Issue 4, January 17th, 2010 Donner and Encanto Updates

This past week was tough on the stock market. The second largest bank in the U.S., JPMorgan Chase reported loan losses which sparked a sell off on Wall Street and put pressure on commodity stocks.

As far as our two focus picks are concerned, one is up and one is down. Both had interesting news last week.

Encanto Potash (EPO, TSX) Connecting the Dots at Muskowekwan

Encanto has provided us with more fuel for the speculative fire which is the Muskowekwan potash prospect.

The company commissioned Chapman Petroleum Engineering of Calgary to analyze the oil wells which surround the property to estimate in-situ potash grades and thicknesses from wire line gamma ray logs. Two of the historical wells used in this evaluation were cored and assayed over the potash bearing intervals. The historical oil wells range from as far as 15.6 km away to as close as 11.4 km away from the Muskowekwan property boundary.

As I mentioned in Issue 39, there are six historic oil and gas wells which surround the Muskowekwan prospect. Gamma logs from these O&G wells indicate that in every hole each of the three major potash beds found in Saskatchewan have been intersected.

Based on the Chapman Report, estimates of the Patience Lake Member have average thicknesses and potash grades in four drill holes of 13.7 feet of 32% KCl*(20% K(2)OS); 11.9 feet of 30% KCl (19% K(2)OS) in the Belle Plaine Member; and 8 feet of 29% KCl (18% K(2)OS) in the Esterhazy Member.

As I reported in November, the thickness of the potash beds from the historic oil and gas wells averaged out at 103.8 feet. In the Chapman report they used a grade cut off of 23.7% KCl (15% K(2)OS). To attain these cut off grades as a minimum, the thicknesses of the potash beds were averaged out to be 33.6 feet.

This compares favorably to Athabasca Potash (API, TSXV) who averaged 32.58 feet of thickness with the 17 drill holes they used to prove up the Burr project. API's 43-101 compliant resource numbers came in at 125,800,000 tonnes at a grade of 21.27% potassium oxide {K(2)OS}.

Of course we must keep in mind the Chapman data is non compliant 43-101 information. However it does help us as investors build upon the theory that Encanto's Muskowekwan project is potentially minable.

Our theory will be proved out by drill results and 3D seismic results. The 3D seismic has nearly been completed and will be key in determining if the potash beds are structurally intact and suitable for mining. Encanto plans on providing 3D seismic on their entire 43,000 Muskowekwan project. That is very significant. For example Potash One's 3D seismic and drill holes covered an area of 14,974 acres. 3D seismic must be done to prove 43-101 compliant resources.

The 3D seismic results will probably be released around the end of March. Based on the 3D data Encanto can then plan a drilling campaign to outline a resource. That will take them up until July to complete. If all goes well, by the fall we should have the first 43-101 compliant resource numbers.

The next significant event for Encanto will be the results of their Phase I drilling campaigns at Ochapawace and the Muskowekwan properties where potash horizons have been intersected and forwarded for analysis.

If my theory on Muskowekwan holds true, this will be an easy double. Accumulate at 24 cents or less.

Full Article

For more information, please contact:

Fred Leigh or Robert Riley
Vanguard Shareholder Solutions
Tel: 604.608.0824
Toll free: 1.866.918.0824

www.encantopotash.com
ir@vanguardsolutions.ca