Karinga Creek Potash

Joint Venture bewteen Rum Jungle Resources Ltd (50%) and Reward Minerals Ltd (50%)
RUM is operator of the Joint Venture. Reward is no longer contributing financially and therefore will dilute from 50% ownership. RUM will increase its percentage of ownership.

Tenements

EL 24987, EL25080, EL28205, EL28272, EL28273 (RUM 50% - RWD 50%)

Resource Drilling
Eight experimental vibracore holes were completed with drilling depths between 1 m and 3.5 m during September 2011. Fifty-five sonic drill holes were satisfactorily completed during October 2011. These holes averaged 3.2 m deep and penetrated through the soft lake sediment aquifer, the stiff clay aquiclude of the basal lake sediments and into the fractured Devonian siltstone aquifer beneath. Logging, sampling and geochemical asssaying should be complete in the first quarter of 2012. It is hoped to post a maiden potash resource estimate shortly thereafter.

Karinga Creek Project Location Map

The Karinga Creek Potash Project is located between Erldunda and Curtin Springs along the Lasseters Highway approximately 200-300 km south west of Alice Springs. The Joint Venture is looking to produce potassium sulphate (K₂SO₄) or schoenite (potassium magnesium sulphate) via solar evaporation ponds from water pumped out of the salt lake sediments or from the shallow underlying aquifers.

The Karinga Creek drainage system contains hundreds of salt lakes representing the eastern extension of Lake Amadeus in the Simpson Desert. These playa lakes contain brines enriched in salts such as potassium, magnesium and sulphate and were the subject of previous investigations for recovery of commercial evaporite minerals during the 1990’s.

Potash (Muriate of Potash) is currently selling at $350 US/MT, on international markets down from dizzy heights of just under $900 US/MT in 2009. Shipping rates from the US Gulf to Australia are currently in the range of $100-120 per tonne (source: ACCC report 2009), giving a landed price of potash in Australia of around $500 AUS/MT. The premium product, sulphate of potash is worth even more.
Australia still imports 100% of its potash fertiliser.

From 2002-2007, Australia’s potash importation averaged 346 000 tonnes per year (source: ACCC report 2009) which is worth around $173 million at current prices. There is huge potential for Karinga Creek to be Australia’s first potash producer and to secure a large share of the market in Australia.

During 2010, over 110 one litre water samples and ten 15-20 litre bulk samples were collected from salt lakes. Forty two air core holes were drilled and twenty seven water samples were collected from salt water aquifers which supply recharge waters to the salt lakes.

Drilling was successful and confirm the following:

Near lake brines have been intersected up to 400 m away from lake edges at shallow depths.
Subsurface springs and aquifers surrounding the salt lakes contain water enriched in potassium, magnesium and sulphate. These waters are further enriched due to evaporation within the salt lakes.
A number of salt water aquifers have been identified.
Potential fresh water aquifers have been found for use during mineral processing.

Highlight Brine Samples From Selected Lakes

Sample	K (mg/L)	Mg (mg/L)	SO₄(mg/L)	LAKE
122248	12000	20372	57581	Curtin Island
122249	11000	18232	47334	Curtin Island
122259	8400	7694	42956	Mallee Well
122229	11000	4302	42735	Miningere
122289	8000	9392	30842	Mallee Well East
122286	7700	11786	40872	Mallee Well East
122293	7500	8785	41803	Curtin West
122281	7700	17989	39008	Island lake 5
122277	7100	10161	37766	Island Lake 3

Explanation of mg/L
mg/L is used when talking about water samples as opposed to rock samples
1mg/L is equivalent to 1ppm
1000 mg/L is equivalent to 0.1%
10 000 mg/L is equivalent to 1%

Values above 2000 mg/L potassium are considered potentially economic

During early 2011, joint venture partner Reward Minerals Ltd conducted tests and evaporation trials on mixtures of these brines.

Conclusions from the trials are as follows:

1. The Karinga Lakes system brines comprise primarily sodium chloride, minor sodium sulfate and sulfate salts of potassium and magnesium. The brines collected to date appear to have potential as a source of Schoenite/Leonite (K₂SO₄ MgSO₄ 6H₂O/4H₂O) from which Potassium Sulfate can be recovered by established technology.

2. In the two trials conducted to date the Potassium loss to the sodium chloride (halite) harvest was approximately 20% of the feed, i.e. 80% of the potassium input progressed to the crude Potash salt crystallization phase. The loss is incurred via the brine entrained in the crude halite as it is harvested and not as crystalline potassium salt contamination.

3. Phase 1 trial was cut short due to technical difficulties but indicated a Potassium recovery of 56.5% to a mixed salt grading 3.8% K. The residual Potassium content representing 24.1% of input reported to the end brine hence was not recovered in the Phase 1 study. Results from Phase 2 trial confirm that a substantial portion of this Potassium can be recovered in a crystalline mixed salt at a considerably higher Potassium grade.

4. Phase 2 trial indicated a combined Potassium recovery of 76% to a mixed salt grading 6.1% K. This product comprised two fractions – Product A representing a K yield of 55.8% in a product grading 5.2% K and Product B representing an additional yield of 20.2% in a product grading 10.6% K.

5. All evaporate products have significant sodium chloride (halite) content as the process brine is saturated in sodium chloride at all stages of the evaporation cycle.

6. The combined A+B product from the Phase 2 trial contains approximately 44% sodium chloride. The Potassium Magnesium Sulfate salts Schoenite and Leonite, which crystallized, can be effectively separated from sodium chloride by flotation.

Last updated: 19/12/2011 - JD

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