Sirius Exploration
LSE : SXX

September 22, 2009 02:00 ET

Proposed Offer to acquire 100% of AusPotash Corporation

For immediate release                                            7.00am 22 September 2009

                                                       
                                            Sirius Exploration PLC
                                          ("Sirius" or the "Company")
                                                       
                            Proposed Offer to acquire 100% of AusPotash Corporation
                                                       

Details of the Proposed Offer

Further  to  the announcement made on 15 September 2009, Sirius (AIM: SXX, OTC: SRUXY) announces  that  it  has
entered  into  a  lock-up  agreement with the directors and management of AusPotash  Corporation  ("AusPotash")
pursuant to which, among other things, the parties have agreed to facilitate the purchase by Sirius of  all  of
the  issued  and  outstanding common shares of AusPotash ("the Proposed Offer") at  a  price  of  CAD$0.40  per
AusPotash share purchased. The expected closing of the transaction is 25 September 2009 (the "Closing Date").

The  lock-up  agreement provides that the Proposed Offer is contingent on various conditions having  been  met,
including  but not limited to: the termination of the Definitive Agreement (as defined and more fully described
below);  and  as  of  the Closing Date, (i) 90% or more of the outstanding common shares of AusPotash  ("Common
Shares")  having been duly endorsed for transfer to Sirius and; (ii) all outstanding convertible securities  of
AusPotash having been exercised in full, cancelled or irrevocably released, surrendered or waived.

Currently there are 44,785,006 Common Shares issued and outstanding on an undiluted basis. AusPotash  has  also
issued  a number of convertible securities, which are exercisable for Common Shares.  Were all such convertible
securities that are presently in-the-money exercised, the number of issued and outstanding Common Shares  would
increase to 59,155,006.

Pursuant  to  the  Proposed  Offer, Sirius shall issue two (2) ordinary shares of Sirius  of  0.25p  ("Ordinary
Shares") for each one (1) Common Share acquired on the Closing Date, the value of an Ordinary Share having been
agreed  by  the  parties to be 11.25p per share (or CAD$0.20 per share). If the share capital of  AusPotash  is
acquired  on  a fully diluted basis (assuming the exercise of those AusPotash securities that are  in-the-money
only), then up to 118,310,012 Ordinary Shares shall be issuable. In addition, Sirius shall be required to issue
1  million Ordinary Shares to Greenwich pursuant to the Termination Agreement referred to below. At the  agreed
price  of 11.25p per share, this equates to a total aggregate consideration of up to £13.4 million (or CAD$23.9
million).


Information on AusPotash

AusPotash  is a private Canadian company whose principal business activity is the acquisition, exploration  and
development of mineral properties.  AusPotash holds an interest in two (2) exploration permits (each  an  "EPM"
and collectively, the "Tenements") covering lands overlying the "Boree Salt Member".

The  Boree Salt Member lies within the Adavale Basin, which is located approximately 50 kilometres (kms)  south
of  Blackall,  central  western Queensland, some 650 kms inland from the Queensland coast  and  840  kms  west-
northwest of Brisbane, Queensland.

For the 9 month period ended 31 May 2009, AusPotash reported a loss of CAD $870,521 on nil turnover and had  as
at that date net assets of CAD$6,462,005.


Information on AusPotash's Properties

AusPotash  has  not  yet  determined whether its mineral property interests (Tenements/EPM's)  contain  mineral
reserves  that  are economically recoverable nor have any reserves or resources been established in  accordance
with  an  internationally  recognized mineral standard acceptable to AIM. AusPotash's operations  are  entirely
dependent  upon the existence of economically recoverable mineral reserves, the ability of AusPotash to  obtain
the  necessary financing to complete the exploration and development of its mineral property interests, and  on
future profitable production or proceeds from the disposition of its mineral property interests.

Based  on  earlier petroleum exploration conducted in the 1980s that included drilling, well logs  and  seismic
surveys,  and on work conducted by the Queensland Department of Mines and the Australian Bureau of  Mines,  the
Boree  Salt Member was identified as the only known significant occurrence of bedded potash in Australia. Since
then,  additional work by Queensland Potash (now a wholly-owned subsidiary of AusPotash) and their  contractors
have  recovered  and  assembled much of the technical literature of the early 1980s on the tenements  including
available data, reports and well logs.

Terra  Search  Pty Ltd, an Australian exploration contractor, has processed the available historical  petroleum
exploration drilling and seismic interpretation data and created a 3D model of the Boree Salt Member  geometry.
This  work indicates that the Boree Salt Member is several tens of cubic kilometres in volume and is more  than
250 meters thick at depths between 2,000 and 2,500 meters below the ground surface.

Based  on  a  review  of  the  available  information, including well  logs,  company  reports  and  government
publications,  AusPotash's  technical  consultant  (M.D. Campbell  and  Associates  L.P.)  has  concluded  that
substantial potential exists for the presence of economic potash within the Tenements controlled by  Queensland
Potash. M.D. Campbell and Associates L.P. has therefore recommend drilling and coring exploration in the  areas
identified by recent re-interpretations of earlier seismic data collected in the 1960s through the 1980s.

Once  the  proposed drilling and coring are complete and the potash content of the upper Boree Salt Member  has
been characterized, the available resources will be re-assessed. Additional data collected during future phases
of  the  project will determine if the potash is economically recoverable by standard "in situ" solution mining
and surface evaporation processing methods that are available at that time.

The  estimated  cost  of the next phase of the Adavale project (the proposed coring and  drilling  project)  is
likely  to be AUS$1.2 million (CAD$1.1 million) over a two-year period. This work would include drilling,  well
logging, and coring and associated geological and engineering supervision of such operations.


Financial effects of the Proposed Offer

The total number of Ordinary Shares to be issued under the Proposed Offer would equate to approximately 29%  of
the  then enlarged issued share capital of Sirius. If all the in-the-money AusPotash convertible securities are
exercised  prior  to  the acquisition by Sirius, AusPotash will add a total of CAD$3,011,000  to  Sirius'  cash
resources which can cover the current AusPotash exploration programme of AUS$1.2 million (CAD$1.1 million) over
the next two years.


Benefits of the Proposed Offer

The  Tenements extend over one of the only known significant occurrences of bedded potash in Australia.  Potash
is primarily, though not exclusively, used in the production of fertiliser, the demand for which is anticipated
to increase steadily in the next decade, driven by the growing economies of the Far East. As such, the proposed
acquisition  expands Sirius's position in the potash and salt market, complementing its existing  Dakota  Salts
properties  in  North  Dakota. The Company also believes the technical expertise and research  activity  it  is
conducting  into  the  field of secondary uses for mined salt/potash caverns will increase  the  value  of  the
Tenements.


Termination arrangements with Greenwich

AusPotash,  Greenwich and R. Bruce Duncan (the Chief Executive Officer of AusPotash) entered into a  definitive
agreement  dated 16 July, 2009 (the "Definitive Agreement") pursuant to which the parties agreed to complete  a
"Qualifying Transaction" in accordance with the policies of the TSX Venture Exchange.

In  light  of  the  Proposed  Offer and through negotiations between AusPotash  and  Greenwich,  AusPotash  and
Greenwich  have  agreed  to  terminate the Definitive Agreement pursuant  to  an  agreement  (the  "Termination
Agreement")  upon  payment by Sirius of CAD$325,000 to Greenwich, which shall be satisfied by  the  payment  of
CAD$125,000  in  cash  and  CAD$200,000 through the issuance of 1,000,000  Ordinary  Shares  (the  "Termination
Consideration").  It is anticipated that the Termination Agreement will be entered into on the Closing Date and
that the Termination Consideration will be paid at that time.


Related Party and Section 190 of the Companies Act 2006

Two  directors of Sirius (Mr Richard Poulden and Mr Jonathan Harrison) have minority interests in AusPotash and
the  acquisition  of  shares held by these interests will be subject to compliance  with  Section  190  of  the
Companies  Act  2006 and with AIM Rule 13 concerning related party transactions (the "Related  Party  Shares").
Following the completion of the Proposed Offer, Sirius will consider taking the necessary steps to proceed with
the acquisition of 1,120,061 and 373,354 AusPotash shares in which respectively Mr Poulden and Mr Harrison have
an  interest  which will include inter alia convening a general meeting of Sirius to approve  the  purchase  of
such  shares.  If and when that matter is taken forward, a further announcement will be made.  For  the  moment
Sirius  will not proceed with these steps and the acquisition of AusPotash pursuant to the Proposed Offer  will
exclude the Related Party Shares.


Further Information

Application  will  be  made for up to 119,310,012 new Ordinary Shares, which will rank, pari  passu,  with  all
existing ordinary shares to be admitted to trading on AIM and trading in such shares is expected to commence on
25 September 2009.

Following the issue of the new Ordinary Shares as set out above, the total number of shares in issue will be up
to 409,715,162.


The  following further information is or will be, following the Closing Date, available on the Sirius  website,
www.siriusexploration.com:

    -       Information Memorandum on AusPotash
    -       NI 43-101 Report on AusPotash


- ends -


Contacts:

Richard Poulden

Chairman, Sirius Exploration Plc.                                   Tel: +971 556 232 672
richard.poulden@siriusexploration.com

Beaumont Cornish
 
Roland Cornish                                                                Tel:  +44 (0)20 7628 3396

Gth media relations

Toby Hall                                                                          Tel: +44 (0)20 7153 8039

Christian Pickel                                                                Tel: +44 (0)20 7153 8036

      
Website: www.siriusexploration.com


Glossary of Technical terms used in the Announcement:

Salts:  The geological products of the natural evaporation of sea-water. Predominantly sodium chloride (halite)
but frequently including chlorides and sulphates of potassium and magnesium.

Potash:  A  term covering the naturally occurring salts of potassium (mostly chlorides)  from which  the  oxide
(formally 'potash') can be prepared for commercial use.

Resource:  A  concentration of material of economic interest in the earth's crust in  such  form,  quality  and
quantity that there are reasonable prospects for its eventual economic extraction.

Reserve:  A  reserve  is that portion of a resource which in the opinion of a competent person  constitutes  an
estimated tonnage and grade that can be the basis of a viable project.



Competent Persons

1.  Michael  D.  Campbell, P.G, P.H, Managing Partner and Principal Geologist of M.D.Campbell  and  Associates,
L.P.,  located  in  Houston,  Texas who is a qualified person under Canadian National  Instrument  43-101,  has
reviewed  and  approved the technical and scientific information on AusPotash contained in  this  announcement.
Mr. Campbell is independent of both AusPotash and Sirius.

2.  The  technical information contained in this announcement had been reviewed and approved  by  Nick  Badham,
Managing  Director of Sirius, a qualified competent person in Europe and North America who is also a  Chartered
European Geologist having had almost 40 years relevant experience in the mining industry.



Contact Information

  • Sirius Exploration