Encanto Potash Mine Built on First Nation Reserve Will Make First Nations a Global Exporter

2017-06-12

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VANCOUVER, June 12, 2017

ENCANTO HAS NET PRESENT VALUE OF $1.13 BILLIONAND IRR OF 18.9% BACKED BY A 20-YEAR OFFTAKE AGREEMENT WITH INDIA'SNACOF

TSXV: EPO

VANCOUVER, June 12, 2017/CNW/ - Encanto Potash Corp. ("Encanto" or the "Company") (TSXV: EPO), which has signed an agreement to supply Indiawith potash over 20 years, would have the capacity to produce and export 3.4 million tonnes of potash annually, according to a recently completed Preliminary Economic Assessment ("PEA") by Amec Foster Wheeler.

The estimated 20 per cent increase in production potential, based on adoption of greater plant capacity, can be maintained for more than 48 years, according to the PEA prepared by Amec Foster Wheeler. The study also concludes the project has a net present value of $1.13 billion CDN, with an internal rate of return of 18.9% after taxes using a 10% discount rate. The PEA highlights are shown in Table 1. Readers are cautioned that the PEA is preliminary in nature, and is based on an economic evaluation of Measured and Indicated Mineral Resources. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability, and there is no certainty that the preliminary economic assessment will be realized.

Encanto, in partnership with the Muskowekwan First Nation ("MFN"), is developing Canada'sfirst potash mine on a First Nation reserve in south-east Saskatchewan. Encanto recently signed a contract with NACOF, the Government of Indiasubsidized Farmers' Co-Operative, to supply five million tonnes of potash annually for 20 years.

"We are confident that we will continue to succeed in building Encanto into a global industrial company, and deliver to the First Nations in Canadaand to Indiaa food security contract through long-term supply," said Encanto President and CEO Stavros Daskos.

"With almost two years of efforts and the strategic alignment in Indiawith Mr. Vinay Maloo, founder and chairman of the Enso Group, we signed a 20-year agreement to supply 100 million tonnes of potash in Indiawith NACOF. With the leadership of Muskowekwan First Nation Chief Reginald Bellerose, we then quickly secured the Mineral Title with the MFN and the support of the Ministry of Indigenous Affairs Government of Canada."

MFN Chief Reginald Belleroseadded: "I believe we are making First Nations history. This recent study makes it clear the Encanto potash mine, thanks to the rich potash resources beneath the MFN, has the capacity to meet this long-term supply contract with India'sNACOF. This represents one of the largest developments on First Nations land and will allow the Muskowekwan people to be active participants in the economy. I also believe this partnership, endorsed by the Muskowekwan, is a model for the future development of Canadian First Nation natural resources."

Encanto next steps will be to secure the additional capacity, above the 3.4 million tonnes estimated mine capacity, to supply the 5 million tonnes of potash established under the NACOF contract. To do so, Encanto has formed a trading company that is now in negotiations to supply potash to India, which if successful, would create a positive revenue stream while the company continues to seek further investment to build the $3.7-billion(CDN) mine and plant.

Said Encanto CEO Daskos: "The next steps concurrent to structuring project financing, are now focused on negotiating a long-term supply agreement or merger with an existing producer where a ramp up schedule for 5 million tonnes per year can be reached with NACOF. This will trigger potash exports before opening on‑site mining operations at MFN, allowing immediate revenues for Encanto. These discussions are currently taking place with the continued intervention of Mr. Maloo, who is also working to secure these quantities with cash as guarantees for supply as we work out pricing."

FURTHER DETAILS OF PRELIMINARY ECONOMIC ASSESSMENT BY AMEC FOSTER WHEELER

Following the signature of the offtake agreement to supply NACOF, a Government of Indiasubsidized Farmers' Co-Operative, with 5 million tonnes (Mt) of potash annually for a guaranteed term of 20 years, Encanto has updated its 2013 prefeasibility ("PFS") study mine plan that was originally designed for 2.8 Mt of annual output by completing a PEA based on 3.4 Mt of annual output. The PEA does not invalidate the 2013 PFS or the Mineral Reserves for the Project, it is simply an alternative development option at a different plant capacity. Under its operating agreement with Muskowekwan First Nation, Encanto is now contractually obligated to deliver potash within 36 months from its December 30, 2016offtake agreement with NACOF.

The PEA indicates that the Project has significant positive economics and that the mineralization is of sufficient size as well as grade to support primary and secondary mining for over 48 years with a Muriate of Potash production rate of 3.4 Mt per annum. Although the Mineral Resources are sufficient to support a production rate of 5 Mt of potash annually, the most efficient production model for the MFN property would be to produce at a rate of 3.4 Mt annually.

KEY FACTS

Pre-tax net present value ("NPV") of $1.13 billion($0.86 billionafter taxes), and an internal rate of return ("IRR") of 18.9% (17.9% after taxes) The economic model is based on financing of 80% of the capital cost of the project at a 20 year amortization to match the 20 year offtake agreement with NACOF.

Table 1: PEA Highlights

(includes utilities, labour, maintenance, reagents, fuel, insurances and municipal taxes) | $42.86/t of MOP produced | | Sustaining Capital Cost

| | | | Table 1 Notes: | | | | | | 1. | Monetary units are in Canadian dollars | | 2. | t equals tonnes | | 3. | Muriate of Potash (MOP) product is 98% KCl | | 4. | The basis for the PEA unit cost estimates was the PFS unit cost estimate. These unit costs were reviewed, and updated as applicable. The updated unit costs are not considered a material change to the equivalent unit costs from the PFS, and therefore the PFS inputs remain current. |

Capital and operating cost estimates were generated with a target accuracy of -30% to +50%, typical for this level of study. The initial CAPEX estimate for the plant is $3.73 billionand includes estimates for water supply, and power and gas tie-ins to a 3rdparty owned Cogeneration plant. The estimate includes a contingency of $568 million. The operating costs were estimated at $42.86/t of MOP product at full production capacity. This figure includes utilities, labour, maintenance, reagents (including fuel), insurances, and municipal taxes. It does not include Royalties, Potash Production Taxes, or Federal/Provincial Income taxes which are estimated at $41.95/t of MOP product. The logistical costs estimates of $50.05/t of MOP product were provided by existing carriers and port facilities with capacity to serve this Project. Sustaining capital costs were estimated at $35.98/t of MOP product at full production and include provisions for well field extension, and reclamation.

As a result of these findings, Encanto plans to proceed to undertake further, more detailed economic studies on the Project. During which, Encanto will review the results of this base-case PEA to identify areas where improvements to the economics of the project can be realized as a result of the First Nations component to the Project. Areas for review may include, but are not limited to, taxes and royalties.

MINERAL RESOURCE BASIS FOR THE PEA

The Mineral Resource estimate used as the basis for the PEA was provided by Saskatchewanbased North Rim Exploration Limited, Qualified Person Tabetha Stirrett, P.Geo. The Mineral Resource is shown in Table 2.

Table 2: Solution Mining Mineral Resource Summary

| Measured | | | | | Member | Tonnage (Mt) | Weighted Average KCl Grade (%) | KCl Tonnage (Mt) | | Patience Lake | 175.85 | 31.08 | 54.65 | | Belle Plaine | 174.16 | 29.27 | 50.97 | | Total Excluding Interbed | 350.02 | | 105.62 | | Weighted Avg. Excluding Interbed | | 30.18 | | | Indicated | | | | | Member | Tonnage (Mt) | Weighted Average KCl Grade (%) | KCl Tonnage (Mt) | | Patience Lake | 905.66 | 29.96 | 271.31 | | Belle Plaine | 769.82 | 29.63 | 228.12 | | Total Excluding Interbed | 1,675.48 | | 499.43 | | Weighted Avg. Excluding Interbed | | 29.81 | | | Inferred | | | | | Member | Tonnage (Mt) | Weighted Average KCl Grade (%) | KCl Tonnage (Mt) | | Patience Lake | 958.82 | 29.29 | 280.80 | | Belle Plaine | 838.06 | 29.61 | 248.12 | | Total Excluding Interbed | 1,796.87 | | 528.93 | | Weighted Avg. Excluding Interbed | | 29.44 | |

| | | | Table 2 Notes: | | | | | | 1. | Mt = Million tonnes. | | 2. | Density = 2.08 t/m3. | | 3. | Tonnage is calculated based on Area x Thickness x Density (2,080 kg/m3) and is reported in-place. | | 4. | KCl Tonnage refers to contained Tonnage times weighted average grade, and is reported in-place. | | 5. | Should any part of the Mineral Resource estimate be converted to Mineral Reserves, the tonnes will be reduced based on a 41.6% extraction ratio and 20% plant and cavern loss. | | 6. | Mineral Resources are reported using a cut-off grade of 15% K2O. | | 7. | Measured Resource Radius of Influence of 800 metres, Indicated Resource Radius of Influence of 2000 metres, Inferred Resource Radius of Influence of 5000 metres | | 8. | Mineral Resources have an effective date of May 24, 2017. | | 9. | Tables 4 and 5 are not additive to Table 2. | | 10. | Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. |

PFS SUMMARY

The summary of the 2013 PFS financial model is shown in Table 3.

Table 3: Summary of PFS Financial Model

(includes utilities, labour, maintenance, reagents, fuel,

insurances and municipal taxes) | $54.32/t of MOP produced | | Sustaining Capital Cost

(includes Potash Production Tax, Crown Royalty and Saskatchewan

Resource Surcharge, average over the life of the project) | $64.76/t of MOP sold | | Initial CAPEX

| | | | Table 3 Notes: | | | | | | 1. | The NPV of the PFS remains positive using the assumed potash price in the PEA, therefore the Mineral Reserves remain current. | | 2. | t equals tonnes | | 3. | Muriate of Potash (MOP) product is 98% KCl |

The NPV of the PFS remains positive using the assumed potash price in the PEA, therefore the Mineral Reserves remain current.

PFS Mineral Reserve and Mineral Resource Statements

Table 4 presents Proven and Probable Mineral Reserves as determined in the 2013 PFS.

Table 4: Proven and Probable Mineral Reserves for the 2013 PFS

| Member | Tonnage (Mt) | KCl Grade1 (%) | KCl Tonnes (Mt)2 | | Patience Lake | — | — | — | | Proven | 75.86 | 24.58% | 18.65 | | Probable | 304.22 | 23.23% | 70.67 | | Belle Plaine | — | — | — | | Proven | 59.79 | 26.06% | 15.58 | | Probable | 230.98 | 24.71% | 57.07 | | | | | | | Total Proven Mineral Reserves | 135.64 | 25.24% | 34.23 | | Total Probable Mineral Reserves | 535.2 | 23.87% | 127.74 | | Total Proven and Probable Mineral Reserves | 670.84 | 24.14% | 161.96 |

| | | | Table 4 Notes: | | | | | | 1. | The grade shown was back-calculated from the Tonnage in-place and the KCl tonnes. The KCl tonnage in the table is the recoverable KCl, and was determined by estimating the production in the life of mine plan on a cavern by cavern basis using the local grade and member thickness from the resource model together with a curve relating the In-place grade to a brine grade. Extraction of brine from the caverns was assumed to be 90% of total cavern volume. | | 2. | Mineral Reserves are based on production from the caverns in the life of mine plan, which represent an extraction ratio of 41.6%. Modifying Factors include tonnage reductions to account for unknown anomalies (5% for Proven and 9% for Probable) and plant recovery of 94.5% (including downstream losses). These Mineral Reserves are based on 100% KCl and do not account for the K2O or KCl grade of the product actually sold. | | 3. | Proven Radius of Influence of 800 metres. | | 4. | Probable Radius of Influence of 2000 metres. | | 5. | The Mineral Reserves have an effective date of February 13, 2013. The NPV of the PFS remains positive using the potash price assumed in the PEA, therefore the Mineral Reserves remain current. | | 6. | The Mineral Reserves in Table 4 are not additive to the Mineral Resources in Tables 2 and 5 |

The Mineral Reserve estimate for the 2013 PFS was provided by Agapito Associates, Inc. of Grand Junction, qualified person Dr. Michael P. Hardy, P.E.

The Mineral Reserves discussed above were obtained from a mine plan covering the areas of Measured and Indicated Mineral Resources surrounding seven of the wells advanced for this project. Mineral Resources outside the areas containing Mineral Reserves are presented in Table 5.

Table 5: Mineral Resource Statement from the 2013 PFS

(Mt) | Weighted Average KCl Grade

(%) | KCl Tonnage

(Mt) | | Patience Lake | 217.92 | 26.74 | 58.28 | | Belle Plaine | 116.55 | 30.71 | 35.79 | | Total Excluding Interbed | 334.47 | | 94.07 | | Weighted Avg. Excluding Interbed | | 28.12 | | | Inferred | | | | | Member | Tonnage

(Mt) | Weighted Average KCl Grade

(%) | KCl Tonnage

(Mt) | | Patience Lake | 838.08 | 29.57 | 247.83 | | Belle Plaine | 776.68 | 29.48 | 229.00 | | Total Excluding Interbed | 1,614.76 | | 476.83 | | Weighted Avg. Excluding Interbed | | 29.53 | |

| | | | Table 5 Notes: | | | | | | 1. | Mt = Million tonnes | | 2. | Density = 2.08 t/m3. | | 3. | Tonnage is calculated based on Area x Thickness x Density (2,080 kg/m3) and is reported in-place. | | 4. | KCl Tonnage refers to contained Tonnage times weighted average grade, and is reported in-place. | | 5. | Should the any part of the Mineral Resource estimate be converted to Mineral Reserves, the tonnes will be reduced based on a 41.6% extraction ratio and 20% plant and cavern loss. | | 6. | Mineral Resources are reporting using a cut-off grade of 15% K2O. | | 7. | Indicated Resource Radius of Influence of 2000 metres, Inferred Resource Radius of Influence of 5000 metres | | 8. | Mineral Resources have an effective date of January 31, 2013. | | 9. | The Mineral Resources in Table 5 are not additive to the Mineral Resources and Mineral Reserves in Tables 2 and 4. Mineral Resources in Table 5 are reported exclusive of the Mineral Resources converted to Mineral Reserves in Table 4. |

The Mineral Resources were provided by Saskatchewanbased North Rim Exploration Limited, qualified person Tabetha Stirrett, P. Geo. Differences between the Mineral Resource tabulation in Table 2 and the Mineral Resource tabulation in Table 5 include the following:

The majority of the Indicated and Measured Mineral Resources for the project were converted to Mineral Reserves in the PFS and Mineral Resources that remain after conversion were reported separately, whereas the PEA is based on the total Measured and Indicated Mineral Resource estimate. An area under the proposed mine plant site that had an 800 m buffer was included in the resource estimates for both the Indicated and Inferred confidence categories in the PEA; however, for the purposes of the PFS this area was excluded for both the Indicated and Inferred confidence categories. A small area of additional land tenure that hosts Mineral Resources was included in the PEA; this area was not available to the PFS study at the time that study was completed. Slight changes to the weighted average grades may occur due to minor differences in the area/volumes reported between the two studies.

Qualified Persons

The following Qualified Persons will contribute to the technical report on the PEA that will be filed on SEDAR within 45 days of this news release: David Myers, P.Eng. and Paul O'Hara, P.Eng. (Amec Foster Wheeler Americas Ltd.): Tabetha Stirrett, P.Geo. (North Rim Exploration Limited); Michael Hardy, P.E. (Agapito Associates, Inc.); and Jim Brebner, P.Eng (Novopro Projects Inc.).

The independent Qualified Person for the Mineral Resource estimates disclosed in this news release is Tabetha Stirrett, P.Geo. (North Rim Exploration Limited). The independent Qualified Person for the Mineral Reserve estimate disclosed in this news release is Michael Hardy, P.E. (Agapito Associates, Inc.). The independent Qualified Person for the information disclosed in this news release in relation to the 2013 PFS is Jim Brebner, P.Eng (Novopro Projects Inc.).

Quality Assurance and Quality Control

From the retrieval of the core at the drill site to the shipment of the core to the North Rim Exploration Core Laboratory in Saskatoon, it was under the care and supervision of the Drilling Supervisor, Wellsite Geologist, or North Rim's Core Supervisor. Following the core retrieval, the core was wrapped in plastic, boxed and secured on site. Immediately following the completion of coring, a hotshot courier from the coring company delivered the locked core trailer to North Rim's secure core facility in Saskatoon, Saskatchewan.

All sampling activities were carried out at North Rim's core laboratory facilities located at 2834 Millar Avenue in Saskatoon, Saskatchewan. Upon arrival at the core laboratory, the core was cleaned thoroughly to identify the potash beds, clay seams, and mineralogical changes within the core. Selection of the correct assay intervals was conducted by North Rim geologists. Geochemical assay sampling was separated into two separate intervals: from the top of the Patience Lake Member to the base of the Belle Plaine Member, and the entire Esterhazy Member. Once the sample intervals were determined the core was slabbed lengthwise into halves by laboratory assistants. The cutting process was supervised at all times by a North Rim geologist. As the samples were chosen they were labeled. Each sample and its corresponding sample tag were placed into a waterproof, plastic sample bag, put into bags and then into sealed plastic pails for transportation to the lab. Shipping sheets were completed and accompanied the samples to the Saskatchewan Research Council Geoanalytical Laboratories ("SRC") at 125 – 15 Innovation Boulevard in Saskatoon, Saskatchewan. SRC is independent of Encanto and is ISO17025 accredited for selected analytical techniques.

North Rim geologists delivered the samples to SRC for analysis. When SRC received the core samples at the laboratory, they signed, dated and returned the North Rim Packing Slip to the North Rim employee who delivered them. After confirming that the sample list matched the samples in the pails, a Sample Receipt Report was emailed to a pre-determined distribution list. There, the samples were crushed, split and analyzed according to the parameters stated in SRC's Basic Potash Analysis package (soluble inductively coupled plasma [ICP], % insolubles and % moisture).

Quality assurance and quality control (QA/QC) measures were strictly adhered to, including the use of standards, blanks and duplicates throughout the analysis period. With each set of 40 samples, two potash standards, one quartz blank, and one sample pulp replicate analysis was completed. After processing, the entire group of samples, a split sample replicate was completed. Assay results generated are reviewed and approved by SRC prior to release. Upon completion of the assaying and QA/QC procedures, the geochemical results were emailed to the Encanto contact list in a password-protected zip file. According to the SRC Customer Quality Control policy the sample preparation and analytical procedures are of the highest quality and are NI 43-101-compliant.