On March 14, 2013, we issued an aggregate of US$285,000 in convertible debentures (each a "Debenture" and collectively, the "Debentures") having a term until March 14, 2014 (the "Maturity Date") and an interest rate of 15% per annum which shall accrue and be payable on the earlier of the Maturity Date or the date the entire principal amount of each Debenture is converted. The principal amount of the Debentures is convertible into shares of our common stock at the option of the holder, in whole or in part, at a price of US$0.19 (the "Conversion Price") per share until the Maturity Date. The Conversion Price of the shares of common stock underlying each Debenture is subject to adjustment upon a reclassification or other change in our outstanding common stock and certain distributions to all holders of our common stock. In addition, each holder of a Debenture received five common share purchase warrants (each a "Warrant") for each US$1.00 of principal amount of Debenture, entitling the holder to acquire one share of our common stock for each Warrant at an exercise price of US$0.19 per share for a period of one year from the date of issuance. The Debentures are secured by a first ranking floating charge security on all of our assets. We relied on exemptions from registration under the U.S. Securities Act provided by Regulation S for the offshore investors, based on representations and warranties provided by the investors in their respective subscription agreements entered into between us and each investor.

The proceeds from the Debenture offering will be used for the preliminary economic assessment and for general working capital.

On March 20, 2013, we filed the preliminary economic assessment (the "PEA") that we received on our Holbrook Basin property in Northern Arizona, which was prepared in accordance with the provisions of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators, on the SEDAR website, at www.sedar.com, and on our website at www.passportpotash.com. The PEA is authored by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH, a consulting and engineering firm, specialized in the potash and salt industry, headquartered in Erfurt, Germany.