Sergipe Potash

The Sergipe Potash Project comprises two separate license blocks, with a total area of 14,114 hectares, which are contiguous with Talon’s Capela and Panqueca potash prospects and cover the strike extension trend of the known potash deposits in Vale’s Taquari-Vassouras Mine. A significant amount of exploration data is available on the Project from the oil and gas industry, which includes geological and geophysical data from 11 oil wells. Two of these wells intersected a cumulative 37 and 5 metres of potash mineralization respectively, in ten and two individual potash-bearing horizons, at depths between 1,300 and 1,800 metres. Furthermore, data is available for at least 30 2-D seismic lines over the Project.

In November 2008, the Company and Sprott Resource Corp., (“Sprott”) agreed to form a strategic alliance (the “Alliance”), owned 50% each, to acquire phosphate, potash and other resource opportunities. Sprott has contributed starting capital of US$500,000 to the new company, which has been used to acquire and evaluate phosphate and potash exploration properties in Brazil to evaluate acquisition opportunities. During the period the Company undertook field reconnaissance work to complete a preliminary evaluation of the Alliance phosphate and potash properties.

Lara is in the process of acquiring the 50% owned by Sprott, and has entered into an Agreement with Talon Metals Corp. (TSX: TLO), whereby Talon has been granted an option to earn 75% interest in the project. To earn the interest, Talon must pay US$500,000 cash, and spend US$4.0 on exploration, both over the next four years. Talon will be the operator of the work programs.