South Boulder Mines Releases Updated Study on Colluli Potash Project

Development News
The Colluli potash deposit is the world’s shallowest and the only open pit mining. What a Wonder?
The Colluli potash deposit is the world’s shallowest and the only open pit mining. What a Wonder?

By ProActiveInvestors,

South Boulder Mines (ASX: STB) has provided an update of the economic model for its Colluli Potash Project in Eritrea.

The company has generated a staged development scenario based on the key elements of the two previous Engineering Scoping Studies (ESS-1 and ESS-2) and the in progress Definitive Feasibility Study (DFS).

The staged development scenario assumes an operation commencing at 1 million tonnes per annum of Sylvinite processing only, expanding to 2 million tonnes per annum of Sylvinite and Carnallite processing after two years. 

The key metrics of the staged development scenario include a net present value (NPV) range of US$601 million to US$1.3 billion (based on post-tax, real discount rates of 7-10%) and an internal rate of return (IRR) of 15.1%.

South Boulder estimates that Colluli’s capital intensity is in the first quartile of emerging greenfield potash projects globally.

The base case assumes a US$450 per tonne flat real potash price, however an increase in the price to US$475 per tonne would increase the NPV to US$773 million and IRR to 16.5%.

Total CAPEX of US$1.29 billion, which is lower than the earlier estimation of US$1.5 billion and excludes working capital, will be externally funded.

Life of mine average steady state cash operating costs have been estimated at US$184 per tonne.


The staged development model draws on ESS-1 and ESS-2 and the conclusions of the DFS process to date.

It envisages:

– Construction in years one and two of a 1 million tonne per annum operation processing Sylvinite ore only, with the start of production in year three and ramp up to full production of 1 million tonnes per annum in year four; and

– Construction in year four and five of 1 million tonne per annum expansion operation processing Carnallite ore, with commencement of expansion project production in year six and ramp up to full production of 2 million tonnes per annum in year seven.

Mining will be by conventional open pit methods.

Processing facilities will be built at Colluli, and South Boulder will build, own and operate its own infrastructure, including the construction of a road to link the minesite to a new port with export facilities to be built at Anfile Bay.


South Boulder remains in discussions with the Eritrean National Mining Company (ENAMCO) regarding ENAMCO’s equity interest in the Colluli Potash Project.

Current negotiations envisage a 50% interest share for each of ENAMCO and South Boulder with all capital costs to be funded by South Boulder.


The DFS began in April 2012 and is around 50% complete.

As a consequence of the work completed on the DFS in the current financial year, South Boulder has already met the expenditure requirements attaching to its exploration licence for the 12 months ending July.

Key items in the work program such as social and environmental monitoring, geological block modelling and the finalisation of hydrogeological modelling are continuing along with resource optimisation, market and product analysis work.

South Boulder is also in discussions with, and considering approaches from, strategic investors regarding the potential for third party investment in the project.

The company has around $18.5 million in cash at the end of December 2012.

Colluli Potash Project – Plan View
Colluli Potash Project – Plan View