30 August 2013 22:38 [Source: ICIS news]
HOUSTON (ICIS)--Exploration of potash resources in Colorado's Paradox Basin will commence with the approval of the environmental assessment and the issuing of permits by federal authorities, officials with Red Metal Limited confirmed on Friday.
The Australian-based producer said the Bureau of Land Management has issued the company five prospecting permits that will allow the company to begin drilling wells in order to begin evaluating the potential for developing a solution mining operation in the Paradox Basin.
The site in the northeast portion of Colorado has not been explored for potash but company officials believe the site's 166 sq km (64 sq miles) holds considerable resources of the crop nutrient.
"At this stage, the Colorado Potash Project is an exciting exploration play, and there are a number of technical boxes to tick before this project will advance to the development stage," said Rob Rutherford, managing director.
"We are proposing to drill one to two proof-of-concept wells, and each of these [is] expected to cost about $1m (€760,000). If successful, then more drilling and seismic will be required to outline a resource and establish its economic viability," he added.
Despite the recent negative sentiment toward potash and forecasts of short-term pricing declines, Rutherford said the company thinks demand for potash will remain stable. He said extensive studies have identified the area as being a site where there is an abundance of the nutrient that could be extracted using standard solution mining methods.
"We, like many potash forecasters, believe the long-term demand for potash is strong but prices could be potentially volatile in a shorter time period," Rutherford said. "For this reason, the Colorado Potash Project must prove to be a reliable, low-cost producer to proceed to development. This is what our exploration efforts over the coming years will hope to establish."
($1 = €0.76)
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