Prospect Global Resources’ Pre-Feasibility Study Indicates Strong Economics

  Prospect Global Resources’ Pre-Feasibility Study Indicates Strong Economics

                               $1.4 Billion NPV

                              27% After-Tax IRR

Business Wire

DENVER -- July 16, 2013

Damon Barber, President and Chief Executive Officer of Prospect Global
Resources Inc. (NASDAQ: PGRX) (“Prospect Global” or the “Company”), is pleased
to announce that a team of internationally-respected engineering and
consulting firms has completed work on a Pre-Feasibility Study (“PFS”) for the
Company’s potash project in the Holbrook Basin of Eastern Arizona. The study
was performed by Tetra Tech Inc. (“Tetra Tech”), a leading provider of
consulting, engineering, construction management and technical services
worldwide.

Highlights Include:^(1)

  *1.42 million tons per year operation^(2)
  *$825 million estimated capital cost
  *$1.4 billion NPV at an 8% discount rate^(3)
  *27% after-tax IRR^(3)
  *Initial mine life of 26 years
  *Life of mine operating costs of $115 per ton
  *Peak production of 1.55 million tons^(4)
  *33 million tons of total MOP production over initial 26 year mine life
  *Approximately 1.3 million tons per annum of production over life of mine

      The Pre-Feasibility Study contains two cases, a “Base Case” which
      economically evaluates only Measured and Indicated Resources and a
      “Development Case” which includes the anticipated conversion of Inferred
      Resources into Measured and Indicated Resources from the Company’s
      upcoming infill drilling program. The Company intends to develop the
      Project in accordance with the Development Case, which it believes is
      the optimal approach and realistic given the Company’s historic and
      anticipated conversion of Inferred Resources to Measured and Indicated
(1)  Resources. The results in this press release are based on the
      Development Case which contemplates a mining schedule that contains
      57.7% Measured and Indicated Resources and 42.3% Inferred Resources
      being mined over an initial 26 year mine life. The term “Resource” does
      not equate to the term “Reserve.” Under U.S. standards, mineralization
      may not be classified as a “Reserve” unless the determination has been
      made that the mineralization could be economically and legally produced
      or extracted. The estimation of inferred resources involves far greater
      uncertainty as to their existence and economic viability than the
      estimation of other categories of resources.
(2)   Nameplate operation based on average production from years 6 through 10.
      Based on prices of $430 per tonne FOB Vancouver for standard product,
(3)   $450 per tonne FOB Vancouver for granular product and $480 per ton
      delivered U.S. Midwest for granular product. Assumes 100% equity.
(4)   Year 7
      

“The completion of the Pre-Feasibility Study represents a significant
milestone in the development of our Holbrook Project,” said Mr. Barber. “The
goal of our work was to lower the risks of financing, development,
construction and mining operations while simultaneously increasing returns on
capital. The PFS shows the results of that effort. We have optimized the
operation for the current resource and significantly reduced the risks of the
project for investors. The PFS estimates confirm our view that the Holbrook
Project has the potential to become a high quality, long-life, conventional
potash mine with robust economics. We look forward to completing our
Definitive Feasibility Study as soon as possible and developing a scalable,
low-risk, mining operation.”

To ensure the success in the preparation of the PFS, Prospect Global
commissioned a team of world-class engineering and specialized consulting
firms with the following roles:

  *Tetra Tech Inc. – processing plant and site engineering, mining,
    permitting, cost estimating and project economics
  *North Rim Exploration – geology and resource estimation
  *John T. Boyd Company – owner’s engineers, mining
  *Novopro Projects Inc. – owner’s engineers, processing and surface
    facilities
  *Brownstein Hyatt Farber Schreck – permitting, land and offsite
    infrastructure
  *Saskatchewan Research Council (SRC) – metallurgical testwork
  *Huffman Laboratories – assaying and ore characterization work
  *Advanced Terra Testing, Inc. – rock mechanic testwork
  *RESPEC – rock mechanic testwork and mine design review

PFS Summary Details

Resource Estimation

Potash in the Holbrook Basin lies in two primary seams within the Supai
Formation, the KR-1 and KR-2 seams. The KR-1 seam lies above the KR-2 seam and
is unevenly distributed throughout the basin. The KR-2 seam is the primary
target for delineation and development. In August 2012, North Rim produced an
NI 43-101 compliant technical report which estimated the Holbrook Project
Resource in accordance with CIM standards and using a 40%-ft (grade x
thickness) cutoff estimated the following:

KR-2 Resource Summary
            Sylvinite      Average     Average        Average      Total KCl
          Tons          KCl Grade  Carnallite    Insoluble   Tons
                           (%)         (%)            (%)          (millions)
            (millions)
Measured    36.8           15.48       2.62           3.24         5.7
Indicated   286.0          15.45       2.42           3.15         44.2
Inferred    311.3          16.98       1.99           2.67         52.8
Total       634.1                                               102.7
                                                                   
KR-1 Resource Summary
Inferred    225.4          17.24       3.79           16.57        38.8
                                                                   

Mining

Mine access will be via shaft. The shaft locations were sited to maximize the
flexibility for underground development and to minimize the time from seam
access to full production, thereby accelerating revenues and cash flow. The
mine orientation is based on the results of rock mechanic analysis and is
intended to enhance operational efficiency, underground stability and employee
safety. The mine design incorporates room and pillar mining techniques
utilizing continuous miners. Planned extraction ratios, based on the results
of current rock mechanic analysis, vary within the mine plan, ranging from 40%
to 48% depending on ore thickness and pillar sizes. Approximately 247 million
tons of ore is projected to be mined over the initial 26 year mine life.

The Holbrook Project mineral resources within the Development Case mine plan
(including dilution) are entirely from the KR-2 seam and are as follows:

KR-2 Mined Resource Summary
           Sylvinite Tons   
              (millions)
Measured      13.7               5.6   %
Indicated     128.9              52.1  %
Inferred      104.7              42.3  %
Total         247.3              100.0 %
                                 

Once fully operational, the mining production rate is expected to be
approximately 9.5 million tons of ore per annum. This will be achieved by
running eight continuous miner units on a DuPont rotating shift schedule to
provide 24/7 coverage.

The following table summarizes the initial life-of-mine production schedule:

          Years
                                                                      Averages
           0        1        2        3        4        5         6-10     11-15    16-20    21-25    26
RoM Ore    7,068     9,519     9,583     9,502     9,509     9,274     9,495     9,532     9,548     9,372     3,116
(Ktons)
Diluted
Moisture   0.2   %   0.2   %   0.3   %   0.2   %   0.2   %   0.3   %   0.2   %   0.8   %   1.2   %   1.0   %   1.1   %
%
Diluted    13.7  %   14.5  %   14.9  %   17.9  %   16.8  %   14.8  %   16.9  %   15.6  %   15.2  %   15.1  %   15.2  %
KCl %
Mill
Recovery   82.6  %   82.6  %   82.6  %   82.6  %   82.6  %   82.6  %   82.6  %   83.6  %   85.0  %   85.0  %   85.0  %
%
Prod.
(MOP       835       1,174     1,204     1,466     1,381     1,180     1,418     1,211     1,229     1,220     417
Ktons)
                                                                                                               
Note: Finished Product is 95.4% KCl
                                                                                                               

The mining plan focuses on extracting higher head grades in the earlier years
of operation. Average production of 1.42 million tons per annum of MOP is
achieved between years 6 through 10, with peak production of 1.55 million tons
in year 7. Average production of approximately 1.3 million tons per annum is
achieved over the initial 26 year life of mine.

The Development Case production schedule contains 57.7% Measured and Indicated
resources and 42.3% inferred resources. The attached graph illustrates the
breakdown of measured, indicated and inferred resources in the Development
Case production schedule.

The Company’s infill drilling program that will start in early August is
designed to maximize the potential conversion of inferred resources to
measured and indicated resources for conversion to reserves upon completion of
a Definitive Feasibility Study.

Processing

The processing plant was designed to process 29,000 wet short tons per day or
approximately 9.5 million wet short tons per year after taking into account
regularly scheduled maintenance shifts, unplanned downtime and an annual two
week shut down.

Unit processes were selected based on the results of metallurgical testing
performed at Saskatchewan Research Council (SRC) facilities. The test results
showed that the potash is easily liberated from the salt matrices and
recoverable using standard industry techniques.

The flotation test work data indicated 82.6%-88.0% recovery and 92 percent
product grade were achieved in rougher flotation. Test work also showed that a
95.4% product grade can be achieved with additional cleaning columns. For the
PFS, an 82.6% mill recovery was estimated for years 0 thru 13, increasing to
85.0% thereafter due to secondary recovery from evaporation ponds that will be
constructed beginning in year 11. Additional metallurgical test work during
the DFS phase will be conducted to validate previous test work, evaluate
variations in feed grade and ascertain the most cost effective way to increase
mill recovery rates, with the objective of increasing the amount of saleable
product and lowering unit operating costs.

The potash ore, containing 15.5% Sylvite (KCl) or 9.79% potassium oxide, will
be processed to produce a marketable potash product grade of 95.4% KCl (60.3%
K[2]O). The compaction circuit was designed with sufficient capacity for the
plant to produce a 100% granular product.

Capital Expenditures

Start-up capital expenditures are estimated at $825 million over a 2½ year
construction schedule; this estimate includes $48 million for EPCM services,
$53 million of owner’s costs and an $83 million contingency:

                                   ($ in millions)
Mine                                 $190.7
Processing Plant                     159.1
Surface Conveyance and Storage       79.4
TSF and Evaporation Pond             34.0
Onsite and Offsite Infrastructure    108.5
Project Indirects                    118.2
Owner’s Costs                        52.6
Contingency                          82.8
Total                                $825.3
                                     

Operating Costs

Direct operating costs for the Development Case average $114.54 per ton
(approximately $115 per ton) over the life of mine. Costs associated with
mining comprise 56% of operating costs, processing 35%, surface support
facilities 2% and G&A 7%. The per ton break-down of operating cost by area is
as follows:

           $ / ROM ton  $ / ton MOP
Mining       $8.60         $64.34
Processing   $5.36         $40.11
Surface      $0.28         $2.09
G&A          $1.07         $8.00
Total        $15.31        $114.54
                           

Within mining, mine labor accounts for 33% of operating expenses, followed by
equipment O&M 27%, roof support 17%, hoisting and ventilation power 13% and
conveyance 10%. The following table provides a breakdown of mining costs:

                     $ / ROM ton  $ / ton MOP
Mining Labor           $2.81         $20.98
Equipment O&M          $2.35         $17.56
Roof Support           $1.42         $10.64
Hoisting/Ventilation   $1.14         $8.55
Conveyors              $0.88         $6.61
Total Mining           $8.60         $64.34
                                     

Within processing, reagents represent the largest cost accounting for
approximately 40% of processing operating expenses, followed by power 24%,
propane 15%, O&M 14%, labor 6%, and tailings 1%. The following table provides
a breakdown of major processing costs:

                 $ / ROM ton  $ / ton MOP
Reagents           $2.15         $16.06
Power              $1.30         $9.73
Propane            $0.81         $6.10
O&M                $0.75         $5.59
Labor              $0.29         $2.20
Tailings           $0.06         $0.43
Total Processing   $5.36         $40.11
                                 

Marketing and Transportation

The economics for the PFS were analyzed using as benchmarks a US$430 per tonne
FOB Vancouver price for standard product and a US$450 per tonne FOB Vancouver
price for granular product. According to Fertecon, the 3-year average basis
differential between Vancouver and the U.S. Midwest has averaged approximately
US$110 per tonne from 2010 to 2012. For the PFS, an $80 per tonne basis
differential was assumed. This equated to approximately a $480 per (short) ton
U.S. Midwest delivered price. A $47 per ton average freight rate was assumed.

Development Path Forward

  *The Company has selected drillers for its upcoming infill drilling program
    and will mobilize to the field in early August to begin drilling.
  *Complete new Resource estimate by end of 2013
  *Complete remaining rock mechanic and metallurgical test work required for
    the Definitive Feasibility Study with core samples obtained from the
    infill drilling program
  *Optimize mine plan and plant engineering based on the new resource
    estimate
  *Build-out management team – key additions identified
  *Complete Definitive Feasibility Study Q3 2014

On behalf of the Board of Directors,

Damon G. Barber
President and Chief Executive Officer
Prospect Global Resources Inc.

About Prospect Global Resources Inc.

Prospect Global Resources Inc. is a Denver-based company engaged in the
exploration and development of a potash mine located in the Holbrook Basin of
eastern Arizona. Prospect Global’s stock is traded on the NASDAQ Capital
Market under the ticker symbol PGRX.

Additional details about Prospect Global Resources Inc. can be viewed at the
Company’s website, www.prospectgri.com.

Regarding Forward-Looking Statements

With the exception of historical matters, the matters discussed in this press
release include forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from
projections or estimates contained herein. Such forward-looking statements
include statements regarding current and future classification of Prospect
Global’s potash resources, development of its potash resources and potash
mining facility and the Pre-Feasibility Study. Factors that could cause actual
results to differ materially from projections or estimates include, among
others, potash prices, economic and market conditions, and the additional
risks described in Prospect Global's filings with the SEC, including Prospect
Global's Annual Report on Form 10-K for the year ended March 31, 2013. Most of
these factors are beyond Prospect Global's ability to predict or control. The
forward-looking statements are made as of the date hereof and, except as
required under applicable securities legislation, Prospect Global does not
assume any obligation to update any forward-looking statements. Readers are
cautioned not to put undue reliance on forward-looking statements.

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Contact:

Media contact:
The Rose Group
Elana Weiss, 310-280-3710
elana@therosegrp.com
or
Prospect Global Resources, Inc.
Mr. Gregory Dangler, CFO
+1-303-990-8444