On Feb. 19, 2013, Passport Potash Inc. issued a total of 2,224,499 units pursuant to its private placement to 12 individuals/entities at a price of 18 cents per unit for total gross proceeds of $400,499.82. Each unit consists of one common share and one-half of one common share purchase warrant. Each whole warrant entitles the holder to purchase one additional common share at a price of 25 cents per warrant share for a period of five years expiring on Feb. 19, 2018. In connection with this private placement, the company paid a cash finder’s fee of $315 and 1,750 common share purchase warrants to an entity in British Columbia, Canada, a cash finder’s fee of $6,300 to an entity in Florida, and a cash finder’s fee of $1,399.86 and 7,777 finder warrants to an entity in Lancashire, United Kingdom. The finder warrants have the same terms as the warrants.

Concurrently, on Feb. 19, 2013, the company issued a total of $5,305,540 (U.S.) in convertible debentures having a term until Feb. 14, 2013, and an interest rate of 15 per cent per year, 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 common stock of the company at the option of the holder, in whole or in part, at a price of 19 U.S. cents 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 the company’s outstanding common stock and certain distributions to all holders of the company’s common stock. In addition, each holder of a debenture received five common share purchase warrants for each $1 (U.S.) of principal amount of debenture, entitling the holder to acquire one share of common stock of the company for each warrant at an exercise price of 19 U.S. cents 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 the company’s assets. In connection with this private placement of debentures, the company paid a cash finder’s fee of $54,600 (U.S.) to an entity in New York, a cash finder’s fee of $2,197.86 (U.S.) and 11,567 common share purchase warrants to an entity in British Columbia, Canada, and a cash finder’s fee of $17,159.94 (U.S.) and 90,315 finder warrants to an entity in Lancashire, United Kingdom. The finder warrants have the same terms as the warrants.

The proceeds from the unit offering and the debenture offering will be used for the preliminary economic assessment, which the company anticipates publishing at the end of the first quarter of 2013, and for general working capital.