Athabasca Potash Inc.
TSX : API

Athabasca Potash Inc.

July 16, 2009 13:31 ET

Athabasca Potash Provides Update on Strategic Review Process

SASKATOON, SASKATCHEWAN--(Marketwire - July 16, 2009) - Athabasca Potash Inc. ("API" or the "Company") (TSX:API) today provided an update on its discussions with third parties regarding a potential strategic alliance to develop the Company's Burr Project in Saskatchewan as a low cost conventional potash mine. These discussions were first described in the Company's March 30, 2009 press release, and progress was updated in API's 2009 Q1 MD & A and May 15, 2009 press release.

The Company has established a Special Committee consisting of Messrs. John King Burns (Chair), Leo Bingleman, CA and Ms. Dawn Zhou. The Special Committee will consider and evaluate proposals resulting from these discussions.

The Company has retained CIBC World Markets and Genuity Capital Markets as financial advisors in connection with these discussions.

To date the Company has broadly solicited expressions of interest from qualified third parties in respect of a strategic alliance to develop the Burr Project and has held in-depth discussions and meetings with many of these parties to advance a possible alliance. API has executed confidentiality agreements with a number of these parties and provided them with access to an extensive electronic data room and the opportunity to conduct a thorough due diligence process on the Burr Project.

In response to initial indications of interest received from these parties, the Company has expanded the scope of transactions it is considering from joint ventures and other forms of direct participation in the development and financing of the Burr Project to include potential mergers or potential acquisitions of all or a portion of the Company or its business.

API will carefully consider its discussions with various parties and the Board of Directors will make its recommendations to shareholders in due course upon receipt of a binding offer.

"We are committed to delivering value to our shareholders in the most efficient way possible," said John King Burns, Special Committee Chairman. "With the definition of a measured and indicated mineral resource of 425 million tonnes at the Burr Project and the advancement of work on our upcoming pre-feasibility study, API believes it is well-positioned to actively seek out a strategic alliance with an established, global industry player to support development of the Burr Project. During our efforts to advance an alliance, however, it also became clear that we might need to consider a broader range of transactional structures that were being presented to us and which might provide value to our shareholders."

"API has a number of potential opportunities arising during its search for a potential strategic alliance which need to be advanced. I am fully committed to working in the best interest of API and its shareholders," said Ms. Zhou, the founder of API and architect of the Burr Project, and a director and the former President & CEO of the Company.

The Company cautions shareholders that there is no assurance whether the Company will receive a definitive proposal with respect to a potential transaction or strategic alliance as a result of this initiative. Also, even if a definitive proposal is received, there is no assurance that such a proposal will be recommended by the Special Committee or API's Board or that such a proposal will be implemented.

The Company anticipates it will make no further announcements regarding its strategic review process unless and until a definitive agreement is reached, or a determination is made not to pursue a transaction or a strategic alliance.

In conjunction with its strategic review process, the Company also continues to advance its search for a full-time Chief Executive Officer with senior executive experience. API has retained a professional executive search firm to assist in this search and several prospective candidates have been identified to date.

The targeted mining members of the Burr Project, including both the Upper Patience Lake ("UPL") and Lower Patience Lake ("LPL") Sub-Members, contain Measured Mineral Resources of 125,800,000 tonnes at a grade of 21.27% potassium oxide ("K2O"), Indicated Mineral Resources of 299,000,000 tonnes at a grade of 23.07 % K2O, and Inferred Mineral Resources of 186,900,000 tonnes at a grade of 23.55% K2O. Mineral resources do not have demonstrated economic viability. Susan Lomas, P.Geo. of Lions Gate Geological Consulting Inc., is the Qualified Person (as defined by NI 43-101) for having prepared the mineral resource estimates and scientific and technical information in this press release and has reviewed the results reported herein. For more scientific and technical information relating to the estimated mineral resources for the Burr Project, please refer to API's press release dated May 29, 2009 and the technical report entitled NI 43-101 Technical Report for a Resource Estimation on the Burr Project, Athabasca Potash Inc., Saskatchewan, Canada, with an effective date of September 18, 2008 (the "Technical Report"). The May 29 press release and the Technical Report are available at www.sedar.com or www.athabascapotash.ca.

About Athabasca Potash Inc.

API is a Canadian based corporation and was founded with a goal of establishing itself as a pre-eminent Canadian public company engaged solely in potash exploration and development with focus on the Company's wholly owned Burr Project in Saskatchewan, and to provide its shareholders with a unique investment opportunity focused entirely on potash.

Caution Regarding Forward-Looking Information

This press release contains forward-looking information within the meaning of applicable Canadian securities legislation, including statements with respect to the Company's strategic review process, its ongoing pre-feasibility study on the Burr Project and its continuing CEO search. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of API, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others, exploration risks, lack of historic drill hole documentation, challenges or impairments to title, the negotiation of access to certain potash mineralization, permit requirements, governmental regulations, aboriginal land use, environmental risks and competition in attracting and retaining personnel. In addition, the forward-looking information contained in this press release is based upon what management believes to be reasonable assumptions, including, but not limited to, assumptions regarding the mining and processing methods to be used in connection with any future development at the Burr Project, mining and processing costs, transport costs, minimum mining widths, metallurgical recovery rates, the long term price of potash, the bulk density of potash mineralization and the estimated extraction ratio. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information contained herein. Accordingly, readers are advised not to place undue reliance on forward-looking information. Except as required under applicable securities legislation, API undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new information, future events or otherwise.

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