Colluli Potash Mine Life Estimate Exceeds 200 Years

Development News

Colluli Potash Project in Eritrea: It is the world’s shallowest deposit – the only open pit deposit in the world – the world’s closest to the coast (65Km) potash deposit, and – the lowest mining cost in the industry (US$75 per tonne). Under the new estimation, its mine life has now increased from 50 to 200 years

Colluli Potash mine is the closest to coast potash deposits in the world and located near to the key growth markets for potassium fertiliser – primarily India and China
Colluli Potash mine is the closest to coast potash deposits in the world and located near to the key growth markets for potassium fertiliser – primarily India and China

By Proactive Investors,

SOUTH Boulder Mines (ASX:STB) is making steady progress at its Colluli Potash Project in Eritrea, where it is conducting economic assessments and project planning that could confirm its potential to process all salts present.

This includes potassium sulphate, a premium potassium fertiliser which currently carries a price premium of approximately $300 per tonne, is ongoing.

This could deliver a significant boost to Colluli’s economics, including a considerably lower strip ratio and therefore reduced costs. 

Mining work completed last year demonstrated that mining all salts resulted in mining cost reductions of over $50 per tonne of product relative to the staged development model and over $100 per tonne of product relative to their DFS case.

The production of potassium sulphate represents further economic enhancement of the project.

Colluli Potash Project

Colluli hosts a large combined Resource of 1.08 billion tonnes at 18% KCl for 194 million tonnes of contained potash that promises a long mine life of more than 200 years.

This includes a Measured Resource of 261 million tonnes at 17.94% KCI.

The project is located in the Danakil Depression region of Eritrea, and is just 65 kilometres from the coast comprising around 400 square kilometres. It is one of the closest potash resources to the coast globally.

It is positioned favourably relative to the key growth markets for potassium fertiliser – primarily India and China.

That South Boulder’s Eritrean joint venture partner ENAMCO endorses the company’s approach to process all salts further demonstrates the value of project.

Under this strategy, processing the sylvinite, carnallitite and kainitite will result in a strip ratio of approximately 2.5:1.

This compares with the previous strip ratio of 14:1 under the original Feasibility Case covering just sylvinite, which makes up just 16% of the resource, and the staged development strip ratio of 7:1 for sylvinite and carnallitite.

Mining cost is estimated at US$75 per tonne versus the previous US$195/t and US$122/t while the expected mine life is estimated at more than 200 years, well above 17 years under the original plan and more than 50 years under the staged development option.

Another draw card of processing all the salts at Colluli is that it allows for the production of K2SO4, which currently draws a price of US$600/t FOB. This compares to KCI, which is currently priced at US$310/t.

South Boulder’s current forecast for K2SO4 is US$562/t (currently $US600/tonne) while KCI could draw a price of US$450/t (currently $US300/tonne).

This is further supported by mineralisation at Colluli favouring the production of SOP (Potassium Sulphate) compared to Muriate of Potash (MOP).

That the project also has the potential to produce MOP and SOPM (sulfate of potash magnesia) is also encouraging.

Colluli is well supported by its proximity to key infrastructure as well as the presence of in country mining support.

Road Ahead

Once the path forward is established, South Boulder and ENAMCO will seek to borrow up to 70% of development costs from a third party bank or lender with the required equity funds being contributed by South Boulder.

Of this equity funding, 50% shall be preferentially paid back from 50% of the available funds after annual payment obligations to third parties have been satisfied. The remaining 50% will be available for profit distribution to shareholder.

After first production, funds where required shall be financed by the Colluli Mining share company either through its own internal cash or from debt funding decided by the board.

Key Catalysts

The following are key catalysts for Colluli:

– Metallurgical Testwork completion in the third quarter of 2014;
– Finalising the Resource in the same time period;
– Preliminary Feasibility Study by the end of 2014;
– Feasibility Study by the end of the first quarter 2015;
– Social Environmental Impact Assessment in the second quarter of 2015;
– Mining Licence Application from third quarter 2015 to the end of 2015;
– Funding in the second quarter of 2016;
– Detailed Engineering from the second quarter of 2016; and
– Start of Phase 1 construction in the fourth quarter of 2016.


There are strong share price catalysts ahead for South Boulder Mines and execution of each would provide fertile ground for re-rating of its shares.

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