Encanto Provides Corporate Update

TRADING SYMBOL:  TSXV:EPO

VANCOUVER, Sept. 27, 2012 /CNW/ - Encanto Potash Corp. ("Encanto" or the "Company") (TSXV: EPO) and (OTCQX: ENCTF) is pleased to release a corporate update on the Muskowekwan potash mine project and the scheduling of an Ochapowace property drilling program.

As released on June 28, 2012, a preferred site has been selected and approved for the Muskowekwan mine infrastructure location and tailings management area.

Since then, a number of key milestones have been met including:

  • A preliminary plant layout has been developed for the railway spur line/loop design. This design has been developed in consultation with the proposed rail company.
  • Cost estimates were obtained for the purchase and  rental of rail cars.
  • Management, engineering consultants and the railway company representatives visited two ports in Vancouver in September.
  • 3D modeling of the compaction plant and  load-out area has been completed.
  • Fluid bed dryers, standard product cooler, conditioning drums and railcar indexer requirements have also been drafted.
  • The evaporation and crystallization study has commenced.
  • Main process equipment requests for quotation (RFQ) have begun.
  • Environmental Assessment, Tailings Management Area, Surface Water Sourcing, Site Selection Assistance studies are ongoing.
  • Soil and surface water studies continue.

Dissolution Tests

The dissolution tests of actual bore hole cores were conducted by NG Consulting in Germany, and have now been completed. This test-work is used to estimate the brine grade which may be produced from the solution mining operation and as material input into the processing plant.

Creep Tests

Rock mechanical tests at IfG lab in Germany and at Respec in the U.S.A, both laboratories with considerable experience in potash core testing, have been completed.  The reports associated with these tests are expected shortly. A compilation of these data sets will aid in cavern and pillar/mine design, with this work being incorporated into the preparation of the preliminary mining plan.

Design of processing plant Mechanical/Piping

  • The Compaction Plant and Load Out area design has been approved.
  • Optimization of the new plant layout continues.
  • 3D modeling of the Evaporation/Crystallization Plant has commenced.
  • Building-to-building pipe rack alignment drawings, well field pipeline layout and cluster valve house design continues.
  • Mine pumping methodology trade-off study completed.

Encanto CEO and President Jim Walchuck commented, "We are pleased with the professional level of engineering work that has been carried out by our employees and consultants to advance this project to this stage.  The time and effort invested is now being returned as results which we believe will move this project forward in a timely manner towards our ultimate goal of building a potash mine on the Muskowekwan First Nation's land. "

The full capacity plant output has been increased to 2.8 Mtpa following the review of mine design with Agapito Associates Inc. (AAI) and the Company now looks forward to delivering a pre-feasibility study (PFS) in Q1 2013.

New 3D Seismic Program and Assay Analysis

Encanto plans to shoot additional 3D seismic on the Muskowekwan Treaty Land Entitlement (TLE) lands in Q4 2012. With the completion of the 3D seismic program on the TLE lands, Encanto will be able to request North Rim Exploration to recalculate and release an upgraded resource estimate.  Encanto is confident the previous drill holes on the TLE area combined with the 3D seismic shot over the same area will result in a significant movement of Inferred Resource into the Indicated Resource category and increase the corresponding mine life associated with Measured and Indicated Resources.

Drilling Program for Ochapowace Prospect

With the ultimate goal of developing a second resource, Encanto intends to test the grade with one hole in Q4 2012 on its Ochapowace property .

New Shareholder Rights Plan

Encanto announces today that it has approved the adoption of a shareholder rights plan (the "Rights Plan") subject to shareholder approval. The Company's management considers the current market valuation to be in contrast to the advancement of the Company and its business at this time.

Under the Rights Plan, share purchase rights (the "Rights") are issued to holders of shares at the rate of one Right for each share of the Company outstanding. The Rights Plan is similar to plans adopted by several other Canadian companies and approved by their shareholders. Initially, the Rights attach to and trade with the common shares and are represented by certificates representing common shares.

On the occurrence of certain triggering events, including the acquisition by a person or group of persons of 20% or more of the votes attached to all outstanding voting shares of the Company in a take-over bid that fails to meet certain conditions, the Rights separate from the common shares and will entitle holders (other than the acquiring person or group of persons) to acquire shares of the Company at a 50% discount to the prevailing market price of the shares.

The Rights are not triggered by purchases of voting shares made pursuant to a "Permitted Bid" made to all holders of common shares on identical terms. A Permitted Bid must be made by way of a take-over bid circular prepared in compliance with applicable securities laws and must comply with certain other conditions set out in the agreement signed to implement the Rights Plan.

The Company is not aware of any pending take-over bid for the Company.

About Encanto:

Encanto Potash Corp. is a TSX Venture Exchange listed and OTCQX traded Canadian resource company engaged in the development of potash properties in the Province of Saskatchewan, Canada, the largest producing potash region in the world. Through the joint venture agreement with Muskowekwan Resources Ltd. on our flagship property, Encanto has been successful in adding a 3.5 fold increase to the project land package, which now totals approximately 58,300 acres. A Preliminary Economic Assessment (PEA), based solely on the Home Reserve Lands (15,500 acres), was released in August of 2011 and an updated NI 43-101 report describing the increase to the compliant resource estimate was filed on May 10, 2012.

Encanto's Muskowekwan First Nation property has a current NI 43-101 resource estimate dated May 9, 2012 titled "2012 Potash Resource Assessment for the Muskowekwan First Nations Home Reserve Project South Eastern Saskatchewan, Canada" containing Measured and Indicated resources of 130.7MMt grading 29.6% KCl or 18.7% K2O and Inferred resources of 234.7MMt grading 28.3% KCl or 17.9% K2O.

The Company has 100% interest in two additional potash properties in Saskatchewan: the 55,000 acre Ochapowace/Chacachas property and the 140,000 acre Spar property.

The technical content of this news release has been reviewed by Ross Moulton, Vice-President of Exploration for Encanto, a qualified person as defined by NI 43-101.

For additional information about Encanto Potash Corp., please visit the Company's website at www.encantopotash.com or review the Company's documents filed on www.sedar.com.

ON BEHALF OF THE BOARD OF DIRECTORS

         "James Walchuck"
Per: _________________
James Walchuck
President and CEO

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

THE FOREGOING INFORMATION MAY CONTAIN FORWARD-LOOKING INFORMATION RELATING TO THE FUTURE PERFORMANCE OF THE COMPANY. FORWARD LOOKING INFORMATION IS SUBJECT TO A NUMBER OF KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED IN OUR FORWARD LOOKING STATEMENTS. SUCH RISKS AND OTHER FACTORS INCLUDE, AMONG OTHERS, THE ACTUAL RESULTS OF EXPLORATION ACTIVITIES, CHANGES IN WORLD COMMODITY MARKETS OR EQUITY MARKETS, THE RISKS OF THE MINING INDUSTRY INCLUDING, WITHOUT LIMITATION, THOSE ASSOCIATED WITH THE ENVIRONMENT, DELAYS IN OBTAINING GOVERNMENTAL APPROVALS, PERMITS OR FINANCING OR IN THE COMPLETION OF DEVELOPMENT OR CONSTRUCTION ACTIVITIES, TITLE DISPUTES, CHANGE IN GOVERNMENT AND CHANGES TO REGULATIONS AFFECTING THE MINING INDUSTRY, AND OTHER RISKS AND UNCERTAINTIES DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH THE CANADIAN SECURITIES ADMINISTRATORS (AVAILABLE AT WWW.SEDAR.COM). FORWARD-LOOKING STATEMENTS ARE MADE BASED ON VARIOUS ASSUMPTIONS AND ON MANAGEMENT'S BELIEFS, ESTIMATES AND OPINIONS ON THE DATE THE STATEMENTS ARE MADE. 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. THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS IF THESE ASSUMPTIONS, BELIEFS, ESTIMATES AND OPINIONS OR OTHER CIRCUMSTANCES SHOULD CHANGE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

SOURCE: Encanto Potash Corp.

For further information:

James Walchuck
President and CEO
Tel:  604-683-2402

Martin Gagel  CFA, MBA
Vanguard Shareholder Solutions
Tel:  604-608-0824
Toll Free: 1-866-918-0824


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