South Boulder Mines near surface Potash hits continue unabated at Colluli, Eritrea

Development News
eritrea location
The world's shallowest potash deposit found in Eritrea

By John Phillips (Proactive Investors),

South Boulder Mines (ASX: STB) string of high grade near surface potash discoveries continues at the Colluli Potash Project in Eritrea.

The significance of the latest hits at Area B is the confirmation by the company of the current exploration target of 1.25 to 1.75 billion tonnes at 18-20% KCl. South Boulder said exploration at the Area B discovery continues to intersect potash from depths as shallow as 16 metres, with assays currently pending from the new discovery area – however, sylvinite has been visually identified in core from 13 of 21 holes drilled to date.

New results that have been received include:

– 8.07 metres of kainitite from 16.51 metres;
– 7.56 metres of kainitite from 48.44 metres;
– 6.54 metres of kainitite from 74.15 metres; and
– 5.58 metres of sylvinite from 65.59 metres.

At the project the current JORC Resource is 548 million tonnes at 18.6% KCl, for total contained potash of 102 million tonnes.

South Boulder has an initial strategy to consider producing 2 to 10 million tonnes of potash annually from an open pit operation in 2016/2017, which is a substantial target considering the current global production is 55 million tonnes.

The company also has the potential to be the lowest cap-ex and op-ex operation in the world, with industry production costs around USD$100 to USD$250 per tonne, compared to the potash price of around USD$500 a tonne. South Boulder has forecast operating costs to be in lower 25% of the industry.

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.