History

The Paradox Basin area, which includes the Liberty One Lithium project, has been explored for oil and gas for many decades. At the same time, discoveries of potash in the area were made as early as 1924 in oil and gas wells, but the correlation of the beds and the extent and richness of the deposits were not recognized until the 1950’s.

The Seven Mile, Salt Wash and White Cloud potash target areas, all west of Moab, Utah were quickly identified, but the White Cloud area (contiguous to the Liberty One project area) was considered to be the most attractive target. Further exploration led to the development of the Cane Creek potash mine in a lower elevation area adjacent to the Colorado River.

Brines were commonly encountered in these wells, but none of the wells was of economic significance (for brines) until in 1962 when the Southern Natural Gas Company drilled a well (Long Canyon Unit #1 well) which encountered a substantial flow of high density brine at a depth of 6,013 feet.

In 1964 the White Cloud #2 well was drilled by J. E. Roberts, 500 feet northeast of the Long Canyon #1 well, specifically for testing the “Brine Zone.” Brine was encountered at 6,013 feet and it was recorded that artesian brine flow was so strong that drilling had to be suspended after penetrating only 6 feet of the 28-foot-thick pay zone. The hole was eventually deepened and records show that the pressure at the bottom of the hole was 4,953 pounds per square inch, or twice the normal hydrostatic pressure at that depth. Several other wells in the immediate area had similar pressures (Mayhew and Heylman,1965). The brine temperature was recorded as 145 degrees Fahrenheit.

It was stated by consultant Dr. John Garrett in a September 19, 1966 letter to J.E. Roberts that the well could flow at a rate in excess of 50,000 barrels of brine per day. He also said that the temperature differential “precludes the zone from which the brine is produced from being the host reservoir. It must be coming from some distant or deeper source of higher temperatures. While additional production and pressure performance history will be necessary to clearly establish the nature of the aquifer, the evidence available to-date precludes the aquifer from being small.”

Roberts, and later his widow, retained control of the White Cloud area through potash exploration lease applications well into the 1980’s, but eventually the leases were allowed to lapse. Foster Wilson of Mesa Uranium recognized the potential of the brines and the potash in 2008 and began acquiring control of the property, similar in location to the older White Cloud area.

The earliest discoveries of potash in the area were made in 1924, but the correlation of the beds and the extent and richness of the deposits were not recognized until the 1950’s. In 1953 Delhi Oil Corporation explored the Seven Mile area, seven miles NW of Moab, drilling 10 holes on one-half mile centers and identifying a substantial potash resource. In 1956 Delhi identified an excellent potash target at Cane Creek, nine miles south of the Seven Mile area. They drilled 7 test holes there and decided that the Cane Creek target was thicker and higher grade. In 1957 a wildcat oil hole 10 miles west of the Seven Mile area intersected a 16-foot thick high grade potash bed at the same stratigraphic horizon as Cane Creek and Seven Mile. This became known as the McRae area. In 1961 Pan American Petroleum discovered the Salt Wash oil field, 16 miles northwest of the Seven Mile area. This drilling revealed a northwestern extension of the same “commercial thickness and grade” sylvite bed and other deeper ones.

In 1960 Texas Gulf Sulfur acquired the Delhi potash properties and was in full production from an underground mine by early in 1965. They announced that the Cane Creek potash bed was 11 feet thick and averaged 25 to 30% potash (Jackson, 1973).

J.E. Roberts also recognized the possibility of producing potash and other salts from the area in 1958 and subsequently acquired control of much of what was called the White Cloud area and is now part of the Liberty One Lithium land package. In 1959 he drilled the White Cloud #1 hole in Sec 14, T26S, R20E to a depth of 4,074 feet, gaining an understanding of the “salt” or potash bearing zones. Other oil and gas drilling (including Delhi) passed through the same series of salt beds, at least 7 of which contain important deposits of potash and other “salts”, and one of which became the Cane Creek Mine. Mayhew and Heylman’s 1965 study provided brine analyses from 22 oil wells in the area. Unfortunately, these were only routine analyses for common elements in most cases. Most of the holes reported very high concentrations of potash, lithium carbonate, magnesium chloride, bromine and borates, all of which have significant value and may be recoverable. In 1991, US Borax re-entered the Roberts brine well to assess the brines for boron content. Further exploration and analysis of the area for resource extraction was minimal until recent events elevated lithium to its current high value status.

Historical Resource Estimates

The following information is not N.I. 43-101 compliant and should not be relied upon for its accuracy. The Company is working to update available information to meet compliance. As such, the available information is presented purely to provide an indication of the resource potential for the property.

To-date, there have been no formal resource estimates for the Liberty One Lithium property for either potash in-situ or for the saturated brines. Anecdotally, regarding the brines, a letter from J. E. Garrett (petroleum engineer) to J.E. Roberts, dated November 22, 1968 (Gwynn, 2008) stated “When the White Cloud #2 well is completed in Clastic 31 Zone it should exhibit the same initial pressure [as White Cloud #1]. I calculate that it should produce 50,000 B/D through the proposed 8-5/8” casing.

Another letter from Garrett to Roberts, dated September 19, 1966 (Gwynn, 2008) stated that the “brine reserves may range all the way from a specific (finite) volume if the source is a closed aquifer to an unlimited amount if it is an actively replenishing aquifer. Assuming a closed aquifer, based on volumetric estimates limited to the six by eight mile area of established brine flows, in my opinion, the proved brine reserves are 15 million barrels.” The letters context indicates that proved reserves were stated as used in the petroleum industry to mean that they have an 85% chance (or more), of recovery.

This of course is quite different from current usage of the term “reserves” in the mining industry, thus these figures cannot be relied upon in that sense, and are not N.I. 43-101 compliant.

Garrett went on to say “Statistically speaking, from the data developed in regard to the project, the ‘expected’ natural water reserves are estimated to be 300 million barrels. I further estimate that there is a possibility that the water reserves will be at least 500 million barrels.This figure could be obtained from either a large closed aquifer or from a live aquifer of modest replenishment.”

The White Cloud #2 brine contained the following amounts of metals (and presumably others such as bromine, boron, strontium, etc, which were not included in the analysis, but are present in other wells nearby) according to analyses done by the USGS Ozark.

Mahoning Laboratory (Gwynn, 2008):

  • Sodium 28,500 ppm equal to 2.85% or 57 lb/ton
  • Potassium 47,000 ppm equal to 4.70% or 94 lb/ton
  • Lithium 1,700 ppm equal to 0.17% or 3.4 lb/ton
  • Calcium 46,700 ppm equal to 4.67% or 93.4 lb/ton
  • Magnesium 43,600 ppm equal to 4.36% or 87.2 lb/ton

A barrel of this brine weighs 450 pounds or 0.225 tons. Thus, the hypothetical 15 million barrels would weigh 3,375,000 tons. By these figures, this “proved reserve” then represents 96,000 tons of sodium, 158,000 tons of potassium (302,400 tons of KCl), 5,750 tons of lithium (30,535 tons of Li2CO3), 157,000 tons of calcium and 147,000 tons of magnesium (576,450 tons of MgCl2). As noted above, there may be recoverable amounts of other metals not included in the analysis.

Metallurgical recovery percentages are not considered. Once again, these are pre-2001 historical resource estimates and they do not include recovery factors or costs, thus readers are cautioned that a Qualified Person has not done sufficient work to classify the historical estimates as current mineral resources. The Company is not treating the historical estimate as current mineral resources and this historical estimate should not be relied upon. This is purely an indication of the area’s potential, rather than an actual resource in mining industry terms.