Date: Wed, 23 Nov 2011 15:11:27 +0100
South Boulder Mines scoping study for Colluli Potash Project returns NPV of US$1.3b
Wednesday, November 23, 2011 by
<http://www.proactiveinvestors.com.au/about_us> Proactive Investors
South Boulder Mines (ASX: STB) primary focus is on the Colluli Potash Project in Eritrea, which currently has a current JORC Resource of 548 million tonnes at 18.6% KCl, with a production timeline in 2016.
The company also holds a 100% interest in the Duketon Gold Project in Western Australia.
A Scoping Study on the Colluli Potash Deposit has returned highly favourable economics for South Boulder at Colluli - including an NPV of US$1.33 billion and an IRR of 40.6%. It confirmed the technical and financial viability of mining and processing of the Colluli project to becoming a significant potash producer.
South Boulder Mines (
<http://www.proactiveinvestors.com.au/companies/sponsors_landing/1142/south-
boulder-mines-1142.html> ASX: STB) has received some highly favourable
economics from discounted cash flow financial modelling for the base case
Stage 1 open pit mining and processing of the Colluli Potash Deposit in
Eritrea.
Based on around 16% of the JORC Resource of 564.4 million tonnes at 18.60% KCl, for total contained potash of 104.9 million tonnes - a net present value of US$1.33 billion (12% discount rate) was returned, with an internal rate of return of 40.6%.
Capital expenditure including contingency came in at US$0.74 billion, delivering project revenue of over US$6 billion. The production rate is based on 1 million tonnes annually from an open pit, for a study mine life of 17 years.
The study has been completed by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (ERCOSPLAN) with input from a number of independent organisations and professionals under the guidance of Non-Executive Director Dr. Chris Gilchrist.
With only a portion of the resource used in the model, South Boulder said that it considers the mine life upside of the project to be immense and likely to be in excess of 50 years once details of Sulphate of Potash (SOP) and K-Mg sulphate production is included.
Importantly for the resource at Colluli, 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.
The current Exploration Target is 1.25 to 1.75 billion tonnes at 18% to 20% sylvinite KCl.
Stage 1 and Stage 2 production
The engineering study completed last month determined a level of 1 million tonnes of annual production of standard muriate of potash (MOP) from sylvite mineralisation as the optimised production rate for the first stage of development.
The study has considered Stage 1 MOP production from sylvite mineralisation only and does not include the Stage 2 sulphate of potash and K-Mg sulphate production from the extensive carnallite, kainite and kieserite mineralisation located directly below the sylvite.
Investigation of Stage 2 production and associated expansion plans are to follow as part of the Definitive Feasibility Study due for completion in 2013.
The outcome for South Boulder is that the study has confirmed the technical and financial viability of mining and processing at the project, with the company continuing the transition into a significant potash producer with production scheduled for 2016, or sooner.
Expressions of interest, under review
South Boulder said that numerous expressions of interest to provide project funding for Colluli have been extended to the company, and a number of options are under initial review.
Importantly for South Boulder, the company has strong support from the Eritrean Government to build a long term economically and environmentally sustainable resource project.
Eritrea - an east African country
Eritrea is a stable jurisdiction that is fully supportive of South Boulder activities, with the project awarded to the company by an open tender process.
The deal structure is as follows:
- Exploration Phase, South Boulder 100% ownership;
- After Mining Lease and BFS, the Government receives 10% of the project for free and can purchase up to another 30% of the project at fair value;
- The 40% is a full equity participation interest, Government to pay 40% of operating and capital costs;
- 3.5% royalty on potash and corporate tax rate of 38%; and
- The deal structure paves the way for a secure and reliable partnership.
A Scoping Study on the Colluli Potash Deposit has returned highly favourable economics for South Boulder at Colluli - including an NPV of US$1.33 billion and an IRR of 40.6%. It confirmed the technical and financial viability of mining and processing of the Colluli project to becoming a significant potash producer.
South Boulder Mines eyes above 50 year potash mine life at Colluli
Tuesday, 22 November 2011
South Boulder Mines (
<http://www.proactiveinvestors.com.au/companies/sponsors_landing/1142/south-
boulder-mines-1142.html> ASX: STB) has received some highly favourable
economics from discounted cash flow financial modelling for the base case
Stage 1 open pit mining and processing of the Colluli Potash Deposit in
Eritrea.
Based on around 16% of the JORC Resource of 564.4 million tonnes at 18.60% KCl, for total contained potash of 104.9 million tonnes - a net present value of US$1.33 billion (12% discount rate) was returned, with an internal rate of return of 40.6%.
Capital expenditure including contingency came in at US$0.74 billion, delivering project revenue of over US$6 billion. The production rate is based on 1 million tonnes annually from an open pit, for a study mine life of 17 years.
The study has been completed by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (ERCOSPLAN) with input from a number of independent organisations and professionals under the guidance of Non-Executive Director Dr. Chris Gilchrist.
With only a portion of the resource used in the model, South Boulder said that it considers the mine life upside of the project to be immense and likely to be in excess of 50 years once details of Sulphate of Potash (SOP) and K-Mg sulphate production is included.
Importantly for the resource at Colluli, 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.
The current Exploration Target is 1.25 to 1.75 billion tonnes at 18% to 20% sylvinite KCl.
Stage 1 and Stage 2 production
The engineering study completed last month determined a level of 1 million tonnes of annual production of standard muriate of potash (MOP) from sylvite mineralisation as the optimised production rate for the first stage of development.
The study has considered Stage 1 MOP production from sylvite mineralisation only and does not include the Stage 2 sulphate of potash and K-Mg sulphate production from the extensive carnallite, kainite and kieserite mineralisation located directly below the sylvite.
Investigation of Stage 2 production and associated expansion plans are to follow as part of the Definitive Feasibility Study due for completion in 2013.
The outcome for South Boulder is that the study has confirmed the technical and financial viability of mining and processing at the project, with the company continuing the transition into a significant potash producer with production scheduled for 2016, or sooner.
Expressions of interest, under review
South Boulder said that numerous expressions of interest to provide project funding for Colluli have been extended to the company, and a number of options are under initial review.
Importantly for South Boulder, the company has strong support from the Eritrean Government to build a long term economically and environmentally sustainable resource project.
Eritrea - an east African country
Eritrea is a stable jurisdiction that is fully supportive of South Boulder activities, with the project awarded to the company by an open tender process.
The deal structure is as follows:
- Exploration Phase, South Boulder 100% ownership;
- After Mining Lease and BFS, the Government receives 10% of the project for free and can purchase up to another 30% of the project at fair value;
- The 40% is a full equity participation interest, Government to pay 40% of operating and capital costs;
- 3.5% royalty on potash and corporate tax rate of 38%; and
- The deal structure paves the way for a secure and reliable partnership.
Originally published at:
<http://www.proactiveinvestors.com.au/companies/news/22443/south-boulder-min
es-eyes-above-50-year-potash-mine-life-at-colluli-22443.html>
http://www.proactiveinvestors.com.au/companies/news/22443/south-boulder-mine
s-eyes-above-50-year-potash-mine-life-at-colluli-22443.html
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