lion Energy 46,000,000 Founders 40,000,000 Endeavor Group 26,000,000 Recent Financing Group 29,000,000 Hutton 6,000,000 Foreign Investors 11,600,000 Float 66,000,000 36 36 MARKET VALUATION COMPARABLES 37 37 SUMMARY: THE ENCANTO ADVANTAGE Partnership First Nations Time Resource Near Term Milestone Compliant Resource – Q4 Significant Revaluation Low Risk High Potential Valuation Management Strong Financial and Technical Team 38 38 INVESTMENT HIGHLIGHTS • • • • • • Anticipated Large Resource In Q1/2011 Low Downside Risk for High Value Asset High Grade Drill Hole 3D – Resource Continuity Demonstrated Strong Political Support Only 3 Saskatchewan Potash Juniors Remain 39 39 PROJECT PIPELINE SPAR PROPERTY • Compliant Resource • Indicated resources of 12.49 million tonnes of K20 • Inferred resource of 12.24 million tonnes of K20 • High Grade Intercepts • Lower Patience Lake Member = 3.06m @ 31% K20 (50% KCI) • Indication that Zone Thickens to East 40 40 PROJECT PIPELINE OCHAPOWACE PROPERTY • 2D Seismic Completed • Large Contiguous Land Package • Potential for Solution Mining 41 41 CORPORATE CONTACT Vancouver Office www.encantopotash.com 380 - 580 Hornby Street [email protected] Vancouver, British Columbia [email protected] Canada, V6C 3B6 Telephone: 604-683-2402 Corporate Communications: 866-918-0824 Regina Office Suite 304, 2505-11th Ave Regina, SK, S4P 0K6 42 42