System At A Glance

Top View
1. LCD Display The panel is where the system content is displayed. 2. LED Status Indicator The LED Status indicators reveal the status of the system power state, battery-charging state, Instant-On/Suspend state, and the WLAN switch enabling and disabling. See the LED Status Indicator Section for details.
3. Keyboard The keyboard is used to enter data. (See Keyboard Section for details.) 4. Touch Pad The touch pad is a built-in pointing device with functions similar to a mouse. 5. Built-in Microphone The built-in microphone records sound. 6. Silent Mode Button When the system is in Windows, pressing the key enables the system to lower its power usage; therefore the fan speed is reduced to achieve lowest operating noise. When Silent Mode is enabled, the shows steady green light. LED status indicator
7. Power / Suspend Button The power/suspend button turns the notebook on and off and it also acts as a system suspend key. Press momentarily to turn on the system. Press and hold for at least 4 seconds to turn off the system. How this key behaves can be defined in [Start > Settings > Control Panel > Power Options > Advanced] menu. Press the power / suspend button again to return from the suspend mode. (See Chapter 3 for more details on system suspend function.) When the system is in Suspend Mode, the indicator shows blinking green light. LED status

Front View

Warning: Do not place any heavy objects on the top of notebook. This may

damage the display

1. Wireless On/Off Switch Use the Switch to disable or enable the Wireless function. When Wireless LAN function is enabled, the indicator shows steady blue light. LED status
2. Ventilation Grill The fan grill is where air is exchanged to dissipate the internal heat. Do not block this airway completely.

Side Views

1. Optical Drive and Disk Eject Button and Manual Eject Key Hole If your computer comes with the Combo drive, DVD-Dual, or Super-Multi drive, you may save data onto a CD-R / CD-RW or DVD RW disc. Press the eject button to eject the disk tray. The manual eject keyhole allows you to manually eject a jammed disk. 2. External VGA Port The VGA video output port is for connecting the external LCD monitor or projector. 3. Power Jack (DC-in) The DC-out jack of the AC Adapter connects here and powers the computer.
4. Modem Port This is where you plug the phone jack (RJ-11) for fax/modem functions. 5. Kensington Lock Key Hole A Kensington-type security lock latches to this keyhole for anti-theft purpose. 6. USB2.0 Port (x3) The Universal Serial Bus (USB2.0-compliant) port allows you to connect a wide variety of devices to your computer at a rate of up to 480 Mbps. This port conforms to the latest USB2.0 plug-and-play standards. 7. Firewire / IEEE1394 / 1394a Port This is a high-speed serial data port. You may connect any Fire-wire-ready device to this port. 8. 4-in-1 Card Reader The 4-in-1 Card Reader supports SD Card, MS Card, MMC Card, and MS-Pro Card. 9. ExpressCard Slot The slot is where Express Card (Type I, 34mm) is inserted. ExpressCard integrates both the PCI-Express bus technology and USB2.0 interface. Press the card into the slot to insert. Press the card again to eject. 10. Stereo Headphone / SPDIF-out Jack The stereo headphone jack (3.5-mm diameter) is where you connect the headphones or external speakers. Alternatively, you may connect the SPDIF output to an external DTS, AC3, or PCM sound processor / decoder in your home stereo system. 11. Microphone/Audio Line-in Jack The microphone/Audio Line-in jack (3.5-mm diameter) is where you connect a microphone or an external audio input source such as a CD player.

Fn + F5 Fn + F6 Fn + F7 Fn + F8
Fn+Num Lk Enables the embedded keypad to work in numeric mode. The keys act like numeric keypads in a calculator. Use this mode when you need to do a lot of numeric data entry. An alternative would be to connect an external numeric keypad. Caps Lock When Caps lock is enabled, all the characters you enter become capitalized. Fn + Scr Lk Press the Fn+Scr Lk key and then press or to move one line up or down.
Windows Keys Your keyboard also has two Windows keys: 1. Start Key This key allows you to pull up the Windows Start Menu at the bottom of the taskbar. 2. Application Menu Key This key brings up the popup menu for the application, similar to a click of the right mouse button. Embedded Numeric Keypad Press Fn + Num Lk to enable the embedded numeric keypad. The numbers are printed in upper right corner of a key, in a color different from the alphabets. This key pad is complete with arithmetic operators (+, -, * , /). Press Fn+Num Lk to revert to normal character keys.

Touch Pad

The built-in touch pad, which is a PS/2-compatible pointing device, senses movement on its surface. As you move your fingertip on the surface of the pad, the cursor responds accordingly. The following items teach you how to use the touch pad: 1. Move your finger across the touch pad to move the cursor. 2. Press buttons to select or execute functions. These two buttons are similar to the left and right buttons on a mouse. Tapping on the touch pad twice produces is similar to clicking the left button of a mouse.
Function Execution Left Button Click twice quickly Click once Click and hold to drag the cursor Click once Right Button Equivalent Tapping Action Tap twice (at the same speed as double-clicking the mouse button) Tap once Tap twice quickly and on the second tap hold finger to the touch pad to drag the cursor

Selection Drag

Access Context Menu Move One Page Up or Down
Tips on Using the Touch Pad: 1. The double-click speed is timed. If you double-click too slowly, your notebook responds as if you single-clicked twice. 2. Keep your fingers dry and clean when using the touch pad. Also keep the surface of touch pad clean and dry to prolong its life. 3. The touch pad is sensitive to finger movements. Hence, the lighter the touch, the better the response. Heavy touch does not produce better response.

Graphic Subsystem

Your computer uses a high performance 14.1-inch active matrix TFT panel with high resolution and multi-million colors for comfortable viewing. The ATI Radeon Xpress 200M integrated video graphics accelerator, which is Microsoft DirectX 9 compatible, performs graphic rendering at a lighting-fast speed.
Adjusting the Display Brightness The notebook uses special key combinations, called hot keys, to control brightness. Press Fn+F7 to increase the brightness. Press Fn+F8 to decrease the brightness.
Note: To maximize your battery operating time, set the brightness to the
lowest comfortable setting, so that the internal backlight uses less power.
Extending the Life of the TFT Display Device Observe the following guidelines to maximize the life of the backlight in the display. 1. Set the brightness to the lowest comfortable setting (Fn+F8). 2. When working at your desk, connect your notebook to an external monitor and disable the internal display Fn+ F4. 3. Do not disable the suspend time-outs. 4. If you are using AC power and have no external monitor attached, change to suspend mode when not in use.
Opening and Closing the Display Panel To open the display, lift up the lid. Then tilt it to a comfortable viewing position. The LCD panel has a maximum opening of 135 degrees. Do not push it down forcibly.
To close the display cover, fold it down gently.
Warning: To avoid damaging the display, do not slam it when closing. Do not
place any object on top of the computer when the display is closed

Audio Subsystem

Your computers audio subsystem is Sound Blaster Pro-compatible.
Adjusting the Volume Manually To increase the volume, press Fn+F5. To decrease the volume, press Fn+F6.
Adjusting the Audio Volume in Windows 1. Click the speaker symbol in the task tray in Windows. 2. Drag the volume control bar up or down to adjust the volume. 3. To temporarily silence the speaker without changing the volume setting, click Mute.
Voice Recording A built-in microphone allows you to record sound. You will need to use audio processing software to enable the built-in microphone. For example, you may use Microsoft Sound Recorder.
Your computer comes with a 56K V.92 internal fax/modem and a phone jack (RJ-11), which is located on the left side of your computer. Use a telephone cable to connect the computer to the telephone wall outlet.
Note: For certain configuration, there is no Modem Port or Function. Connecting the Modem 1. Plug one end of the phone line into the modem port located on the rear side of the computer. (For EMI compliance, you need to clip the included EMI CORE to the phone line.) 2. Plug the other end of the line into the analog phone wall outlet. Depending on where your computer is used, you may need to change settings in the modem. Correct setting will allow you to maintain a stable connection in a country where its telecommunication system may be different to others. To change the modem setting, do the following: 1. Go to [Start > Settings > Control Panel > Phone and Modem Options]. Go to Dialing Rules and Edit My Location. You will see a similar dialog box.

2. Click on the pull-down menu and select the country where it is applicable. Click on OK to exit.

Ethernet

Your computer is equipped with a 10/100Base-TX Fast Ethernet network adapter. Connect the active LAN cable to the RJ-45 LAN port located on the left side of the computer. This allows you to access and transmit data in the local area network. Connecting to the Network Use Unshielded Twisted Pair (UTP) Ethernet cable only. 1. Insert one end of the UTP cable into the network connector until the connector snaps securely into the receptacle. 2. Either connect the other end of the cable to an RJ-45 jack wall outlet or to an RJ-45 port on a UTP concentrator or hub in the network. Cabling Restriction for Networks The following restrictions should be observed for 10/100BASE-TX networks: The maximum cable run length is 100 meters(m) (328 feet[ft]).
Note: Consult Windows manual and / or Novell Netware users guide for the
software installation, configuration, and operation of the network.
Chapter 2 Bios Setup and Security Feature
BIOS SETUP AND SECURITY FEATURE
In this chapter, you will learn how to enter the BIOS Setup Menu and manipulate various hardware control settings. You will also learn how to use the built-in security features.
The Setup Utility is a hardware configuration program built into
your computers BIOS (Basic Input/Output System). It runs and maintains a variety of hardware functions. It is a menu-driven software, which allows you to easily configure and change the settings. The BIOS contains manufactures default settings for the computers standard operations. However, there are occasions when you may be required to modify the default settings in the BIOS. The BIOS allows you to set up passwords to limit access to users. This is an important feature because a great deal of vital information is carried within the computer nowadays. Unauthorized access can be prevented. Later in this chapter, you will learn how to use this security feature.
Entering the BIOS Setup Screen
First turn on the power. When the BIOS performs the POST (Power-On Self Test), press F2 key quickly to activate the Pheonix BIOS Setup Utility.
Note: You may need to press F2 key fairly quickly. Once the system begins to load
Windows, you may have to retry by cycle-power on again
Leaving the BIOS Setup Screen
When you have finished modifying the BIOS settings, exit the BIOS. It takes a few seconds to record changes in the CMOS.

BIOS Action Keys

Function Key Command ESC Enter F1 F9 F10 <Tab> + Exit

Go to Sub Screen

Description Leaves a sub-menu to return to the previous menu OR exits the BIOS setup while saving changes. Shows the Sub Menu Shows the Help Screen Load default values Saves changes and reboots the computer. Selects the next field. Selects the next upper item. Selects the next lower item. Selects the next value within a field. Selects the next value within a field.

General Help Setup Defaults Save and Exit Select a field Select an item Select an item Lower value Higher value
Modifying the BIOS Settings
The Phoenix BIOS setup main menu is subdivided into sub-menus. Each menu item is described in this section.

Main Setup

Under this menu, you may change time/date and view basic processor and system memory information. Item System Time System Date Selections / Sub-menu N/A N/A Description Type in the current date, in HH:MM:SS format. Type in the current date, in MM/DD/YY format.

Info Setup

Item BIOS Information: BIOS Version: 1.00 KBC Version: 1.00 Processor: CPU Type CPU Info Description Display BIOS version and CPU Information
Genuine Intel CPU Intel Celeron M inside

Advanced Setup

Item Selections / Sub-menu Description When enabled, this unique feature protects against certain type of virus that creates Buffer Overflow problem in the memory subsystem. When Disabled, the system will display OEM logo instead of the POST messages. When Enabled, the system will display POST messages (i.e. devices information.) Enable or disable the built-in touchpad.
Execute Disabled Disable Bit Enabled Quiet Boot Disabled Enabled
TouchPad Enabled Support Disabled

Security Setup

Item Selections / Sub-menu N/A Description Install or Change the Password
Set Supervisor Password Set User N/A Password Password Disabled on Boot Enabled
Install or Change the Password When enabled, the system will always ask for User Password on boot.
Using Password Protection Two Levels of Password Protection are available. The BIOS
provides both a Supervisor and a User password. If you try to activate both passwords, the Supervisor password must be set first. The passwords activate two different levels of protection: 1. System always asks for password every time it is powered on. 2. System asks for password only when you attempt to enter BIOS utility. The passwords are encrypted and stored in NVRAM. Make sure you write them down or memorize them. If you lost the passwords, the computer may need to be sent back to the factory or to an authorized service dealer to reset the passwords.

Power Setup

Item LCD Panel Power Saving Selections / Sub-menu Enable Disable Description When Enabled (system is powered by battery), the system will automatically adjust the LCD brightness to save power. When Enabled, maximum battery life can be achieved. The processor performance is lowered.

Note: Read Section Protecting Your Notebook in the beginning of this manual
for tips about how to maintain the battery pack.
Note: To achieve optimal battery performance, you may need to do a battery
calibration at a 3-month interval. To do this: 1. 2. Fully charge the battery. Then discharge the battery by entering the BIOS setup screen. (Press F2
key as soon as you turn on the computer. And let it remain at the setup screen until the battery runs out. 3. 3-6 Fully charge the battery again.
Using Windows Power Options
Windows Power Management provides basic power saving features. In the Windows Power Options Properties [Start > Settings > Control Panel > Power Options] dialogue box, you may enter time-out values for display and hard disk drive. Windows power manager saves power by turning off hard drive after 1 minute of inactivity, for example.

Windows Power Schemes

The power management control panel in Windows XP, known as Power Schemes, is designed to provide the user with an easy-to-use interface. The Power Schemes tab can be found in the Power Options Properties panel that is accessible via the control panel window. Schemes are easy to understand, based on notebook usage scenarios, and control not only processor power usage but other system peripherals as well. Go to [Start > Settings > Control Panel] and double-click the Power Options icon. Always on mode puts the processor into maximum performance mode, which provides no power saving. The other schemes control processor performance based on demand. For example, Max Battery mode lowers the processors speed and voltage to conserve power as much as possible.
In this dialog box, you can manually set the LCD and hard drives time-out values in the Plugged in column and in the Running on batteries column. Lower time-out values will save more battery power.
Note: Also consult Windows user guide for more information on how
to use Windows power management functions.
Note: Actual dialogue box shown above may appear slightly different.

Suspend Mode

Standby Suspend The system automatically enters this mode after a period of inactivity, which is set in the Power Schemes dialog box. In Standby mode, hardware devices, such as display panel and hard disk, are turned off to conserve energy. Hibernate Suspend In this mode, all system data are saved in the hard disk before powering down. When this mode is activated, all system state and contents are saved to the hard disk drive after a period of inactivity defined by the user. No power or very little power is drawn from the battery module under this mode. However, depending on how much RAM that have been installed on your computer, the amount of time the system requires to restore all its previous contents can range from 5 to 20 seconds. For Windows 2000 / XP users, hibernation is handled by the operating system; therefore, no special disk partition or disk file is necessary. If you wish to activate Hibernate mode, you need enable Hibernate Support in the Hibernate tab of the Power Options menu.

changes you made, try to restore all the settings to factory defaults. Be sure all the device drivers are installed properly. For example, without the audio driver properly installed, the speakers and microphone will not work. If external devices such as USB camera, scanner, and printer do not function correctly when connected to the system, it is usually the devices own problem. Consult the devices manufacturer first. Some software programs, which have not gone through rigorous coding and testing, may cause problems during your routine use. Consult the software vendor for problem solving. Legacy peripheral are not plug-and-play capable. You need to restart the system with these devices powered up and connected first. Be sure to go to BIOS SETUP and load DEFAULT SETTING after BIOS re-flash. Contact technical support, 24 hours a day, 7 days a week, at (866) 287-5555.

Audio Problems

No speaker output Software volume control is turned down in Microsoft Sound System or is muted. Double-click the speaker icon on the lower right corner of the taskbar to see if the speaker has been muted or turned down all the way. Most audio problems are software-related. If your computer worked before, chances are software may have been set incorrectly. Go to [Start > Settings > Control Panel] and double-click the Sounds and Audio Devices icon. In the Audio page, make sure that Realtek HD Audio is the default playback device. Sound cannot be recorded You will need to plug-in an external microphone to the microphone connector to record sound. Double-click the speaker icon on the lower right corner of the taskbar to see if the microphone has been muted. 1. 2. 3. Click Options and select Properties. Select Recording and click the OK button. After Click OK button, the recording volume control panel will appear. Go to [Start > Settings > Control Panel] and double-click the Multimedia icon (or Sounds and Audio Devices icon). In the Volume or Audio page, make sure that Realtek HD Audio is the default recording device.

Hard Disk Problems

The hard disk drive does not work or is not recognizable The new HDD may need to be partitioned and reformatted. O/S and drivers will need to be re-installed as well. Check the hard disk indicator LED. When you access a file, the LED lamp should light up momentarily. The new HDD may be defective or is not compatible. If your computer has been subjected to static electricity or physical shock, you may have damaged the disk drive. The hard drive is making abnormal whining noises You should back up your files as soon as possible. Make sure the source of noise is indeed from the hard drive and not the fan or other devices. The hard disk drive has reached its capacity Run Disk Cleanup utility in Windows. [Start > All Programs > Accessories > System Tools > Disk Cleanup] The system will prompt you for what to do. Archive files or programs that you had no longer used by moving them to an alternative storage medium (floppy disk, optical record-able disk, etc.) or uninstall programs that no longer use. Many browsers store files in the hard drive as a cache to speed up the performance. Check the programs Online Help for instructions on decreasing the cache size or on removing temporary Internet files. Empty the Recycle Bin to create more disk space. When you delete files, Windows saves them to the Recycle Bin.

The hard disk takes longer to read a file If you have been using the drive for a period, the files may be fragmented. Go to [Start > Programs > Accessories > System Tools > Disk Defragmenter] to perform a disk defragmentation. This operation may take a while. Interrupt requests or problems with other hardware devices may have occupied the CPU and therefore slows down the system performance. The files are corrupted Run the Error-checking utility in Windows to check the HDD. Double-click My Computer. Right-click C: and select Properties. Click Check Now in Error-checking in Tools.

Optical Drive Problems

The optical drive does not work Try rebooting the system. The disk is damaged or files are not readable. After you have inserted a CD-ROM disk, it may take a moment before you can access its content. The drive dose not read any disks The CD may not be properly seated in the tray. Make sure the disk is firmly seated onto the spindle. The disk is damaged or not readable. The disk cannot be ejected Normally, it takes a few seconds to eject the disk. If the disk cannot be ejected, it may be mechanically jammed. Straighten out a paper clip and insert it to a tiny hole next to the eject button. This should reject the disk tray. If not, return the unit for repair. Do not forcefully pull on the disk tray. The Combo or DVD Dual cannot record You need to purchase and install a burner utility program to record files to a blank media.

Display Problems

The display panel is blank when the system is turned on Make sure the computer is not in the Standby or Hibernate suspend modes. The display is turned off to conserve energy in these modes. The screen is difficult to read The display resolution should at least be set to at least1024x768 for optimal viewing. Go to [Start > Settings > Control Panel] and double-click the Display icon. Under the Settings page, set screen resolution to at least 1024x768 and choose at least 256 colors. The screen flickers It is normal if the display flickers a few times during shutting down or powering up.
Keyboard and Mouse Problems
The built-in touch pad performs erratically Make sure there is no excess perspiration or humidity on your hand when using the touch pad. Keep the surface of the touch pad clean and dry. Do not rest your palm or wrist on the surface of the touch pad while typing or using the touch pad.
The built-in keyboard accepts no input If you are connecting an external keyboard to the system, the built-in keyboard may not work. Try restarting the system.

The characters on the screen repeat while I type. You may be holding the keys down too long while youre typing. Keep the keyboard clean. Dust and dirt under the keys could cause them to stick. Configure the keyboard to wait longer before the auto repeat feature starts. To adjust this feature, Go to [Start > Settings > Control Panel], and double-click the Keyboard icon. A dialogue box shows up with the adjustable settings for the keyboard.

CMOS Battery Problem

A message CMOS Checksum Failure displays during the booting process or the time (clock) resets when booting Try to reboot the system. If the message CMOS Checksum Failure appears during the booting procedure even after rebooting, it may indicate failure of the CMOS battery. Please call our service center for troubleshooting at (866) 287-5555.

Memory Problems

The POST does not show an increased memory capacity when you have already installed additional memory Certain brands of memory module may not be compatible with your system. You should ask your vendor for a list of compatible DIMM. The memory module may be defective.
The O/S issues an insufficient memory error message during operation This is often a software or Windows-related problem. A program is draining the memory resources. Close the application programs youre not using and restart the system.

Modem Problems

The built-in modem does not respond Make sure the modem driver is loaded properly. Go to [Start > Settings > Control Panel > Phone and Modem Options] and go to Modems tab. Make sure Motorola SM56 Data Fax Modem is listed. Otherwise, click the Add button to add the modem drive, which is located in the factory CD-ROM (or floppy diskette). Go to [Start > Settings > Control Panel > System] and click Device Manager button in the Hardware page to check for possible resource or driver conflict. See Windows on-line help or manual for how to handle such problems. Make sure the phone line, which the computer is connected to, is working. Connection difficulties Be sure to disable Call Waiting on the phone line. Be sure to have the correct country setting where your computer is used. Go to [Start > Settings > Control Panel > Phone and Modem Options]. Go to Dialing Rules and Edit My Location. In the Country/Region pull-down menu, select the appropriate country setting. Excessive line noise might cause the connection to be dropped. To check this, put the regular phone handset on the line and placing a phone call. If you do hear abnormal noise, try to make the modem connection with a different line or contact your local telephony company for service. Make sure the cable connection is firm. Try a different receiver number and see if the problem persists.

Network Adapter / Ethernet Problems
The Ethernet adapter does not work Go to [Start > Settings > Control Panel > System > Hardware > Device Manager]. Double-click on Network Adapters and check if Realtek RTL8139/810x Family Fast Ethernet NIC appears as one of the adapters. If it does not exist, Windows has not detected the Realtek RTL8139/810x Family Fast Ethernet NIC or the device driver has not been installed properly. If there is a yellow mark or red-cross on the network adapter, it may be a device or resource conflict. Replace or update the device driver from the factory CD-ROM disk or consult Windows manual on how to solve the resource conflict problem. Make sure the physical connections on both ends of the cable are good. The hub or concentrator may not be working properly. Check to see if other workstations connected to the same hub or concentrator is working. The Ethernet adapter does not appear to operate in the 100Mbps transmission mode Make sure the hub you are using supports 100Mbps operation. Make sure that your RJ-45 cable meets the 100Base-TX requirements. Make sure the Ethernet cable is connected to the hub socket that supports 100Base-TX mode. The hub may have both 10Base-TX and 100Base-T sockets.

Performance Problems

The computer becomes hot In a 35oC environment, the certain areas of the computers back case are expected to reach 50 degrees. Make sure the air vents are not blocked. If the fan does not seem to be working at high temperature (50 degrees Celsius and up), contact the service center. Certain programs that are processor-intensive may increase the computer temperature to a degree where the computer automatically slows down its CPU clock to protect itself from thermal damage. The program appears stopped or runs very slowly Press CTRL+ALT+DEL to see if an application is still responding. Restart the computer. This may be normal for Windows when it is processing other CPU-intensive programs in the background or when the system is accessing slow-speed devices such the floppy disk drive. You may be running too many applications. Try to close some applications or increase system memory for higher performance. The processor may have been overheated due to the systems inability to regulate its internal heat. Make sure the computers ventilation grills are not blocked.
Firewire (IEEE1394) and USB2.0 Problems
The USB device does not work Windows NT 4.0 does not support USB protocols Check the settings in the Windows Control Panel. Make sure you have installed the necessary device drivers. Contact the device vendor for additional support. The IEEE1394 port does not work Go to [Start > Settings > Control Panel > System > Hardware > Device Manager]. You should see an entry which reads OHCI Compliant IEEE 1394 Host Controllers. If it does not exist, Windows has not detected the host controller or the device driver has not been installed properly. If there is a yellow mark or red-cross on the 1394 host controller, it may be a device or resource conflict. Replace or update the device driver from the factory CD-ROM disk or consult Windows manual on how to solve the resource conflict problem. Make sure the cable is fully connected. Make sure you have installed the necessary device drivers. Contact the device vendor for additional support.

EN55022 : 1998+A1: 2000+A2: 2003, CLASS B EN61000-3-2 : 2000 EN61000-3-3 : 1995+A1: 2001 EN55024 : 1998+A1 : 2001+A1: 2003 IEC61000-4-2: 2001 IEC61000-4-3:2002+A1:2002 IEC61000-4-4:1995+A1:2000+A2:2001 IEC61000-4-5:2001 IEC61000-4-6:2001 IEC61000-4-8:2001 IEC61000-4-11:2001 EN50082 (IEC801-2, IEC801-3, IEC801-4) Electro-magnetic Immunity EN 300 328-2, EN 300 328-1, EN 301 489-1, EN 301 489-17 (ETSI 300 328, ETSI 301 489) Electro-magnetic Compatibility and Radio Spectrum Matter. TBR21 ( ETSI TBR21) Terminal Equipment. EN60950 (IEC60950) I.T.E. Product Safety Canadian Notice This digital apparatus does not exceed the Class B limits for radio noise emissions from digital apparatus as set out in the radio interference regulations of the Canadian Department of Communications. Le present appareil numerique nemet pas de bruits radioelectriques depassant les limites applicables aux appareils numeriques de Classe B prescrites dans le reglement sur le brouillage radioelectrique edicte par le Ministere des Communications du Canada.
REN (Ringer Equivalent Numbers) Statement ''NOTICE: The Ringer Equivalence Number (REN) assigned to each terminal device provides an indication of the maximum number of terminals allowed to be connected to a telephone interface. The termination on an interface may consist of any combination of devices subject only to the requirement that the sum of the Ringer Equivalence Numbers of all the devices does not exceed 5.'' IC ID: 3409A-M30EI0
Attachment Limitations Statement ''Notice: This equipment meets telecommunications network protective, operational and safety requirements as prescribed in the appropriate Terminal Equipment Technical Requirements document(s). This is confirmed by marking the equipment with the Industry Canada certification number. The Department does not guarantee the equipment will operate to the user's satisfaction. Before installing this equipment, users should ensure that it is permissible to be connected to the facilities of the local telecommunications company. The equipment must also be installed using an acceptable method of connection. The customer should be aware that compliance with the above conditions may not prevent degradation of service in some situations. Repairs to certified equipment should be coordinated by a representative designated by the supplier. Any repairs or alterations made by the user to this equipment, or equipment malfunctions, may give the telecommunications company cause to request the user to disconnect the equipment. Users should ensure for their own protection that the electrical ground connections of the power utility, telephone lines and internal metallic water pipe system, if present, are connected together. This precaution may be particularly important in rural areas. Caution: Users should not attempt to make such connections themselves, but should contact the appropriate electric inspection authority, or electrician, as appropriate.'' Power Cord Requirement The power cord supplied with the AC adapter should match the plug and voltage requirements for your local area. Regulatory approval for the AC adapter has been obtained using the power cord for the local area. However, if you travel to a different area and need to connect to a different outlet or voltage, you should use one of the power cords listed below. To purchase a power cord (including one for a country not listed below) or a replacement ac adapter, contact your local dealer. U.S. and Canada The cord set must be UL-Listed and CSA-Certified or C-UL Listed. The minimum specifications for the flexible cord are (1) No. 18 AWG, (2) Type SJ, and (3) 3-conductor.

The cord set must have a rated current capacity of at least 10 A. The attachment plug must be an earth-grounding type with a NEMA 5-15P (15A, 125V) or NEMA 6-15P (15 A, 250V) configuration. Japan All components of the cord set (cord, connector, and plug) must bear a `PSE` mark and registration number in accordance with the Japanese Dentori Law. 2 The minimum specification for the flexible cord are: (1) 0.75 mm conductors, (2) Type VCT or VCTF, and (3) 3-conductor. The cord set must have minimum rated current capacity of 7 A. The attachment plug must be a two-pole, grounded type with a Japanese Industrial Standard C8303 (15 A, 125 VAC) configuration. Other Countries The cord set fittings must bear the certification mark of the agency responsible for evaluation in a specific country. Acceptable agencies are: BSI (UK) OVE (Australia) CEBEC (Belgium) SEMKO (Sweden) FIMKO (Finland) DEMKO (Denmark) NEMKO (Norway) SETI (Finland) EANSW (Australia) SEV (Switzerland) IMQ (Italy) UTE (France) CCC (China) PSB (Singapore) PSE (Japan) BSMI (Taiwan) B (Polish) VDE (Germany) SASO (Saudi Arabia) The flexible cord must be of a HAR (harmonized) type HO5VV-F 3-conductor cord with a minimum conductor size of 0.03 square inches. The minimum specification for the flexible cord for Class II product 2 are: (1) 2X0.75 mm conductors, (2) 2-conductor cord.
The cord set must have a current capacity of at least 10 A and a nominal voltage rating of 125 / 250 VAC.
CAUTION: MODEL NB-14w2 IS DESIGNED TO USE WITH THE FOLLOWING AC ADAPTER MODEL ONLY Manufacture: LITE-ON ELECTRONICS, INC Model: P PA-1650-02 (65W), PA-1650-01 (65W) Manufacture: LI SHIN INTERNATIONAL ENTERPRISE CORP. Model: 0335A2065 (65W), 0335C2065 (65W) Manufacture: EPSF Model: 10653-A (65W)
Telephone lines requirement The appropriate utilization of 26AWG telephone line cord on unit. CAUTION: Always disconnect all telephone lines from the wall outlet before servicing or disassembling this equipment. CAUTION: To reduce the risk of fire, use only No. 26AWG or larger telecommunication line cord. Battery Pack Safety The battery pack is intended to use only with this notebook. Do not disassemble the pack. Do not dispose of the battery pack in fire or water. To avoid risk of fire, burns, or damage to your battery pack, do not allow a metal object to touch the battery contacts. Handle a damaged or leaking battery with extreme care. If you come in contact with the electrolyte, wash the exposed area with soap and water. If it contacts the eye, flush the eye with water for 15 minutes and seek medical attention. Do not charge the battery pack if the ambient temperature exceeds 45 (113). To obtain a replacement battery, contact your local dealer. Do not expose the battery pack to high storage temperatures (above 60, 140). When discarding a battery pack, contact your local waste disposal provider regarding local restrictions on the disposal or recycling of batteries. Use only supplied AC Adapter for charging. CAUTION: Danger of explosion if battery is incorrectly replaced. Replace

Polyhalite Resources and a Preliminary Economic Assessment of the Ochoa Project Lea County, Southeast New Mexico

PREPARED FOR

Dated August 19, 2009
Prepared by Sean C. Muller, C.P.G., R.G. Robert Galyen, C.P.G., R.G. Chemrox Technologies William J. Crowl, R.G. Donald E. Hulse, P.E. Terre A. Lane, Member, AusIMM Richard D. Moritz, Member, MMSA Gustavson Associates, LLC

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LIST OF CONTENTS
1. 2. 3. 4. SUMMARY.....1 INTRODUCTION.....8 RELIANCE ON OTHER EXPERTS....13 PROPERTY DESCRIPTION & LOCATION...15 4.1 PROSPECTING PERMITS....23 4.1.1 Federal Land Holdings...24 4.1.2 Other Land Requirements....24 4.1.3 Royalties.....24 4.1.4 Environmental Considerations...25 4.1.5 Retention and Obligations of the Permits...25 4.1.6 Bonding and other Financial Obligations..26 4.1.7 Boundaries and Survey Requirements...26
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY....27 HISTORY.....30 GEOLOGICAL SETTING....31 7.1 7.2 7.3 7.4 REGIONAL GEOLOGY....31 LOCAL GEOLOGY....36 IDENTIFICATION OF POLYHALITE IN GEOPHYSICAL WELL LOGS..37 DATA INTERPRETATION....38
DEPOSIT TYPES....45 MINERALIZATION.....46
10. EXPLORATION.....48 11. DRILLING.....51 12. SAMPLING METHOD AND APPROACH...52 13. SAMPLE PREPARATION, ANALYSES AND SECURITY...54 14. DATA VERIFICATION.....56 15. ADJACENT PROPERTIES....58 16. MINERAL PROCESSING AND METALLURGICAL TESTING..59 17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES..62 17.1 17.2 17.3 PETRA MODEL CALCULATIONS...62 VALIDATION OF PETRA MODEL USING SURPAC...66 DEVELOPMENT OF AN INDEPENDENT RESOURCE ESTIMATE..66
Prepared by: Chemrox Technologies and Gustavson Associates August 19, 2009

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18. OTHER RELEVANT DATA AND INFORMATION...72 18.1 BACKGROUND TO THE POTASH INDUSTRY...72 18.1.1 Fertilizer Products...73 18.1.2 Polyhalite as a Direct Fertilizer and K2SO4 Feed Stock..75
19. ADDITIONAL REQUIREMENTS FOR TECHNICAL REPORTS ON DEVELOPMENT PROPERTIES AND PRODUCTION PROPERTIES..77 PRELIMINARY ECONOMIC ASSESSMENT...77 MINING.....78 19.2.1 Mining Method Selection...78 19.2.2 Mine Design.....78 19.2.3 Mine Development Design...79 19.2.4 Mobile Equipment....79 19.2.5 Development and Production Schedules...79 19.2.6 Mining Support Services....80 19.3 MINING RECOVERY....80 19.4 PROCESS DESCRIPTION....81 19.5 MARKETS.....81 19.6 CONTRACTS.....82 19.7 ENVIRONMENTAL CONSIDERATIONS...82 19.8 TAXES.....82 19.8.1 Royalties.....82 19.8.2 Corporate Income Tax....82 19.9 OPERATING COST ESTIMATES (OPEX)...82 19.9.1 Mining OPEX....83 19.9.2 Mineral Processing OPEX and Beneficiation...84 19.9.3 General and Administration and Site Services OPEX..85 19.9.4 OPEX Summary....86 19.10 CAPITAL COST ESTIMATES (CAPEX)...86 19.10.1 Mining....87 19.10.2 Mineral Processing....88 19.10.3 Exploration and Permitting....89 19.10.4 CAPEX Summary....89 19.11 ECONOMIC ANALYSIS.....89 19.11.1 Sensitivity Analysis....90 19.12 PAYBACK....92 19.13 MINE LIFE.....92 19.14 OPPORTUNITIES AND RISKS....92 19.14.1 Opportunities....92 19.14.2 Risks.....92 20. INTERPRETATION AND CONCLUSIONS...94 21. RECOMMENDATIONS....96 22. REFERENCES..... 101 23. CERTIFICATES..... 105 24. GLOSSARY..... 116 19.1 19.2

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LIST OF APPENDICES
APPENDIX A Mineralogical Investigations of Salado and Rustler Polyhalite APPENDIX B Analytical Results from the Mineral Lab and ALS Chemex APPENDIX C Metallurgical Test Results from RDi APPENDIX D Polyhalite Density Calculations APPENDIX E Mining Support Documents

LIST OF FIGURES

FIGURE 1.1 OCHOA AREA OF INTEREST LAND POSITION, PROPOSED DRILL HOLE LOCATIONS AND POLYHALITE ISOPACHS.... 2 FIGURE 1.2 K2SO4 PRICE SENSITIVITY.... 6 FIGURE 2.1 GENERAL LOCATION OF THE OCHOA RESOURCE AREA.. 12 FIGURE 4.1 GENERAL LOCATION MAP OF THE OCHOA PROPERTY IN NEW MEXICO.. 15 FIGURE 4.2 LOCATION OF OIL AND GAS LEASES THAT OVERLAP POTASH PERMITS HELD BY ICP IN THE OCHOA AOI.... 17 FIGURE 4.3 LOCATION OF THE NEWLY ADDED ACREAGE CURRENTLY IN ENVIONMENTAL ASSESSMENT STAGE.... 21 FIGURE 4.4 LOCATION OF THE FIVE ADDITIONAL ICP PROSPECTING PERMITS (17-21). 22 FIGURE 5.1 TYPICAL TERRAIN AND VEGETATION FOR THE OCHOA AOI (AFTER MICON, 2008) 27 FIGURE 5.2 KPLA & WIPP.... 29 FIGURE 7.1 GEOLOGICAL MAP OF NEW MEXICO.... 31 FIGURE 7.2 LOCATION OF DELAWARE SUB-BASIN... 32 FIGURE 7.3 OCHOAN STRATIGRAPHIC MAPPING UNITS... 34 FIGURE 7.4 POLYHALITE SHOWING A HIGH GAMMA RAY RESPONSE.. 35 FIGURE 7.5 CONCEPTUAL CROSS SECTION OF THE PERMIAN BASIN (AFTER JONES, 1972). 36 FIGURE 7.6 LOCATION MAP FOR CROSS SECTIONS... 39 FIGURE 7.7 NW-SE CROSS-SECTION A-A ON WEST SIDE OF AOI... 40 FIGURE 7.8 N-S CROSS SECTION B-B ON EAST SIDE OF AOI... 41 FIGURE 7.9 THICKNESS ISOPACH FOR TAMARISK POLYHALITE BED WITH ICP PERMITS.. 42 FIGURE 7.10 DEPTH FROM SURFACE ELEVATION TO THE BASE OF THE POLYHALITE IN THE RUSTLER FM.... 43 FIGURE 7.11 CROSS-SECTION C SHOWING SALADO POTASH BED DISTRIBUTION ON THE WEST..... 44 FIGURE 10.1 PROPOSED DRILL HOLE LOCATIONS IDENTIFIED.. 50 FIGURE 17.1 SHOWS THE GAMMA RAY TRACK ON THE LEFT... 62 FIGURE 17.2 SURPAC ISOPACH OF RUSTLER POLYHALITE BED WITH AOI OUTLINE.. 68 FIGURE 17.3 LOCATION OF PERMIT TRACTS HAVING GREATER THAN 6 FT OF POLYHALITE IN THE ICP AREA OF INTEREST.... 70 FIGURE 17.4 OCHOA INFERRED RESOURCE VOLUMES AND TONNAGES BY OBJECT AREA. 71 FIGURE 19.1 K2SO4 PRICE SENSITIVITY.... 90 FIGURE 19.2 CONTROLLABLE COST SENSITIVITY... 91 FIGURE 19.3 CAPITAL COST SENSITIVITY.... 91 FIGURE 19.4 DISCOUNT RATE SENSITIVITY.... 92

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TABLE 1.2 COST PER TON OF FEED AREA Mine Mill G&A Total LifeofMineAverage $8.84 $26.63 $0.66 $36.13 TypicalYear $10.74 $27.48 $0.64 $38.86
Total estimated initial capital cost for the mine and plant are shown in Table 1.3:
TABLE 1.3 TOTAL ESTIMATED INITIAL CAPITAL COST FOR THE MINE AND PLANT
Total Mine and Plant Capital Total Direct Costs EPCM Indirects Subtotal Direct plus Indirect Owners costs Contingency Subtotal Other Costs Total Estimated Costs $589,884,206 $589,884,206 $70,786,105 $23,595,368 $684,265,679 $17,696,526 $175,490,551 $193,187,077 $877,452,756

12% 4% 3% 25%

direct direct direct total
The estimated exploration, engineering and permitting costs total $9.8 million, as shown in Table1.4, bring the total preproduction expenditure to $887.3 million. The ICP Phase 1 drill program budget is US $550 million and the Phase 2 budget is US$2.5 million US.
TABLE 1.4 EXPLORATION, ENGINEERING AND PERMITTING COSTS ACTIVITY PreliminaryDrilling(PhaseI) DevelopmentDrilling(PhaseII) PrefeasibilityStudy FeasibilityStudy Permitting Total COST $550,000 $2,500,000 $2,000,000 $4,000,000 $750,000 $9,800,000
The project will produce two fertilizer products, potassium sulfate, and polyhalite. The potassium sulfate product is readily marketable as a highly desirable fertilizer. 85% of the project revenue is derived from potassium sulfate at full production. Test work has shown polyhalite to be a good direct application fertilizer; however polyhalite is currently not utilized as a fertilizer and will require market development. Initial polyhalite production is planned for 50,000 tons per year; rising by 50,000 tons per year for 9 years to a maximum of 500,000 tons per year. Polyhalite sales at full production represent 15% of the projects revenue. The pricing of the polyhalite

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product is at a discount to competing fertilizer products. The selling price of direct application polyhalite fertilizer used in the PEA is $250/ton and the selling price used for potassium sulphate is $750/ton. It is assumed a 5% gross royalty would be imposed by the federal government. A $1/ton potassium product produced, and a 3% net profits royalty are also included. The 30-year life project gives a pre-tax IRR of 43% and NPV of $2.90 billion with a 10% discount rate. NPVs at other rates are listed in Table 1.5.

ICP has invested a great deal of time and effort with surface owners in the area to facilitate access and good relations. To what extent private and State minerals plus surface rights are necessary for the development of a large scale project is still unknown at this time and this PEA does not consider the acquisition of non-BLM ownership. 4.1.3 Royalties
There is a 5% gross royalty on potash production payable to the Federal Government. A further royalty of $1/ton of any potassium product produced is payable to Robert Hite.

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Environmental Considerations
Preliminary screening of the AOI indicates that there are no existing environmental liabilities excepting for abandoned oil and gas wells. These would need to be effectively plugged and abandoned if there was a concern for natural gas leakage into future mine workings. Shallow aquifers exist in the AOI at or around 300 foot in depth that are utilized for potable water supply. The continuity and areal extent of these aquifers has not been quantified. For the most part, the surface conditions throughout the AOI are such that only limited grazing is possible. This is a function of the arid climate and nature of the poor soils. Water usage for mine development has not been ascertained from an availability standpoint. Brines, while present at depth, are thought to exist below the target Rustler Formation polyhalite. If there were brine producing zones, consideration for disposal or treatment would be necessary. Surface development activities such as the establishment of tailings impoundments will require consideration of potential potable water supplies should potential infiltration be an issue. While it is unlikely that this condition would exist, special studies and infrastructural siting for low infiltration areas away from shallow aquifers may be necessary. Some sensitive species such as the Lesser Prairie Chicken and a sand lizard are known in the area and the habitat appears to be widespread and non-unique. Currently the BLM supports limiting activities for earth disturbing activities during the mating seasons of the Lesser Prairie Chicken in the few areas where the birds have been documented. There does not appear to be any Threatened or Endangered Species or suitable habitat in the AOI, but baseline studies still need to be conducted. 4.1.5 Retention and Obligations of the Permits

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7. 7.1
GEOLOGICAL SETTING Regional Geology
The AOI lies in the Delaware Sub-basin of the Permian Basin of the Great Plains physiographic province. The surface geologic map of New Mexico is shown in Figure 7.1. This map shows the Ochoa area to mainly have limited, bedrock exposures which indeed is the case.
FIGURE 7.1 GEOLOGICAL MAP OF NEW MEXICO
Large scale evaporite deposits occur throughout the Permian age sedimentary basin elongated in a northeast-southwest direction. The Delaware and Midland sub-basins of the upper Permian Basin are separated by the Central Basin Platform on the Texas-New Mexico border and contain extensive evaporite deposits of the Ochoa Series. These evaporites lie between the Capitan Reef

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limestone of the underlying Guadalupe Series and the fine clastic sediments of the Dewey Lake redbeds. The location of the Delaware Basin where Ochoa is located can be seen below in Figure 7.2. The other potash deposits that have been developed to date in the Carlsbad area occur in the Delaware sub-basin of the Permian Basin as well.
FIGURE 7.2 LOCATION OF DELAWARE SUB-BASIN

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The first evaporite cycle of the Ochoa Series is known as the Castile Formation. The Castile
consists of anhydrite and halite within the Delaware Basin. The overlying Salado Formation is structurally and lithologically complex and, in addition to the cyclic anhydrite, halite, clay sedimentation, it is also host to the McNutt potash zone. Potassium-bearing salts accumulated in the northeast Delaware Basin. With later subsidence, the remainder of the Salado Formation sediments was deposited, followed by anhydrite and dolomite of the Rustler Formation and the Dewey Lake Formation red beds. Collectively, the Castile, Salado and Rustler formations are over 4,000 feet thick. The Ochoa Series underlie an area of about 400,000 square miles. Potash salts are found throughout the southern half of the area of the Ochoa Series. Potash in the Salado Formation occurs in both the anhydrite and halite members of the cyclic units. In the former, it occurs in the form of polyhalite and in the latter as sylvite, langbeinite or carnallite. The Salado Formation in the northern Delaware Basin is divided into three members, of which the middle zone, known as the McNutt potash zone, varies in thickness between 120 ft in the northwest part of the Delaware Basin to over 590 ft in the eastern part of the basin. Within the McNutt zone, there are 11 distinct potash cycles of which five have been commercially developed in the Carlsbad area but none have been correlated in the AOI. A stratigraphic column of the Ochoa evaporite series is shown in Figure 7.3. As noted above, the McNutt potash zone occurs within the Salado Formation. The target horizon of ICP is the polyhalite in the Rustler Formation which overlies the Salado Formation.

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FIGURE 7.6 LOCATION MAP FOR CROSS SECTIONS

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FIGURE 7.7 NW-SE CROSS-SECTION A-A ON WEST SIDE OF AOI

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FIGURE 7.8 N-S CROSS SECTION B-B ON EAST SIDE OF AOI

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FIGURE 7.9 THICKNESS ISOPACH FOR TAMARISK POLYHALITE BED WITH ICP PERMITS

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FIGURE 7.10 DEPTH FROM SURFACE ELEVATION TO THE BASE OF THE POLYHALITE IN THE RUSTLER FM

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FIGURE 7.11 CROSS-SECTION C SHOWING SALADO POTASH BED DISTRIBUTION ON THE WEST

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DEPOSIT TYPES
Bedded potash deposits occur in sedimentary basins in which the minerals have formed as a result of the evaporation of seawater, or mixtures of seawater and other brines, in restricted marine basins and through post diagenetic processes. The following description is taken from Williams-Stroud et al., 1994:
The reflux depositional model for evaporite deposition was first described in the literature in 1888 by Ochsenius. A shallow bar, or sill, across the mouth of a basin lets in a restricted flow of seawater which evaporates into a salt-precipitating brine. The density of brine at the distal end increases with increased salinity, sinks to the bottom, and sets up a reflux current of higher density brine back towards the ocean. The sill, which restricts the inflow of seawater, allows inhibited flow of evaporation-concentrated brines back to the ocean. The least soluble salts are precipitated nearer the sill, and the most soluble components come out of solution in the deeper parts of the basin. The result is a lateral facies change in a tabular shaped deposit that is due to the salinity gradients in the brine. The asymmetrical facies distribution of the Paradox Formation (Middle Pennsylvanian) Utah, the Prairie Formation (Middle Devonian) in Saskatchewan, and the Salado Formation (Upper Permian) in New Mexico. The evaporation of seawater results in the precipitation of alkaline earth carbonate minerals [i.e., calcite, dolomite], followed by calcium sulfates, halite, magnesium sulfates, and then magnesium and potassium chlorides. The ratio of sodium to potassium in seawater is 27:1, and, in general, minable potash beds are
accompanied by thicker halite deposits. Often, the potash ore zone is located near the tops of halite beds

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polyhalite in the sample was qualitatively estimated to about 5% depending upon the other associated minerals. To our knowledge, a standard of polyhalite for quantifying the mineral concentration using XRD is not available. A 200 gram -400 mesh sample was sent to ALS Chemex in Vancouver, BC or for MS analysis (ME-MS81) of major and trace analytes and ICP-AES analyses of whole rock oxides. Additionally, chloride and sulfur were analyzed using methods CL-XRF11 and S-GRA06 respectively and pH using method OA-ELEO5. (9) A representative weight percentage equivalent of each sample was combined into a single sample (composite) of about 500 grams for metallurgical testing by calcining and leaching methods (10) A representative split was crushed and screened to +1 inch, <-8 mesh to >+10mesh; <-20 mesh to >100 mesh; and -200 mesh and weighed. (11) These samples were then tested for polyhalite and other mineral concentration using a combination of XRF, XRD and microscopy using a vacuum impregnated mount to facilitate thin section preparation. For select solute derived from additional metallurgical testing, Florin Analytical Services conducted analysis using MS-AA methods. For purposes of this study, nearby core of the target interval is deemed representative of the likely mineralogy, grade and thickness of polyhalite to be encountered on the ICP area of interest. This is based upon the authors cross-comparison of gamma and acoustic logs plus experience with polyhalite and associated potash beds elsewhere in the Permian Basin of New Mexico. Further, testing of mine samples believed to be
comparable to the polyhalite in the underlying Salado Formation are likely representative of this interval as well based upon the unique depositional and post-diagenic environments.

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SAMPLE PREPARATION, ANALYSES AND SECURITY
For core sampling, the cutting of the whole core was done by Sandia Laboratories under the direction of the resource QP. After taking 6 inch lengths of core that were logged by the ICP geologist in the lab, the Sandia geologist cut the core in half using an automated diamond wire rock saw. This method was employed so as not to introduce any moisture in the samples with a drilling lubricant such as water or oil. Transportation of the secured samples that were individually wrapped and sealed in moistureproof core boxes was performed by a resource QP to ensure that testing and sample preparation was done by a third-party other than ICP. Upon driving the samples by truck to Golden, Colorado, the samples were taken to a secure office area where the QP had the only key. The samples were stored in a locked office area when logging and sample selection for preparation and analysis was conducted again under the supervision of the QP. Samples were then taken directly to The Mineral Lab for XRD and XRF. Select samples were directly given to

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MINERAL PROCESSING AND METALLURGICAL TESTING
Two basic sample suites were collected and analyzed by ICP and RDis personnel with the oversight of the resource QP, Sean Muller. One suite of rock samples was collected at two underground locations in a potash mine where polyhalite was found as a thin (<18 in.) caprock and in discontinuous stringers or layers. The polyhalite found in these Salado Formation mines tends to be red in color due iron coloration. After channel sampling and sorting material from a gob pile, samples were crushed to a minus one inch size fraction and split for testing by XRD, XRF, AA-MS and IC Plasma. Microscopy and SEM methods were also employed. Sample splits were further crushed and screened into discrete size fractions (Appendix B). Results of the testing showed that the samples were generally 80% polyhalite with the chief gangue constituent being halite. Dry crushing and screening tended to drop halite to the finer fraction likely due to differential hardness and cleavage fracturing. Polyhalite was further upgraded to nearly 100% by washing. Other tests were run on these samples originally intended for discrete size fraction wash analysis. Instead, the samples remained in a bath and it was determined that after 48 hours certain amounts of potassium were immediately released to the water. Optical mineralogy (Appendix A) and SEM (Appendix C) confirmed that there were two sizes of polyhalite, but the testing did not go far enough to determine whether it was the fine or coarse grained polyhalite that preferentially went into solution with the remainder retained for slower release. This testing shows that a suitable product for direct application can be readily upgraded if the main gangue constituent is halite. Polyhalite core obtained from a Sandia drill site west of Ochoa was carefully split and relogged. The core is from the Rustler Formation target horizon for prospective mining on the AOI. The core looks very much like anhydrite macroscopically but possesses a gamma and density signature typical for polyhalite. Further positive polyhalite wetting test results correlated with the change from polyhalite to anhydrite at the top and bottom of the bed shown by XRD and XRF. Discrete 6 inch intervals were collected and several evaluated by microscopy including a technique by which half of the thin section was soaked to exsolve a portion of the polyhalite (Appendix A). Select portions of these samples have also been examined by SEM to ascertain potential phase change and discriminate chemical composition within specific minerals. The chief gangue constituent in this Rustler Formation polyhalite is anhydrite which has a similar

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pricing of the polyhalite product is at a discount to competing fertilizer products. The polyhalite price used in the PEA is $250/ton and the price of potassium sulphate is $750/ton. 19.6 Contracts
There are currently no contracts in place for the project. 19.7 Environmental Considerations
An allowance has been made for baseline data collection and project permitting within the project development capital costs. This cost will need refinement as the project progresses and the location of surface facilities are chosen. There is significant environmental compliance and permitting costs associated with the ownership of the surface potentially being used for that purpose. 19.8 Taxes
Economic modeling was completed pre-tax. 19.8.1 Royalties It is assumed a 5% gross royalty would be imposed by the federal government. A $1/ton potassium product produced, and a 3% net profits royalty are also included. 19.8.2 Corporate Income Tax Economic modeling was completed pre-tax. 19.9 Operating Cost Estimates (Opex)
Operating costs for the project were developed using the Western Mine Engineering Cost Estimators Guide, firsthand knowledge of the potash operations in Carlsbad, and the Report Potassium Sulphate and Magnesium Oxide from Polyhalite, written by Cummings, Engelhardt & Corbin , giving detailed information on a treatment process for the production of potassium sulfate from polyhalite feed stocks. Staffing levels and operating positions were generated including overtime allowance and burden at 35% of the base cost. Detailed equipment costs were developed for the mine, including overhaul parts, maintenance parts, power / fuel costs, lubricants, and wear parts. As previously noted, the necessary maintenance and operational staff were included in the staff and operating personnel detail.

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19.9.1 Mining OPEX Mining costs will be $10.47 per ton for a typical full production year and for the life of mine will average $10.91 which includes the inefficiencies that will be experienced during year 1 start up. Table 19.3 is a detailed listing of the staffing for the mine. There are 295 people in the mine at a fully loaded annual cost of $21 million. Detailed mine equipment and operating cost are included within the PEA appendix (see Appendix E).

TABLE 19.3 MINE STAFF

MineStaff
QTY MineManagement MineManager MineSuperintendent MaintenanceSuperintendent ChiefMineEngineer MineEngineers Surveyors $134,400 $112,000 $89,600 $89,600 $67,200 $44,800 $47,040 $39,200 $31,360 $31,360 $141,120 $31,360 $181,440 $151,200 $120,960 $120,960 $544,320 $120,960 $1,239,840 Salary Hourlyrate Rollup OTallowance Burden AnnualCost

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Permitting, bonding, and permit requirements may increase the capital requirements, and the time necessary to develop the project. Process piloting and process flowsheet development may increase the capital and operating costs.

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INTERPRETATION AND CONCLUSIONS
Based upon an independent review of the data and interpretations done with the database, the following conclusions can be made at this time: 1. Natural gamma and sonic or acoustic logs from oil and gas drilling are adequate for calculating polyhalite thickness; 2. Grade calculations from geophysical logs are not currently possible and will need to be qualified after validation coring; 3. The database is sufficient to warrant a calculation of inferred resources of polyhalite in the Rustler Formation in the AOI; 4. Drill hole spacing is adequate for estimation of inferred resources for the entire AOI. For the eastern-most area outside the AOI and under permit application, the drill hole spacing is not adequate for estimation of mineral resources at this time. 5. The discontinuity of the Rustler polyhalite bed from west to east across the area of interest does not appear to be a stratigraphic change but a structural or dissolution phenomenon that is seen both in the top and base of the Rustler Formation. It will not affect mineability due to the distances involved 6. Chemrox using the Petra model, estimated 399 Mt inferred resource and 382Mt of inferred resource using the check-model Surpac. Petra is a defensible model for calculation of inferred resources of polyhalite. Analytical and mineralogical data obtained for the Salado polyhalite from the langbeinite mine and the Rustler polyhalite from the core likely are representative of the gangue mineral associations and grade to be expected from core on the property.
7. Based upon preliminary log interpretation and examination of oil and gas cuttings, it is known that polyhalite and likely other potash also occurs in the underlying Salado Formation beneath the BLM permits in the AOI. The zones are more discontinuous but range in thickness up to 8 feet above a depth of 2500 ft. It is unknown at present what the continuity of the beds might be, due to the drillhole spacing. It appears that the Salado potash beds are less continuous and more variable in thickness. 8. Using the grade of the Sandia core, 85% percent polyhalite, the Rustler polyhalite bed contains an inferred polyhalite resource of 339Mt, within the BLM permitted AOI. This has not been adjusted for mine dilution or buffer zones which would be required around existing and shut-in oil or gas production wells. 9. If the polyhalite has halite as a gangue mineral, as the Salado Formation at the langbeinite mines do, production of a direct application polyhalite product would merely require crushing and washing. Screening may also be effective to reduce halite gangue as halite often pulverizes during crushing and reports to the finer fraction, reducing

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washing requirements. 10. Polyhalite in the samples tested in the Salado Formation showed immediate release of potassium and significant residual potassium for likely slow release. 11. If polyhalite has anhydrite as its main gangue constituent (re: Sandia Rustler Formation), concentration of a direct application fertilizer by physical methods may be more difficult or quite costly. However, testing of polyhalite of this nature using calcining and leaching has proven successful for the extraction of the potassium and sulfate. 12. The positive results of the PEA, (indicating that based on the enumerated assumptions in Section 19, a potentially economically viable polyhalite mining and processing facility can be developed at Ochoa), justify the Phase 1 drilling program outlined herein.

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RECOMMENDATIONS
During the data review and continuing through resource development, several features that could possibly affect geologic or geostatistical interpretations were noted. A major northwest to southeast structural depression was observed through the eastern portion of the AOI. The nature of this depression, whether it is synclinal, faulted or another feature is not known. Additionally, while the trend orientation of the polyhalite can be visually observed to be northwest-southeast, the numerous wells lacking polyhalite intercepts appears to strongly influence variography. Polyhalite analytical standards should be developed to satisfy QA/QC needs of the project in the future. The addition of potassium and other key cation standards during the core preparation process would enhance the defensibility of the results. The Phase I exploration program to be carried out by ICP in late 2009 is comprised of drilling 8 core holes, averaging 1700 feet in depth. The budget for Phase I is $550,000, including all ancillary costs (labor, drilling, geophysical logging, analysis, etc.). With drilling success in Phase I, ICP will initiate Phase II (in-fill drilling). Phase II is comprised of 30 core holes, with an estimated budgetary cost of $2.5 million. The budget includes all of the cost categories of Phase I, plus geotechnical studies, preliminary hydrological studies and other investigations which will support an eventual pre-feasibility study if the drilling campaign is successful in defining mineral resources of a higher confidence than inferred. The Phase I program budget is as follow: Drill pad construction and reclamation Drilling (8 rotary/core holes) Aquifer Protection (temporary casing) Geophysical logging Geological oversight (labor) Analytical Field Expenses ESTIMATED TOTAL Phase I $40,000 280,000 80,000 60,000 30,000 30,000 30,000 $550,000

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Lorenz, J.C., 2005, Assessment for Potential Karst in the Rustler Formation at the WIPP site. Pre-publication draft of Internal WIPP document, 127 p. Lowenstein, T.K., 1983 Deposition and Alteration of an Ancient Potash Evaporite: The Permian Salado Formation of New Mexico and West Texas. PhD. Dissertation, The Johns Hopkins University. 411 p. Mercer, J.W., and Snyder, R.P., 1990, Basic Data Report for Drillholes H-17 and H-18 (Waste Isolation Pilot Plant- WIPP), Sandia Report RS-8232-2/70269. Mercik, S., 1981, The effect of polyhalite of varying degrees of conununitation on the yield dynamics and uptake of nutrients by plants. Roczniki Nauk Rolniczych 104(4):53-66. New Mexico Bureau of Geology and Mineral Resources, 2008, Potash Past, Present and, Future, Earth Matters, Summer, 2008. Nurmi, Roy D., 1978, Use of Well Logs in Evaporite Sequences, in Marine Evaporites, SEPM Short Course No. 4, Dean, W. E. and Schreiber, B. C., eds. Panitkin, V. A., 1967, Effect of polyhalite on sandy loam soil. Agrokhimiya. 1:81-84. Powers, D.W., Holt, R.M., 1999, The Los Medaos Member of the Permian (Ochoan) Rustler Formation, New Mexico Geology, November, 1999. Powers, D.W., Holt, R.M., Beauheim, R.L., Richardson, R.G., 2006, Advances in Depositional Models of the Permian Rustler Formation, Southeastern New Mexico, New Mexico Geological Society Guidebook, 57th Field Conference, Caves and Karst of Southeastern New Mexico, pp. 267-276. Roberts, B.L., and Brainard, J.R., 2009, Interim Report on the Use of Oil and Gas Well Logs for Potash Reserve Identification in Southeastern New Mexico. BLM publication, in press. 56 p. Schaller, W. T., and Henderson, E.P., 1932, Mineralogy of Drill Cores from the Potash Field of New Mexico and Texas. USGS Bull. 833, 124 p.

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Snyder, R.P., 1985, Dissolution of Halite and Gypsum, and Hydration of Anhydrite to Gypsum, Rustler Formation, in the Vicinity of the Waste Isolation Pilot Plant, Southeastern New Mexico, United States Geological Survey, Open File Report, 85-229. Spooner, J., 2007, Potash, in Country and Commodity Reports published by Mining Journal/Mining Communications Ltd. Spooner, J., 2006, Potash, in Country and Commodity Reports published by Mining Journal/Mining Communications Ltd. Spooner, J., 2000, Potash, Financial Times Executive Commodity Reports. Terelak, H., 1974, Solubility and fertilizing value of polyhalite as affected by the degree of crushing and calcination. Pam. Pulawski 59:39-52. Terelak, H., 1975, The effect of polyhalite fertilizer on the content of potassium and magnesium in the soil and plants. Pam. Pulawski 63:67-84. U.S. Department of Energy, Sandia, NM, Compliance Certification Application for the Waste Isolation Pilot Plant, 21 vols., DOE/CAO, 1996-2184, Title 40 CFR Part 191: vol. 2 and appendix FAC. United States Geological Survey, Potash in Annual Yearbooks and Mineral Commodity Summaries. Williams-Stroud, S.C., Searls, J. P. and Hite, R. J., 1994, Potash Resources, in Industrial Minerals and Rocks, 6th Edition, Donald C. Carr, Senior Editor, Society for Mining, Metallurgy, and Exploration, Inc., Littleton, Colorado. Workman, S. M., P. N. Soltanpour, and R. H. Follett, 1988, Soil testing methods used at Colorado State University for the evaluation of fertility, salinity and trace element toxicity. Colorado State University Agric, Sta. Technical Bulletin LTB88-2. Wroth, J.S., 1930, Commercial Possibilities of the Texas-New Mexico Potash Deposits. USBM Bulletin 316. 144 p.

Figure 3.15 Polished thin section 651.1. Note right-angle cleavages in some larger grains of anhydrite. Transmitted light, crossed polars.
Section 651.8 Section is very similar to 651.1.
Figure 3.16 Polished thin section 651.8. Transmitted light.
Figure 3.17 Polished thin section 651.8. Relatively coarse-grained anhydrite, 100-150 microns in diameter. Transmitted light, crossed polars.
Figure 3.18 Polished thin section 651.8. Transmitted light, crossed polars.
Figure 3.19 Polished thin section 651.8. Note prominent rectangular cleavage pattern in anhydrite grain (arrow). Transmitted light, crossed nicols.
Figure 3.20 Same view of previous section. Transmitted light, crossed polars.
Figure 3.21 Polished thin section 651.8. Transmitted light, crossed polars.
4.0 MINERAL UNKNOWNS Several minerals could not be identified during this study. These are pictured below, and generally include colorless, well-formed crystals. They have been marked for followup SEM analysis.
Figure 4.1 Polished thin section 646.4. Unknown crystal A, confirmed later as polyhalite. Transmitted light.
. Figure 4.2 Polished thin section 646.4, showing unknown grains, E1 and E1a. E1a is site of unknown mass of clay. Unknown grains located along traverse E, convex side of white area, Figure 3.9. Transmitted light.
Figure 4.3 Polished thin section 646.4, showing unknown grain, E4, along Traverse E, concave side of white area, Figure 3.9. Transmitted light.
Figure 4.4 Polished thin section 651.8. Unknown mineral, D, confirmed later as anhydrite. Transmitted light.
Figure 4.5 Polished thin section 651.8. Section contains several unknown, anisotropic grains of high relief (?), confirmed later as anhydrite. Transmitted light.
Mineral Paragenesis Due largely to the fine grain size of the potash samples, the sequence of mineral deposition, or paragenesis could not be determined with any degree of confidence. 5.0 SUMMARY OF XRD RESULTS XRD analysis of core samples from H17 are reported in Appendix A. Results of this study for the interval 646.4-646.7 indicate the dominance of polyhalite (>90%), <5% magnesite, and <5% unidentified. (The unidentified material most likely is clay, which was observed in this petrographic study). In samples from 651.1-651.8 ft, anhydrite is the major phase, 68- >85%, with lesser amounts of polyhalite, magnesite, halite, and <5% unidentified. After these samples were submersed in water, a white deposit was formed. XRD analysis of the white deposit indicated that approximately half of the polyhalite was converted to gypsum in H17-14-1A (48% gypsum, 45% polyhalite; 55% gypsum and 38% polyhalite in H17-14-1B. 6.0 SUMMARY OF SEM RESULTS Polished sections were submitted to the Mineral Lab in Golden for followup analysis of grains that were not identifiable under the petrographic microscope. Results of this study are presented in Appendix B. The image of crystal A, sample 646.4 is pictured in Figure 1, Appendix B. Semi-quantitative SEM analysis indicates that the unidentified grain fits the chemistry most closely to that of polyhalite---78% total SO3 + CaO, 7.0% MgO, and 13% K2O. After submersion of the slide in water, the white material gave a non-descript, massive appearance (Fig. 2). Analysis of this material is similar to the preceeding analysis, but the K2O content is much higher at 23%. This material is also considered to be polyhalite. A thin zone of acicular white crystals near the border of the massive white zone is shown in Figure 3. SEM analysis at point X indicates that these grains are most likely gypsum, but they have significant contents of K2O (4.6%) and MgO (1.4%). The third phase that was unidentified under the petrographic microscope is shown in Figures 4 and 5, Appendix B. These crystals possess well-developed pseudocubic cleavage, with 3 cleavages intersecting at right angles. This cleavage pattern fits that of anhydrite, and both the XRD and chemical spectra corroborate this identification. 7.0 SUMMARY AND CONCLUSIONS Four polished thin sections were prepared from core from one drill hole, DDH H17-14-1A. Sections are labeled according to sample depths, eg., 651.1, 651.8, 646.4, and 646.7. Core samples were first prepared by submerging in water to see the effects of dissolution and precipitation of the sulfate minerals. Unfortunately, the competent 17

Mo 5 ppm <5 <5 <5 <5
Na 0.01 % 0.06 0.06 0.06 0.04

Ni 5 ppm 7 8

Pb 10 ppm 103 148
Richard A. Grondin QC Manager
Nevada Assembly Bill No. 519.130 requires the following statement: The results of this assay were based solely upon the content of the sample submitted. Any decision to invest should be made only after the potential investment value of the claim or deposit has been determined based on the results of assays of multiple samples of geologic materials collected by the prospective investor or by a qualified person selected by him/her and based on an evaluation of all engineering data which is available concerning any proposed project.

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Submitted By: Resource Development, Inc 11475 West I-70 Frontage Road North Wheat Ridge, CO 80033 Attention: Mr. Deepak Malhotra Method: LECO CS-400 Lab code: 7036 Element: Detection Limit: Units: IP #1 After Leach IP #2 After Leach IP #1 After Wash IP #2 After Wash Sulfate Sulfur 0.01 % 14.41 15.08 13.13 13.58 Laboratory No.: 092040 Client Number: F174 Date Received: 08/31/2009 Date Completed: 08/07/2009

APPENDIX D

Polyhalite Density Calculations
PolyhaliteDensityCalculations 71309(revised81909SCM) ChrisBrus Therearetwodifferentmethodsnormallyusedtocalculatethedensityofsolidbodiessuchasrock samples.Thefirstmethodusesaratiobetweenadirectlymeasuredmassandacalculatedvolumeofa rocksample.Thesecondmethodusedtodeterminethedensityofarocksampleistocomparethemass ofthesampleinairversusthemassofthesamplewhilesuspendedinafluidofaknowndensity,inthis casewater.Thematerialsandproceduresforeachmethodarediscussedbelow. MaterialsNeeded: 1. MassBalance,preferablyoneonwhichyoucansuspendthedesiredbelowthescale.(Triple beambalanceusedinthesemeasurements.) 2. Fishingline,orotherstringwhichdoesnotabsorbliquidandhasanegligiblemass. 3. Containerlargeenoughtocompletelyholdsampletobemeasured 4. Water(preferablydistilled,=1) 5. GraduatedCylinder 6. TowelorPaperTowels 7. RockSample Theprocedureforthewaterdisplacementmethodisasfollows. 1. Measureandrecordthemassoftherocksampleyouwishtoknowthedensityof.Mass=m 2. Fillagraduatedcylinderpartiallywithwaterandrecordthevolume.Makesurethereisenough tocompletelysubmersethesample.Initialvolume=Vi 3. Droprocksampleintothegraduatedcylinderandrecordthevolume.Finalvolume=Vf 4. Calculatethedensityoftherocksampleusingthefollowingformula:=m/(VfVi) 5. Drythesampleafteritisremovedfromthewater. 6. Becausepolyhaliteiswatersoluble,makesurethesamplespendsaslittletimeinthewateras possible. Theprocedureforthewatersuspensionisasfollows. 1. Measurethemassoftherocksample.(Ma) 2. Usingthefishingline,suspendthesamplefromthescaleplatformsoitisbothcompletely submersedandsuspendedinthewatermakingsureitdoesnottouchthebottomofthe container.Measurethemassofthesample.(Mw) 3. Drythesamplesaftertheyareremovedfromthewater. 4. Calculatethedensityoftherocksampleusingtheformula:=Ma/(MaMw) 5. Becausepolyhaliteiswatersoluble,makesurethesamplespendsaslittletimeinthewateras possible.