South Boulder Mines to expedite DFS at Colluli in Eritrea with A$10.1m
capital raising
07/12/20118:20 pm
<
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) will accelerate the completion of the
Definitive Feasibility Study on the Colluli Open Cut Potash Project in
Eritrea with a planned capital raising of A$10.1 million.
The company will exit a trading halt this morning after announcing the
non-renounceable entitlement offer of up to 9.2 million shares at $1.10 per
share on the basis of one new share for every 10 held.
The company is also offering one attaching unlisted option for every two new
shares subscribed for, exercisable at $1.60 each and expiring 12 months
after the date of issue.
The record date for the offer is 22 December 2011. The offer opens on 23
December 2011 and closes on 17 January 2012.
A recent Scoping Study on the Colluli Open Cut Potash Project returned
highly favourable economics for South Boulder.
Based on around 16% of the JORC Resource of 564.4 million tonnes at 18.6%
KCI, 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.
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.
Potash Demand
Importantly for South Boulder, demand for potash is expected to rise due to
increased population and standard of living and worldwide decreased arable
land. The biggest growth markets are India, China and Brazil.
The potash market is currently around 50 million tonnes per annum and
growing.
The Colluli project is strategically located close to major infrastructure
and 70 kilometres from the coast, and is the closest supplier to India and
nearby to Asia.
South Boulder is targeting first production in 2016 or sooner.
Cash Advantage
Funds from the capital raising will add significantly to South Boulder's
cash reserves of around $14 million.
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Received on Wed Dec 07 2011 - 17:46:12 EST