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Monument Potash Project, Utah Corporate Presentation | June 2015 1 1
FORWARD-LOOKING STATEMENTS Information included in this presentation is forward-looking and is subject to uncertainties and risks. The results or events predicted in this presentation may differ materially from actual results or events. Such information is sometimes accompanied by words such as “project”, “potential”, “estimate”, or similar statements. None of the Company’s properties are presently producing and all estimates or statements regarding target size, incremental production and values have been created by the Company without independent verification. No assurance can be given that actual results, performance, achievements or values expressed in, or implied by, forwardlooking statements within this disclosure will occur, or if they do, that any benefits may be verified from them.
Most recent N.I. 43-101 report dated December 6, 2012 filed on www.sedar.com and available on the Company website www.sennenpotash.ca.
Ian Rozier, B.Sc. (Hons), M.Sc., P.Eng is the Qualified Person responsible for the review and approval of the technical and scientific data presented herein. Ian Rozier is a Director and Officer of Sennen Potash Corporation.
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MONUMENT POTASH PROJECT PROVEN HIGH GRADE POTASH 46.1% KCl (29.1% K2O) over 6.3m (20.6ft) in Cycle 18 Upper Bed
SIMPLIFIED EXTRACTION High temperature 68°C (154°F); likely less energy required and better solubility dynamics STRONG LOCAL MARKET Located adjacent to one of the world’s largest agricultural markets – the US midwest LOW CAPITAL REQUIREMENT Excellent jurisdiction and access to substantial existing infrastructure SCALABLE PRODUCTION Potentially very large scale project with rapid development potential
LOW OPEX Initial results indicate positive potential for low-cost solution mining and solar evaporation DOMESTIC FERTILISER Import substitutions as a domestic source of potash – premium pricing
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POTASH – HEALTHY PLANTS AND HIGHER YIELDS
INTRODUCTION POTASH DEMAND With population growth Potash will continue to be in demand RIGHT LOCATION Monument Project located in Utah, USA, existing potash market nearby SIMPLE GEOLOGY High assayed KCl grades, thick beds, high temperature and good continuity ENVIRONMENTALLY FRIENDLY Excellent technical fundamentals for solution mining multiple beds LOW COST Potentially low development and operating costs as well as rapid results WELL POSITIONED Available technical data compares very favourably to peers
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2014 RESULTS EXCEEDED ALL ESTIMATES JOHNSON 1 WELL DEPTH:
2,123 m
CYCLE 18 TOP
6,965 ft 2,124.1 m
2,138.7 m UPPER BED¹: 46.1% KCl (29.1% K2O) over 6.3 m (20.6 ft)
Insolubles: MgO: Temperature:
0.56% ~0.01% 68°C (154°F)
2,144.9 m
2,156.6 m
2,157.3 m 2,160.7 m
LOWER BED²: 44 – 52% KCl (28 - 33% K2O) over 3.4 m (11.2 ft)
2,195 m
6,968.8 ft
C O R E D
7,016.6 ft
7,037.2 ft
7,075.4 ft
7,077.6 ft 7,088.8 ft
7,200 ft
BASE OF DRILLED INTERVAL (CYCLE 18) Note 1: Based on core assay results performed by Saskatchewan Research Council Geoanalytical Laboratories Note 2: Based on Gamma Ray Equivalent Calculation by North Rim
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POTASH – HEALTHY PLANTS AND HIGHER YIELDS
POTASH PRICE OVERVIEW1 USES 1.
Increases crop yield and resistance to disease
2.
Strengthens plant cells
3.
Speeds absorption of Nitrogen and Phosphates
4.
Aids in water retention and photosynthesis
5.
Essential - no known substitute
Note 1: Sourced from World Bank January 2015
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MONUMENT PROJECT OVERVIEW •
Proven high grade, thickness and temperatures² *
Upper and Lower Potash Beds proved by drilling
Upper Bed: 46.1% KCl (29.1% K2O) over 6.3 m (20.6 ft)
Type
Leases
Net Mineral Acres
Lower Bed: 44 – 52% KCl (28 - 33% K2O) over 3.4 m (11.2 ft)
Private
100
10,645
*
Ambient temperature averaging 68°C (154°F)
State
21
15,645
*
Very low insolubles (0.56%) and MgO (0.01%)
Federal
38
80,553
*
Land position¹ of over 167 mi² (432 km²)
Total
159
106,8423
•
Sennen has earned into 70% ownership
•
Utah, USA is an attractive jurisdiction
•
MONUMENT LEASEHOLD OVERVIEW¹
*
Politically safe and in a mining friendly state
*
San Juan is a mining supportive county
UTAH
COLORADO
Supportive factors for development/operations *
Access, road/rail infrastructure in place
*
Electricity, oil & gas, water all available
*
Sparsely populated area with little flora/fauna
*
Smaller surface and environmental footprint
*
Encouraging environment for solution mining
*
Much lower capex for solution vs. underground mining
*
Pricing advantage over N. American peers of ~US$82 / ton³
Note 1: 100% basis, Sennen has a 70% interest Note 2: Confirmed from assay results and GREC from Johnson 1 Well core and well logs Note 3: Based on Intrepid Potash 2014 Q1 – Q3 net realized sales price versus North American Peers
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REGIONAL OVERVIEW UTAH
SOUTH EAST UTAH POTASH •
•
Located ~110 km (70 mi) SE of Cane Creek solution mine¹ *
Owned and operated by Intrepid Potash Inc.
*
Largest Potash solution producer in USA
•
•
Targeting 0.6 – 1Bt at 11.6 – 17.7 % eK2O
Moab Solution Mine Intrepid Potash
Hatch Point Potash Minerals
125 year mine life, 180Kt p.a.
0.9Mt at 12.2% eK2O (JORC)
Paradox Project North American Potash
Greatly reduced energy requirements
Cane Creek is one of the lowest cost potash mines in North America *
Employs solution mining, solar evaporation and flotation process to produce final product
*
100% sylvite (KCl) or ~63% K2O
*
Sylvinite = mixture of halite (NaCl) and sylvite
Monument Project Sennen Potash Corp • Upper Bed: 29.1% K2O over 6.3 m (20.6 ft) •Lower Bed: 28 - 33% K2O over 3.4 m (11.2 ft) •:
Q1 – Q3 2014 Intrepid received $82/tonne higher versus North American peers¹ *
•
Green River American Potash Corp
Low humidity and hot sun year round ideal for solar evaporation *
COLORADO
Driven largely by transport and proximity to consumers
Low transportation cost *
Next door to world’s largest agricultural markets
ARIZONA
NEW MEXICO
LEGEND Paradox Salt Formation Extent Approx. Potash Mineralisation Extent
40 km
80 km
Sennen Land Position Source 1: Based on publically available information Note: eK2O grade in graphic assumes 1 tonne KCl per 0.63 tonnes K20
Peer Projects
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SEISMIC OVERIEW • • • • •
20 lines acquired totaling 440km (275mi)
UTAH
2D lines shot between 1979 to 1986
COLORADO
A
Intersects existing historic well data Review, interpretation and analysis completed with RPS Canada and North Rim
A’
This work supports: *
Paradox calculated ispoach of ~860m (2,700 feet) thick
*
No evidence of salt dissolution in area of interest
*
No evidence of faulting in and around Johnson 1 Well
*
Johnson 1 Well < 40m (130ft) from 50-81 Thistle line
50-81 Thistle Line (A – A’) 11NR-4 Line
Johnson 1 Well
LEGEND 2D Seismic Lines Approx. Potash Mineralisation Extent Private Leases
2.5 km
5 km
Federal Leases State Leases
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LOW COST PRODUCTION
THICK FLAT POTASH BED • Supported by seismic
• Facilitates simple operational approach
• Mitigated costs related to directional drilling
• Affords higher margin or operating error
HIGHER POTASH CONTENT • Monument has grade of 28-33% K2O1
• Peer solution mining projects grade² between 1023% K2O
HIGH AMBIENT TEMPERATURE
SOLUTION MINING
• Monument Cycle
• Initial Monument
18 temperatures of 68°C
work shows no obvious hurdles
• Peer solution mining projects temperatures² between 25-55°C
• Preferential KCI solubility at higher temperatures decreases energy requirements
• Potential sources of water observed in drilling
• Allows for rapid development
• Lower Capex/Opex
SOLAR EVAPORATION • Same climate as existing Cane Creek solar evaporation ponds
• Greatly reduced energy requirements
• Sustainable and eco-friendly
• Less surface and environmental footprint
Note 1: Confirmed from assay results and GREC from Johnson 1 Well core and well logs Note 2: Peer figures as listed on slide 18
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FAVOURABLE PROVEN GEOLOGY POTASH CYCLE NO. 181 • • •
Johnson 1 Well drilled to depth of 2,195m (7,200ft)
• •
#18 K2O Bed 10.0m 9.1m 6.3m (U) 3.4m (L)
#18 K2O Bed 6.0m 3.0m (U) 4.6m (L)
Estimates prior to drilling were 25% to + 30% K2O
6.1m (U) 2.4m (L)
Cedar Point Area
Estimates prior to drilling were ~2,100m (6,900ft)
Dove Creek Area 7.6m (U) 3.7m (L)
NIL
Cycle 18 average depth of ~2,123m (6,965ft) Cycle 18 combined potash zones of 9.7m (31.8ft) *
• •
Six Shooter Area
Recovered grades of 28 – 33% K2O (44 – 52% KCl)
*
•
Utah Colorado
Geologically simple – little or no faulting predicted
*
•
MONUMENT POTASH PROJECT
32.6m (107ft) core extracted including all of Upper Bed
Johnson 1 Well confirmed figures in line with or better than pre-drilling estimates:
•
CYCLE 18 POTASH THICKNESS
Estimates prior to drilling were from 5-9m (16-30ft)
4.6m
Low insolubles of 0.56%, low MgO of 0.01%
4.6m
Ambient temperature of 68°C (154°F) *
Estimates prior to drilling of 67-70°C
*
Ideal for solution mining
4.6m NIL
Dec 2012 NI 43-101 report estimates exploration target potential between 20.7 – 47.1 Mt sylvinite/mi2 (average thickness ranging from 13 – 30ft)² Engineering and geological work underway to prepare updated NI 43-101
NIL
Thickness of K2O bed (m) (U) = upper (L) = lower
Oil and Gas well Johnson 1 Well - Sennen
Note 1: Confirmed from assay results and GREC from Johnson 1 Well core and well logs Note 2: The above potential quantities and grades are conceptual in nature, and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource
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JOHNSON 1 WELL - COMPLETED Western Natural #1 Charles Redd Well
PRIME LOCATION • Extensive Interpreted Seismic Data
50 - 81 Thistle 2D Seismic Line
Long Draw
•
Over 440km (275mi) of acquired and interpreted 2D seismic
•
Well located within 40m (130ft) of 50-81 Thistle
UT T34S R26E
2D seismic line UT T34S R25E
E. Lockerby Road
•
Johnson 1 Well
Seismic indicates continuous & flat Cycle No. 18 in and around the area of the Well
• Historic Well Data • 400 m
120 - 82 Thistle 2D Seismic Line
presence of 107m (350ft) Cycle No. 18
800 m
•
Geology & Engineering Seismic Permitting Archeological Pad Construction Wellsite Supervision
Western Natural #1 Charles Redd well indicated
Notable Cycle No. 18 gamma kick •
Also encountered in Johnson 1 Well
•
KCl grades confirmed via core assay
• Good road access •
Well located on intersection of E. Lockerby (339 E-W) and Long Draw (355 N-S)
•
Located ~4km (2.6mi) S of Highway 491
• Flat surface terrain •
Flat, low vegetation and sparsely populated
• Proximity to local towns
Drilling
•
~18km ( mi) W of Dove Creek, CO
Drilling Fluids
•
~21km (13mi) SE of Monticello, UT
•
Established regional potash services TSXV:SN
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JOHNSON 1 WELL
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STRATEGIC APPROACH Reduced exploration spending by staging initial exploration approach: • Rapid results from confirmatory drilling and coring • Johnson 1 well completed
• Results received – confirmed all results predicted prior to drilling • Anticipate relatively low cost to feasibility level study • Targeting up to 3 wells in total (including Johnson 1 Well)
• Expect low development Capex • Relative simplicity of solution mining and surface evaporation
• Condensed construction timeline • Potential to re-purpose exploration wells as production and/or extraction wells
• Scalable approach • Modular build-out – avoid excessive capex
• Preliminary work indicates potential to commence production at approximately 200Ktpa and increase up to ~1.0 Mtpa • Intrepid’s Cane Creek Solution Mine (Utah) operating at ~180,000 tons KCl per year¹ • Intrepid’s HB Solution Mine (New Mexico) expected to operate at ~150,000 - 200,000 tons KCl per year¹
Source 1: Intrepid Potash public information
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SOLAR SOLUTION MINING – SIMPLE AND INEXPENSIVE IN: Brine Solution
OVERVIEW •
Drill production and potentially extraction wells
•
Inject salt-saturated brine to dissolve potash
•
Allow brine to circulate and dissolve potash (Monument’s higher ambient heat may expedite this)
•
Extract saturated brine and pump onto lined solar evaporation ponds
•
Solar evaporation allows potash to recrystallize as water evaporates
•
Harvest precipitated potash and salt from evaporation ponds
•
Transport to flotation plant
•
Separate potash from salt and refine for sale
•
Monument may not need to heat the large volume of brine solution required to dissolve potash underground which may significantly decrease cash operating costs
SOLAR EVAPORATION POND
OUT: Potash Solution
SURFACE
Ambient Temperature Heats Brine
TOP OF POTASH BED
POTASH ZONE – CYCLE 18 Brine dissolves potash and forms a cavity
Note: Engineering and development regarding solution mining method is currently under investigation, the diagram above is purely for illustrative purposes
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POTASH – HEALTHY PLANTS AND HIGHER YIELDS
ADVANTAGES OF SOLUTION MINING REDUCED COSTS Capex and opex significantly lower than conventional mining LESS COMPLEX Less technical, engineering, mine design requirements vs underground mining STRAIGHTFORWARD No development shafts, underground mining equipment, or de-watering
FAST PROGRESS Time to production ~3-4 yrs vs 6-7 yrs for conventional mine SMALLER FOOTPRINT Significantly lower environmental impact SOLID ECONOMICS Generally higher IRR, lower OPEX, faster payback period FLEXIBILITY Production volume is easily scalable TSXV:SN
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CANE CREEK SOLUTION MINE • Monument is located ~110km (70mi) SE of Intrepid Potash’s Cane Creek Mine •
Solution mining and solar evaporation
• Cane Creek is in the bottom quartile of operating costs for potash producers
• Excess of 125 year mine life • Production of ~180,000 tons KCl per year • Low humidity and an arid climate results in
Cane Creek - Outline of evaporation ponds
rapid evaporation of solution brines •
Results in significant cost reduction in energy and processing costs
• Solid combination of geology, location and infrastructure
• Intrepid is also planning to build the new HB solution mine in New Mexico¹ •
Forecast production cash operating cost of US$90/ton at full production
•
Estimated to be 150,000 – 200,000 ton per year at capex of US$240 million
Cane Creek - Harvesting product Source 1: Intrepid Potash public information
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SOLUTION MINING COMPARABLES Company
Project
Name
Stage
Location
Ambient
KCl
Insolubles
Temperature
Grade
Grade
State/Prov
°C
%
%
Name
Sennen Potash
Monument
Exploration
UT, USA
68°
44 - 52%
0.01%
Western Potash
Milestone
FS
SK, Canada
58 - 65°
16 - 32%
6 - 11%
Mosaic Company
Belle Plaine
Producing
SK, Canada
n/a
29%
n/a
Intrepid Potash
Cane Creek
Producing
UT, USA
41°
41%
n/a
Intrepid Potash
HB
Development
NM, USA
n/a
34%
7%
Legacy
Producing
SK, Canada
43 - 55°
27%
7.25%
Muskowekwan
PFS
SK, Canada
33 - 38°
28%
6%
Hatch Point
PEA
UT, USA
49°
20%
n/a
Wynyard
FS
SK, Canada
25 - 55°
18 - 26%
2 - 4%
K + S Aktiengesellschaft Encanto Potash Potash Minerals Karnalyte Resources
GRADE, TEMP & INSOLUBLES ALL AMONGST BEST OF SOLUTION MINING PEERS Source: Company websites, publications and industry publications Note 1: Confirmed from assay results and GREC from Johnson 1 Well core and well logs Note 2: 1 tonne KCl per 0.63 tonnes K20
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OUR TEAM IAN ROZIER B.Sc. (Hons), M.Sc. P.Eng. President/CEO, Director Has over 30 years experience in the international mining industry. He has been involved in many capital raisings for mining ventures and is well known in the Canadian Mining Industry and European capital markets
BARBARA DUNFIELD B.Ed, MBA Chief Financial Officer Formerly an Investment Advisor, with over 20 years experience in the management, financing and development of public companies
ANDREW GOURLAY P.Geo. Project Manager Graduate of the University of British Columbia with extensive exploration and project management experience throughout Asia, North and South America and has successfully advanced projects from the grassroots to the resource estimation stage. As well as having a strong technical background, he also has extensive experience in corporate management, finance, and regulatory compliance in the junior mining sector.
DOUGLAS HYNDMAN LLB, Director Lawyer with the firm Kornfield LLP and sits as an independent director of several public companies and is very familiar with the financial and regulatory aspects of public companies in the resource sector
JAMES ROBERTSON B.Sc. P.Eng. Director Has twenty years experience in the international management of mineral exploration companies
MERFYN ROBERTS B.Sc., M.Sc. Director Over 30 years experience in international mining and mining finance. He holds a B.Sc. (Hon) in Geology, an M.Sc. (Oxford) and is also a Chartered Accountant in the U.K.
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HITTING ALL THE HIGH POINTS
MONUMENT HIGHLIGHTS LOCATION Excellent project location PROVEN Nearby Cane Creek Mine is precedent for solution mining in region SIMPLE GEOLOGY High assayed KCl grades, thick beds, high temperature and good continuity SIMPLE BUILD Straightforward development and technical fundamentals LOW COST Potentially low capex and opex as well as expedited timeframe WELL POSITIONED Geology compares very favourably to peers
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APPENDIX A – CAPITALIZATION OVERVIEW SENNEN POTASH CORP. Ticker
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Close Price1
C$
$0.355
12 Month Range
C$
$0.20 - $1.35
Basic S/O
#
26,314,344
Warrants
#
12,913,000
Options2
#
1,635,000
Fully Diluted S/O Market Capitalization
40,862,344 C$mm
CONTACT US Suite 408, 837 West Hastings Street Vancouver, BC Canada V6C 3N6 T (604) 685 6851 E
[email protected] www.sennenpotash.com
9.2
Note 1: As at 27 May 2015, sourced from TMX website Note 2: Stock Options of 1,635,000, strike of C$1.10 and C$0.50, expiring February 12, 2018 and March 18, 2019, respectively
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APPENDIX B – POTASH SOLUBILITY CURVE
SOLUBILITY CURVE – POTASH (KCI) vs. SALT (NaCl)
•
Increasing temperature increases KCI Solubility
•
At 26°C KCI becomes rapidly more soluble than NaCl
•
Monument: 68 C° Milestone: 58-65 C°
Increasing temperature may improve economics
Cane Creek (Moab): 41 C° Legacy: 43-55 C°
•
Water saturated in NaCl can still dissolve KCI
•
Selectively mine KCI by circulating NaCl saturated fluids
•
NaCl remains in situ and KCI is dissolved and pumped to surface
Note 1: Note 2: Note 3:
Solubility Curve sourced from Sennen N.I. 43-101 dated 6 December 2012 Peer temperature information from Company websites, disclosures and technical publications The above potential quantities and grades are conceptual in nature, and there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource
Muskowekan: 33-38 C°
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APPENDIX B – POTASH MARKET OUTLOOK DEMAND • •
33% population growth by 2050 (80M people/year)1 Potash fertilizer consumption growth led by Asia & South America² *
Indian CAGR ‘03 – ‘13 = 2.8% –
• • •
•
•
Forecast CAGR of 10 – 13% ‘13 – ‘18
*
China CAGR ‘03 – ‘13 = 3.9%
*
Latin America CAGR ‘03 – ‘13= 3.1%
*
Diet shift towards fruits, vegetables and meats
Food security becoming a key global issue
•
• • •
2009 ~ 28 Mt up to 53 Mt in 2013²
*
H1 2014 already at ~32.5 Mt, expected FY 58 Mt²
*
No commercial substitute
*
Crop yields fall sharply in its absence
Industry susceptible to supply shocks Production growth not sufficient2 Most producers running at or near estimated operational capability
Depleted existing mines and reserves *
6 mines with >15 year reserve life –
World potash consumption growth continues *
Potash essential
*
Result is growth in global potash demand
*
•
5 conventional mines already depleted
Water inflows a challenge –
U.S. potash supply/demand deficit
Caused 5 mine closures since 1976
Grain inventories approaching all time lows³ *
25 year grain ‘stocks-to-use’ ratio=25%, today=~20%
Arable land per person forecast to steadily decline as population grows – need for more efficient farming
*
Growth in crop production needed
Crop prices trending steadily upward
*
*
•
SUPPLY
In 2012 over 85% of potash imported³
Source 1: United Nations Source 2: Fertecon, IFA, Industry Publications Source 3: USDA
–
•
Record 2013 crop production yet supply still tight
Higher crop prices reflect tight supply
Most new projects increasingly expensive TSXV:SN
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APPENDIX C - PARADOX FORMATION STRATIGRAPHY System Quaternary
Unit Alluvium
5,890
250
6,140
15
Salt Wash
200 - 400
Salt 7
6,155
50
Tidwell
0 - 60
Clastic 7
6,205
5
Summerville
5 - 70
Salt 8
6,210
20
Curtis
80 - 110
Clastic 8
6,230
50
Entrada
60 - 310
Salt 9
6,280
130
Triassic Moenkopi
20 - 80
Clastic 9
6,410
23
Navajo Sandstone
80 - 500
Salt 10
6,433
57
Kayenta
60 - 360
Clastic 10
6,490
35
Wingate Sandstone
220 - 420
Salt 11
6,525
30
Church Rock
240 - 310
Clastic 11
6,555
13
Owl Rock
70 - 120
Salt 13
6,568
89
Petrified Forest
50 - 100
Clastic 13
6,647
18
Moss Back
0 - 100
Salt 14
6,665
60
Moody Canyon
40 - 120
Clastic 14
6,725
40
Torrey
100 - 200
Salt 16
6,765
163
Sinbad Limestone
0 - 20
Clastic 16
6,928
8
Black Dragon
0 - 230
Salt 17
6,935
23
Clastic 17
6,958
5
Salt 18
6,963
327
Clastic 18
7,290
10
Salt 19
7,300
170
Clastic 19
7,470
35
Salt 21 Cane Creek Clastic Salt 22
7,506
84
7,590
85
7,675
80
Clastic 22
7,755
15
Salt 23
7,770
14
Hoskinnini Sandstone
Devonian
0 - 100
Clastic 6
Chinle
Mississippian
Thickness (ft)
Salt 6
Glen Canyon Group
Pennsylvanian
Depth (ft)
250 - 500
Carmel
Permian
Unit
Brushy Basin Morrison
Jurassic
Thickness (ft)
Cutler Group
Hermosa Group
0 - 50 White Rim
0 - 250
Organ Rock
200 - 400
Cedar Mesa Sandstone
200 - 1,200
Elephant Canyon / Halgaito
0 - 1,500
Honaker Trail
0 - 3,000
Paradox Formation
500 - 9,000
Pinkerton Trail
200 - 300
Molas
0 - 100
Leadville Limestone
400 - 600
Ouray Limestone
100
Elbert
300
Note 1: Detailed Stratigraphic Column of Monument Project Area and Paradox Formation – Mossoth (2011)
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