By Nick Worth Exploration will continue in Passport Potash Inc. properties on the east side of the Holbrook basin, thanks to a non-brokered US $500,000 private placement the company has agreed to with Concept Capital Management Ltd. (CCM). Passport and CCM have entered into a non-binding “term sheet” that sets forth the preliminary terms of the private placement, which is subject to the execution of a definitive agreement by the company and CCM. The company expects the private placement to close on or before April 30. Under the terms of the agreement, Passport must use the money to complete core drilling on eight holes on the east side properties. According to Ken Bond, head of corporate development for Passport, the properties in question are located to the east of Petrified Forest National Park and are checker-boarded with properties owned by rival potash mining firm Prospect Global Resources. Another stipulation in the agreement calls for Passport to prepare a NI 43-101 potash resource estimate for the properties. The NI 43-101 is a set of rules and guidelines for reporting information related to mineral properties owned by, or explored by, companies which report the results on Canadian stock exchanges. If the drilling results justify it, Passport must also use the funds to apply to the Arizona State Land Department for mining leases on the east side properties. According to Bond, the conditions of the private placement are typical in the industry. “Whenever you have exploration permits, there’s a certain amount of work that has to be done in order to prove the suitability of the resource,” Bond said. “This strategic investment comes at a crucial time for Passport and will help us to build some real value in our east block properties,” said Passport President and CEO Joshua Bleak. “We are thrilled to have the continuing interest of CCM in the development of this project. We are enthusiastic about getting the drills turning again, and moving this project forward.” Bond echoed Bleak’s statement. “We’re excited about it,” Bond said. “It’s a good opportunity to get the drilling going again and get moving forward on the project.” As a further condition of closing the private placement, Passport would transfer the properties into its wholly owned subsidiary, PPI East Block Holding Corp. (EBHC). The $500,000 private placement is structured as a convertible debenture of Passport, which is set to mature 48 months from the issue. When issued, the debenture can be converted at any time prior to the maturity date into either units of Passport at US 12 cents per unit. Each unit consists of one common share of Passport and one warrant to purchase a common share at 12 cents each. Another option is to convert the debenture into 10 percent of the shares Passport holds in EBHC, with the exception that no entity can accumulate a larger stake in the company than 20 percent. Bond said the investment from CCM came at just the right time. “We’ve seen positive things happening in the potash markets,” he said. “Domestic sales of potash are up 30 percent over the previous year.” Bond said along with the stronger sales, U.S. potash prices have bounced back up from a low in the $305 to $310 range globally to their previous U.S. rate of $430 per ton. He explained that Passport had listed $430 per ton as the going rate in its Preliminary Economic Analysis (PEA). “As we talked with potential investors, that price was a sticking point,” Bond said. He added that globally the price is still lower, up to $50 to $80 less in some cases, but the stronger domestic market is helping the company. “That’s a good thing,” said Bond. “We’re seeing some renewed interest among investors.”