$1.4 Billion NPV

27% After-Tax IRR

DENVER -- (Business Wire)

Damon Barber, President and Chief Executive Officer of Prospect Global Resources Inc. (NASDAQ: PGRX) (“Prospect Global” or the “Company”), is pleased to announce that a team of internationally-respected engineering and consulting firms has completed work on a Pre-Feasibility Study (“PFS”) for the Company’s potash project in the Holbrook Basin of Eastern Arizona. The study was performed by Tetra Tech Inc. (“Tetra Tech”), a leading provider of consulting, engineering, construction management and technical services worldwide.

Highlights Include:⁽¹⁾

• 1.42 million tons per year operation⁽²⁾
• $825 million estimated capital cost
• $1.4 billion NPV at an 8% discount rate⁽³⁾
• 27% after-tax IRR⁽³⁾
• Initial mine life of 26 years
• Life of mine operating costs of $115 per ton
• Peak production of 1.55 million tons⁽⁴⁾
• 33 million tons of total MOP production over initial 26 year mine life
• Approximately 1.3 million tons per annum of production over life of mine

“The completion of the Pre-Feasibility Study represents a significant milestone in the development of our Holbrook Project,” said Mr. Barber. “The goal of our work was to lower the risks of financing, development, construction and mining operations while simultaneously increasing returns on capital. The PFS shows the results of that effort. We have optimized the operation for the current resource and significantly reduced the risks of the project for investors. The PFS estimates confirm our view that the Holbrook Project has the potential to become a high quality, long-life, conventional potash mine with robust economics. We look forward to completing our Definitive Feasibility Study as soon as possible and developing a scalable, low-risk, mining operation.”

To ensure the success in the preparation of the PFS, Prospect Global commissioned a team of world-class engineering and specialized consulting firms with the following roles:

• Tetra Tech Inc. – processing plant and site engineering, mining, permitting, cost estimating and project economics
• North Rim Exploration – geology and resource estimation
• John T. Boyd Company – owner’s engineers, mining
• Novopro Projects Inc. – owner’s engineers, processing and surface facilities
• Brownstein Hyatt Farber Schreck – permitting, land and offsite infrastructure
• Saskatchewan Research Council (SRC) – metallurgical testwork
• Huffman Laboratories – assaying and ore characterization work
• Advanced Terra Testing, Inc. – rock mechanic testwork
• RESPEC – rock mechanic testwork and mine design review

PFS Summary Details

Resource Estimation

Potash in the Holbrook Basin lies in two primary seams within the Supai Formation, the KR-1 and KR-2 seams. The KR-1 seam lies above the KR-2 seam and is unevenly distributed throughout the basin. The KR-2 seam is the primary target for delineation and development. In August 2012, North Rim produced an NI 43-101 compliant technical report which estimated the Holbrook Project Resource in accordance with CIM standards and using a 40%-ft (grade x thickness) cutoff estimated the following:

Mining

Mine access will be via shaft. The shaft locations were sited to maximize the flexibility for underground development and to minimize the time from seam access to full production, thereby accelerating revenues and cash flow. The mine orientation is based on the results of rock mechanic analysis and is intended to enhance operational efficiency, underground stability and employee safety. The mine design incorporates room and pillar mining techniques utilizing continuous miners. Planned extraction ratios, based on the results of current rock mechanic analysis, vary within the mine plan, ranging from 40% to 48% depending on ore thickness and pillar sizes. Approximately 247 million tons of ore is projected to be mined over the initial 26 year mine life.

The Holbrook Project mineral resources within the Development Case mine plan (including dilution) are entirely from the KR-2 seam and are as follows:

Once fully operational, the mining production rate is expected to be approximately 9.5 million tons of ore per annum. This will be achieved by running eight continuous miner units on a DuPont rotating shift schedule to provide 24/7 coverage.

The following table summarizes the initial life-of-mine production schedule:

The mining plan focuses on extracting higher head grades in the earlier years of operation. Average production of 1.42 million tons per annum of MOP is achieved between years 6 through 10, with peak production of 1.55 million tons in year 7. Average production of approximately 1.3 million tons per annum is achieved over the initial 26 year life of mine.

The Development Case production schedule contains 57.7% Measured and Indicated resources and 42.3% inferred resources. The attached graph illustrates the breakdown of measured, indicated and inferred resources in the Development Case production schedule.

The Company’s infill drilling program that will start in early August is designed to maximize the potential conversion of inferred resources to measured and indicated resources for conversion to reserves upon completion of a Definitive Feasibility Study.

Processing

The processing plant was designed to process 29,000 wet short tons per day or approximately 9.5 million wet short tons per year after taking into account regularly scheduled maintenance shifts, unplanned downtime and an annual two week shut down.

Unit processes were selected based on the results of metallurgical testing performed at Saskatchewan Research Council (SRC) facilities. The test results showed that the potash is easily liberated from the salt matrices and recoverable using standard industry techniques.

The flotation test work data indicated 82.6%-88.0% recovery and 92 percent product grade were achieved in rougher flotation. Test work also showed that a 95.4% product grade can be achieved with additional cleaning columns. For the PFS, an 82.6% mill recovery was estimated for years 0 thru 13, increasing to 85.0% thereafter due to secondary recovery from evaporation ponds that will be constructed beginning in year 11. Additional metallurgical test work during the DFS phase will be conducted to validate previous test work, evaluate variations in feed grade and ascertain the most cost effective way to increase mill recovery rates, with the objective of increasing the amount of saleable product and lowering unit operating costs.

The potash ore, containing 15.5% Sylvite (KCl) or 9.79% potassium oxide, will be processed to produce a marketable potash product grade of 95.4% KCl (60.3% K₂O). The compaction circuit was designed with sufficient capacity for the plant to produce a 100% granular product.

Capital Expenditures

Start-up capital expenditures are estimated at $825 million over a 2½ year construction schedule; this estimate includes $48 million for EPCM services, $53 million of owner’s costs and an $83 million contingency:

Operating Costs

Direct operating costs for the Development Case average $114.54 per ton (approximately $115 per ton) over the life of mine. Costs associated with mining comprise 56% of operating costs, processing 35%, surface support facilities 2% and G&A 7%. The per ton break-down of operating cost by area is as follows:

Within mining, mine labor accounts for 33% of operating expenses, followed by equipment O&M 27%, roof support 17%, hoisting and ventilation power 13% and conveyance 10%. The following table provides a breakdown of mining costs:

Within processing, reagents represent the largest cost accounting for approximately 40% of processing operating expenses, followed by power 24%, propane 15%, O&M 14%, labor 6%, and tailings 1%. The following table provides a breakdown of major processing costs:

Marketing and Transportation

The economics for the PFS were analyzed using as benchmarks a US$430 per tonne FOB Vancouver price for standard product and a US$450 per tonne FOB Vancouver price for granular product. According to Fertecon, the 3-year average basis differential between Vancouver and the U.S. Midwest has averaged approximately US$110 per tonne from 2010 to 2012. For the PFS, an $80 per tonne basis differential was assumed. This equated to approximately a $480 per (short) ton U.S. Midwest delivered price. A $47 per ton average freight rate was assumed.

Development Path Forward

• The Company has selected drillers for its upcoming infill drilling program and will mobilize to the field in early August to begin drilling.
• Complete new Resource estimate by end of 2013
• Complete remaining rock mechanic and metallurgical test work required for the Definitive Feasibility Study with core samples obtained from the infill drilling program
• Optimize mine plan and plant engineering based on the new resource estimate
• Build-out management team – key additions identified
• Complete Definitive Feasibility Study Q3 2014

On behalf of the Board of Directors,

Damon G. Barber
President and Chief Executive Officer
Prospect Global Resources Inc.

About Prospect Global Resources Inc.

Prospect Global Resources Inc. is a Denver-based company engaged in the exploration and development of a potash mine located in the Holbrook Basin of eastern Arizona. Prospect Global’s stock is traded on the NASDAQ Capital Market under the ticker symbol PGRX.

Additional details about Prospect Global Resources Inc. can be viewed at the Company’s website, www.prospectgri.com.

Regarding Forward-Looking Statements

With the exception of historical matters, the matters discussed in this press release include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. Such forward-looking statements include statements regarding current and future classification of Prospect Global’s potash resources, development of its potash resources and potash mining facility and the Pre-Feasibility Study.Factors that could cause actual results to differ materially from projections or estimates include, among others, potash prices, economic and market conditions, and the additional risks described in Prospect Global's filings with the SEC, including Prospect Global's Annual Report on Form 10-K for the year ended March 31, 2013. Most of these factors are beyond Prospect Global's ability to predict or control. The forward-looking statements are made as of the date hereof and, except as required under applicable securities legislation, Prospect Global does not assume any obligation to update any forward-looking statements. Readers are cautioned not to put undue reliance on forward-looking statements.

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Contacts:

Media contact:
The Rose Group
Elana Weiss, 310-280-3710
elana@therosegrp.com
or
Prospect Global Resources, Inc.
Mr. Gregory Dangler, CFO
+1-303-990-8444

Source: Prospect Global Resources Inc.