Iodine prices continued to hold around $27 for the first quarter of 2010. This price has been confirmed for the second quarter, and demand remains strong, indicating the potential for slight increases later in the year. Grades mined continue to be higher than plan as a result of encountering higher grade remnant ores from previously mined areas.

Three additional environmental permits for drilling have been received from government authorities on the Salvador potash project in northeastern Brazil. There are eight more applications in process at this time. Drilling on the first exploration hole of a three hole program started slowly, and recent severe rains have hampered productivity. At this time, the first hole is expected to be completed by the end of the second quarter. The second drill hole, located on the mainland to the north of the first hole, is in progress.

The development of the Company's nitrate fertilizer project at the Aguas Blancas Mine is on hold to allow management to focus on resolving the agitated leach plant operational issues. Once re-activated, additional capital will be required to fund completion of the fertilizer plant designed for production of 70,000 tonnes per year.

Iodine prices remained stable at approximately $27 per kilogram during the latter part of 2009. This price is expected to be maintained with little change through the first half of 2010 and perhaps longer. There is some downward market pressure on this price, but to date it has not affected major volumes of iodine. The Company continues to make significant progress in increasing iodine production by optimizing heap leach operations, increasing volume of ore to the leach pads and higher iodine grades.

Three additional environmental permits for drilling have been received from government authorities on the Salvador potash project in northeastern Brazil. There are eight more applications in process at this time. Drilling on the first exploration hole of a three holes program started slowly, but has improved in the early part of 2010. This hole is expected to be completed in the second quarter of 2010 to a depth of 1,500 meters.

The development of the Company's nitrate fertilizer project at the Aguas Blancas Mine is on hold in order to preserve cash and also for management to focus on resolving the agitated leach plant operational issues. Once re-activated, additional capital will be required to fund completion of the fertilizer plant designed for production of 70,000 tonnes per year.

The all time high price of iodine experienced in the first quarter of this year has softened somewhat to a stable level of $27 per kilogram, compared to a price of $24 per kilogram during the same period last year. Iodine prices are expected to remain at this level for the remainder of the year and into the first quarter of 2010. The Company has made significant progress in increasing iodine production by optimizing heap leach operations, increasing volume of ore to the leach pads and higher iodine grades.

Environmental permits for drilling have been received from government authorities on the Salvador potash project in northeastern Brazil and the drill program is expected to commence in the latter part of November 2009.

The development of the Company's nitrate fertilizer project at the Aguas Blancas Mine is still on hold while management focuses on resolving the agitated leach plant operational issues.

Once re-activated, additional capital will be required to fund completion of the fertilizer plant designed for production of 70,000 tonnes per year.

The all time high price of iodine experienced in the first quarter of this year has softened somewhat during the second quarter, but still remains in excess of $27 per kilo, compared to a price of $24 per kilo during the same period last year. Iodine prices are expected to remain at this level for the remainder of the year, but will naturally depend on world economic developments. The Company will continue to focus on maintaining and increasing iodine production at its Aguas Blancas Mine by optimizing heap leach operations while modifications to the feed system of the agitated leach plant are being installed.

Groundwork is underway on the Company's potash project in northeastern Brazil in the form of environmental permitting of selected drill targets. Completion of permitting is expected during the third quarter at which time drilling is expected to commence.

The development of the Company's nitrate fertilizer project at the Aguas Blancas Mine is still on hold while management focuses on resolving the agitated leach plant operational issues.

Once re-activated, additional capital will be required to fund completion of the fertilizer plant designed for production of 70,000 tonnes per year.

The all time high prices, in excess of $28 per kilogram, for iodine and lower production costs contributed to the Company's income from mining operations of $1.3 million during the first quarter of 2009. Iodine prices are expected to remain at attractive levels for the remainder of the year, but will naturally depend on world economic developments. The Company will continue to focus on maintaining and increasing iodine production by optimizing heap leach operations while technical issues related to the conversion to the agitated leach plant are addressed.

Groundwork is underway on the Company's potash project in northeastern Brazil in the form of geophysical and geological work for selection and permitting of drill targets within the project area. Drilling is expected to commence in early third quarter of 2009.

The Company expects to commence the development of the nitrate fertilizer project once market conditions improve and the agitated leach plant is operational. Additional capital will be required to fund completion of the fertilizer plant.

In response to the unprecedented global credit crisis, the Company has taken measures to preserve existing capital, which includes deferring capital expenditures which do not relate directly to the production of iodine. The nitrate fertilizer project has been temporarily deferred and new business development has been suspended.

To return the Company to a positive cash flow position, the Company is focusing immediate efforts on sustaining and expanding iodine production. This will be done by maximizing the heap leach operations while the Company addresses the technical issues related to the crushing and grinding system of the agitated leach plant. The Company has also initiated a series of cost-saving measures, including rationalization of personnel and the use of supplies and services.

The current union labor contract at Aguas Blancas expired in early April 2009 and was recently successfully renegotiated for three years on acceptable terms.

At the corporate level, the Company is reducing short-term debt by repaying loans as they become due.

The Company anticipates extending for another year an $8.5 million loan which becomes due in May 2009. This loan was used for the completion of the new powerline.

As a result of the CDN$50 million financing completed in August, 2008, the Company believes existing funds are sufficient to complete necessary capital expenditures during 2009 for completing the agitated leach plant and for general corporate activities.

The iodine market has remained stable during 2008 in spite of decreases in other commodity markets.

Iodine prices are expected to remain at fairly stable levels into 2009. Iodine contract sales averaged $24.25 per kilogram during the fourth quarter of 2008 as compared to $23.50 kilogram in the same period of last year.

Recent decreases in the price of sulfur, sulfuric acid, caustic soda, fuel and freight rates are expected to benefit the Company in the coming months by decreasing production costs for iodine.

The Company has started a potash exploration program in the Reconcavo Basin of northeastern Brazil. Groundwork is underway in the form of geophysical and geological work for selection and permitting of drill targets within the project area. Drilling is expected to commence during the second quarter of 2009.

In response to continuing global financial developments, the Company intends to return to positive cash flow by cutting costs, increasing production, and preserving capital. It will take the time to properly develop its assets and the Company is deferring capital expenditures which do not relate directly to the production of iodine. In an effort to return to a positive cash flow, the Company has started to place more ore on the heap pads while the agitated leach plant is not operational.

The Company has also initiated cost-saving measures, including a reduction in personnel, particularly at the corporate level. The Company is repaying short-term loans which became due and intends, if possible, to rollover the powerline loan of $8.5 million which becomes due in May 2009. Subsequent to September 30, 2008, $7.9 million has been repaid and $1.5 million borrowed, repayable in December 2008.

The Company is focused with immediate efforts on sustaining and expanding iodine production. This will be done by maximizing the heap leach operations while the Company addresses the technical issues related to the crushing and grinding system of the agitated leach plant. Full start-up of the agitated leach plant is expected to be operational in the first half of 2009. The delay in converting from the heap leaching system to the agitated leach plant has affected iodine production, resulting in lower levels than anticipated for this year. Consequently, the lower production will result in lower sales revenue for this year compared to the previous year. The Company is taking aggressive measures to address these issues in its revised mine plan.

The iodine market has remained stable in spite of the recent decreases in other commodity markets. Iodine prices are expected to remain at fairly stable levels for the remainder of the year and into 2009. Quarterly contract sales are currently averaging $24.25 per kilogram as compared to $23.50 kilogram in the same period of last year. Recent decreases in the price of sulfur, sulfuric acid, caustic soda, fuel and freight rates are expected to benefit the Company in the coming months by decreasing production costs for iodine. Production costs will also improve due to recent strengthening of the U.S. dollar relative to the Chilean pesos as a majority of costs are paid in Chilean pesos.

Following approval by the Board in June of this year, the Company initiated the engineering and procurement phase of a new nitrate fertilizer plant to be built at Aguas Blancas. In response to the continuing global financial crisis, the major capital expenditures for the plant have been deferred.

The Company has started a potash exploration program in the Reconcavo Basin of northeastern Brazil. Groundwork is underway in the form of geophysical and geological work for selection of drill targets within the project area. Exploration data in the form of geophysics and geology are being compiled and analyzed for selection of drill targets. The Company's response to the current global financial crisis may affect the timing of the drill program.

The Company continues to grow towards becoming an important iodine and fertilizer producer in South America. Internal growth at the Aguas Blancas Mine, coupled with the new Salvador Potash Project in Brazil is expected to result in significant future growth for the Company.

Iodine production at the Aguas Blancas iodine plant continues to head towards production capacity of 1,500 tonnes per year. This will be done by converting from the present heap-leaching method to agitated leaching. Commissioning of the new agitated leach plant is currently underway. Due to technical issues related to the crushing and grinding system, full start-up may be delayed to the fourth quarter of this year. These delays may affect iodine production resulting in lower levels than anticipated for the year, but a total of 950 tonnes is expected by year-end The lower production will likely result in lower sales revenue for this year than the previous year. Actual production levels will depend on the quantity and grade of caliche ore available from mining activities during the remainder of the year as well as the actual date of start-up for the agitated leach plant. The Company is taking aggressive measures to address these issues both in mining operations and in commissioning of the agitated leach plant.

Iodine prices are expected to remain at fairly stable levels for the remainder of the year. Quarterly contract sales are currently averaging $24.25 per kilogram.

Following approval by the Board in June of this year, the Company has initiated the engineering and procurement phase of a new nitrate fertilizer plant to be built at Aguas Blancas. It is anticipated the new plant will be in production at a rate of 70,000 tonnes per year during the later half of 2010.

The Company has started a potash exploration program in the Reconcavo Basin of northeastern Brazil. Potash as an agricultural fertilizer is meeting with increased demand world-wide. It is anticipated a sixmonth drilling program will be commenced in the fourth quarter of this year. The success of the initial phase of this program will determine succeeding developments.

Growth opportunities for the Company are under constant review, through exploration, joint-ventures and acquisition of new projects. At any given time, the Company could be involved in one or more discussions and activities relating to these types of opportunities, although there is no assurance that such activities will result in definitive transactions.

After the start-up and commissioning period for the new agitated leach plant, full iodine production is expected to be converted from heap leaching in the third quarter of 2008. Production is expected to ramp up from the current annualized production of 1,000 Mt to a rate of 1,500 Mt of prilled iodine. Besides an increase in production, the new plant will render several operational and cost efficiencies. The new plant will use less water compared to the current heap leach operations resulting in a direct cost savings. Recovery of iodine-nitrate salts from the caliche ore is expected to increase from the current level of approximately 55% with the heap leach system to in excess of 75% using the new agitated leach plant. The processing time for leaching the ore in the new plant will be significantly reduced and eliminates having to build additional leach pads thereby reducing operating capital requirements.

In the first three months of 2008, the iodine market showed continuing strength in demand. Marginal price increases are expected during the remainder of the year. The Company expects revenues to grow in the second half of the year along with iodine production as the agitated leach plant reaches expected capacity. World demand has risen due to the increase in industrial uses particularly in the manufacturing of LCD screens for computers and televisions, X-ray contrast media and also due to the growth of health care programs introduced in China.

The iodine produced at Aguas Blancas is of high quality and widely accepted in the world markets. Its many uses coupled with growing demand have firmly established the Company as a reliable and key supplier in the market.

World-wide use of inorganic nitrate fertilizers has experienced a 5% growth in the last five years with current demand of approximately 1.3 million Mt per year. Potassium nitrate, sodium nitrate and mixed sodium-potassium nitrate fertilizers from Chile are considered natural in origin and find world-wide application as specialty fertilizers in agriculture. The Company believes that prices will continue to increase in 2008.

Aguas Blancas has a series of large evaporation ponds which contain nitrate salts. The Company has completed a feasibility study for the development of nitrate fertilizer. The Board has approved the construction of $60 million nitrate fertilizer plant designed to initially produce 70,000 tonnes of nitrate fertilizer per year.

The Company has established an aggressive growth plan which includes increasing the resource and reserve base at the Aguas Blancas mine as well as examining other industrial mineral opportunities. Exploration opportunities are being considered along with possible joint ventures and/or acquisitions.

The new agitated leach plant is expected to begin production in early May. Production will ramp up over the next few months to an annualized rate of 1,500. In addition to the increase in production, the new plant will offer several operational and cost advantages to the Company.

The new plant will use less water compared to the current heap leach operations resulting in a direct cost savings and conservation of water. Recovery of iodine-nitrate salts from the caliche ore is expected to increase from the current level of approximately 55% with the heap leach system to in excess of 75% using the new agitated leach plant. This was confirmed by the pilot plant operations conducted in 2006. The processing time for leaching the ore in the new plant will be significantly reduced and eliminates the need to continuously build additional leach pads thereby reducing operating capital requirements.

The iodine market continues to be strong with price increases expected to continue in 2008. The Company expects revenues in 2008 to be higher as iodine production is expected to increase when the agitated leach plant becomes fully operational. World demand has risen due to the increase in industrial uses particularly in the manufacturing of LCD screens used in computers and televisions, X-ray contrast media and also due to the child health care programs introduced in China, where it has become a national concern to treat drinking waters with iodine to prevent widespread disease.

The iodine produced at Aguas Blancas is of high quality and widely accepted in the world markets. The many uses of iodine coupled with the growing demand have firmly established the Company as a reliable and key supplier in the market.

World-wide use of inorganic nitrate fertilizers has experienced a 5% growth in the last five years with current demand of approximately 1.3 million Mt per year. Potassium nitrate, sodium nitrate and mixed sodium-potassium nitrate fertilizers from Chile are considered natural in origin and find world-wide application as specialty fertilizers in growing tobacco, fruits and vegetables. The Company believes that fertilizers prices are expected to continue to grow in 2008.

The Company has a series of large evaporation ponds which contains nitrates salts and has completed a feasibility study for the development of nitrate fertilizer. The Company expects to make a decision during the second quarter of 2008 on production of nitrate fertilizers based on the results of the feasibility study.

The Company has established an aggressive growth plan which includes increasing the resource and reserve base at the Aguas Blancas mine as well as examining other industrial mineral opportunities in South America. Other exploration opportunities are being considered along with possible joint ventures and/or acquisitions.

Results year to date for the Company's operations at the Aguas Blancas Mine in the Atacama Desert of northern Chile were in line with expectations. Iodine production has been increased to a current annualized level of approximately 1,000 tonnes per year as a result of the Company's on-going improvement program at Aguas Blancas with continuing improvements expected when the full mechanical agitated leach becomes operational in the first quarter of 2008. The plant is designed for 125 tonnes per month or a total of 1,500 tonnes per year. Upon conversion to continuous agitated leach, the Company is expecting to substantially increase overall recoveries with iodine production capacity anticipated to reach 125 tonnes per month, or 1,500 tonnes per year. In addition, water use will be economized, processing time will be drastically reduced from months to hours and the operational costs will come down over the long term. The new plant is expected to be operational by the first quarter of 2008.

In addition, the Company is nearing completion of the feasibility study for development of nitrate fertilizer production. A series of large evaporation ponds have been completed and pond floors are being filled with iodine plant discharge solution containing sulphate and nitrate salts for eventual precipitation and production of plant feedstock. The Company expects to make a decision early next year on production of nitrate fertilizers based on the results of the feasibility study.

The iodine market continues to be strong with third quarter sales averaging a ten year high. The Company expects sales and revenues to be higher in the fourth quarter of 2007. World demand has been high due to the increase in industrial uses particularly in the manufacturing of LCD screens used in computers and televisions, X-ray contrast media and also due to the child health care programs introduced in China, where it has become a national concern to treat drinking waters with iodine to prevent widespread disease.

The relatively strong quarterly increases in the price of iodine during the nine months ending September 30, 2007, are expected to stabilize during the fourth quarter of 2007.

The iodine produced at Aguas Blancas is of high quality and widely accepted in the world markets. The many uses of iodine coupled with the growing demand have firmly established the Company as a reliable and key supplier in the market.

World-wide use of inorganic nitrate fertilizers has experienced a 5% growth in the last five years with current demand of approximately 1.3 million tonnes per year. Potassium nitrate, sodium nitrate and mixed sodium-potassium nitrate fertilizers from Chile are considered natural in origin and find worldwide application as specialty fertilizers in growing tobacco, fruits and vegetables. The outlook for the future production of nitrate fertilizers at Aguas Blancas will depend on the outcome of the feasibility study.

The Company has established an aggressive growth plan which includes increasing the resource and reserve base at the Aguas Blancas mine as well as examining other industrial mineral opportunities in South America. Other exploration opportunities are being considered along with possible joint ventures and acquisitions.