South Boulder Mines: Eritrean Government looks to increase Colluli Potash
Project stake
26.03.2012
<
http://www.proactiveinvestors.com/companies/overview/1154/South+Boulder+Min
es> South Boulder Mines (
<
http://www.proactiveinvestors.com.au/companies/sponsors_landing/1142/south-
boulder-mines-1142.html> ASX: STB) has received a further vote of confidence
in the company's Colluli Potash Project from the Eritrean Government, with
potential for a joint venture agreement.
The government has requested that South Boulder submit a proposal to begin
discussions regarding the Eritrean National Mining Corporation's (ENAMCO)
intention to acquire up to a 30% paid participating interest in Colluli.
This is in addition to ENAMCO's existing 10% interest, which is to be
carried 3.3% by ENAMCO and 6.7% by South Boulder.
Earlier in 2012 South Boulder was looking to assess potential financial,
offtake and development partners for the Colluli Project.
Lorry Hughes, managing director of South Boulder, said the company welcomed
the request by ENAMCO.
"Commencing discussions now will allow South Boulder and ENAMCO to work
towards formation of a Joint Venture and apply for the appropriate mining
exploitation license in a timely manner," Hughes said.
"Finalising the terms of the 30% paid participating interest will provide
certainty and facilitate South Boulder's efforts to secure additional
investors and proceed through DFS, project financing and construction."
Consideration for the interest has not yet been given, however the
government has the right to purchase a 30% stake in the project at fair
value following completion of the Bankable Feasibility Study.
South Boulder is now progressing a Definitive Feasibility Study at Colluli,
based on initial production of 1 million tonnes per annum. The Definitive
Feasibility Study is on track for completion in 2013, followed by production
in 2016.
Colluli project viability confirmed
An Engineering Scoping Study delivered in October 2011 confirmed the
viability of the Colluli Project with some very positive outcomes.
The highlight from the study is a conservative start-up base case to produce
an initial 1 million tonnes per annum of standard MOP (KCl) has been
determined - which would utilise shallow open pit mining methods for 11
years.
Start up capital cost was estimated at US$0.74 billion, which is expected to
generate a pre-tax Net Present Value of US$1.33 billion.
Where the study really gets interesting, is that there is scope to
significantly increase production rates and mine life to more than 50 years.
Substantial production upside is expected from the large resource, with the
deposit remaining open in many directions.
South Boulder is continuing to test these extensions, with resource
definition and delineation drilling continuing.
The current resource consists of 564.4 million tonnes at 18.60% KCl, for
total contained potash of 104.9 million tonnes.
Importantly, some of the resource sits in the higher confidence categories,
with Measured 133.7 million tonnes at 17.55% KCl, Indicated 343.3 million
tonnes at 17.38% KCl, and Inferred 87.3 million tonnes at 24.96% KCl.
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Received on Mon Mar 26 2012 - 13:25:47 EDT
