Deposit Type The geology of the potash-bearing beds of the Carlsbad area has been well documented. Overall, the potash-bearing beds may be described as bedded sedimentary rocks, deposited across the Delaware Basin and Northwest Shelf backreef from the Capitan Reef. The depositional sequences that developed in the Salado Formation consist of repetitive cycles that can be recognized by changes inmineralogy, sedimentary textures, and structures. Two types of cycles are differentiated Type I and Type II. A complete Type I cycle rangesin thickness from 3 ft to 33 ft and consists of (in ascending order): • A basal, mixed siliciclastic and carbonate mudstone • Laminated to massive anhydrite-polyhalite • Halite • Halite with mud (argillaceous halite) Type II is a thinner, less complete sequence and consists of halite that grades upward into argillaceous halite (Lowenstein 1988).The anhydrite-polyhalite beds are laterally continuous over large distances and are used as marker beds for correlation. Potash beds arenot included in these sequences because potash is secondary and formed later than the basic depositional sequence. The HB Mine, which was formerly mined on the 1 and 3 ore zones (Barker and Austin 1999),has been flooded and is currently being solution mined with brines to obtain potash from the remaining pillars. Mineralization In the Carlsbad Area, the potassium minerals, in order of decreasing abundance, are polyhalite, sylvite, carnallite, langbeinite,kainite, and leonite. Other potassium minerals occur only in minor amounts in association with the principal potassium minerals listedpreviously. The minerals can be described as follows (Schaller and Henderson 1932): • Polyhalite is the most abundant potassium mineral in the Carlsbad Area. Beds of nearly pure polyhalite have thicknesses up to 8 ftand beds a foot or more thick are numerous. • Sylvite often has a dark red or reddish-brown color due to hematite inclusions. Sylvite without the inclusions is a milky white color.Sylvite is typically mixed with halite and where clay is present in the mixture, it is in bands distinct from the sylvite. • Carnallite is massive and compact showing no crystal faces. Crystals where seen are typically less than 1 millimeter (mm) indiameter. It occurs in small blebs with halite and sylvite. • Langbeinite is found in distinct tetrahedral crystals that reach sizes up to ¾ inch. It is typically associated with halite and sylvite andoften some kieserite. It has a distinct pink color in most samples and has a higher compressive strength than sylvite. • Kainite is massive with poorly developed fibrous fracture surfaces and has a characteristic honey-yellow color. It is found in narrowbands between sylvite and langbeinite and is apparently a result of a reaction between the two. • Leonite is typically found in small quantities in mixtures of other minerals, notably kainite and sylvite. Its color ranges fromcolorless to pale yellow. It is also found with polyhalite and anhydrite, but the relationship is unclear. It has also been found as asecondary replacement for kieserite.

The HB Plant produces Muriate of Potash (MOP) from the solution mine brine. The long-term underground mining plan includes development and high-extraction, room-and-pillar mining in the 3, 4, 5, 7, 8, and 10 ore zones. Solution mining of the 1 and 3 ore zones in previously mined-out areas of the property is planned to continue long term. All MOP production at IPNM comes from the HB Solar SolutionMine in the 1 and 3 ore zones. Historical room-and pillar-mining operations at the HB complex recovered about 70% of the ore, leaving approximately 30% of the ore available for secondary recovery in pillars plus what can be recovered beyond the limits of the conventional mine works. Mining at the HB Solar Solution Mine recovers potash by injecting saturated saline NaCl brine into the old mine works to create underground leach lakes. Over time, the solution enriched with potash is pumped to the surface to solar evaporation ponds. Selective solar evaporation leaves behind a potash-enriched salt that is collected using scrapers, pumped and processed at the HB Plant. The solution mine comprises six injection wells, five extraction wells, and three monitoring wells.

In 2012, IPNM commenced filling the HB solar evaporation ponds. The extraction brine sourced from the mined-out areas of the 1 ore zones of the former underground workings of portions of HB Eddy, HB South, HB North, and the HB Crescent, collectively referred to as the HB Mine, contains approximately 21.7% NaCl and 7.0% KCl. The brine is collected and crystallized in 18 solar evaporation ponds. The HB flotation mill processes the harvested potash and salts from the solar evaporation ponds.

Conditioned injectate, made with NaCl-saturated brine, is injected to create underground leach lakes in the lower portions of abandoned subsurface mine workings. The solution mine comprises six injection wells, five extraction wells, and three monitoring/extraction wells.

As mining progresses, the brine strength is expected to decline and production is projected to fall from current levels of 180,000tons per year (tpy) to less than 150,000 tpy by 2045. Following the separation of ........