By Vivien Diniz2 - Exclusive to Potash Investing News3
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South Boulder Mines Signs Joint Venture Agreement with Eritrean
Government4On May 14, Australias South Boulder Mines (ASX:STB5)
announced a 50/50 joint venture agreement with the Eritrean National
Mining Corporation (ENAMCO) for its Colluli potash project in
Eritrea. As part of the terms of the agreement, both parties will
hold a 50-percent stake in the project via a newly formed company,
Colluli Mining Share Company (CMSC). CMSC will undertake further
exploration, development and operation of the potash project.
The agreement with the government is no small win for the company.
The joint venture will provide South Boulder with a fair amount of
certainty as to the economic and fiscal basis for the development of
the project; not to mention facilitating attracting potential
strategic investors for the project.
The Eritrean government is highly supportive of of the potash project.
Colluli potash project
The Colluli potash project is the companys flagship project, located
in the Danakil Depression, a region known to most investors for
hosting Allana Potashs (TSX:AAA7) Dallol project. Colluli has a JORC-
compliant resources of 1.08 billion tonnes of contained potash
grading at 18-percent KCl. According to the companys fact sheet,
Colluli is the worlds shallowest potash deposit, which facilitates
extraction via open-pit mining. There are currently no operating open-
pit potash mines.
The project has had an engineering scoping study that returned an
economic 1 million tonne per annum mine can be build for a
significant discount to typical potash mines. South Boulder has also
provided investors with updated economics for the project which have
shows a total capex (without working capital) of US$1.2295 billion.
With a potash price of $450 per tonne, the project has an net present
value of $1.3 billion with a discount rate of 7 percent and an IRR of
15.1 percent.
The company is currently working on its definitive feasibility study.
Should all go according to plan, production is slated for 2016.
The Danakil Depression
The Danakil Depression is a desert basin that stretches from southern
Eritrea to north-eastern Ethiopia. The region has a history of
artisanal salt production. According to Beat the Market Stock Picks,
the Danakil Depression is the fourth most important potash belt in
the world (the other three being in Saskatchewan, Brazil and Russia).
As mentioned, Allana Potash is working on the Dallol potash project
on the Ethiopian side of the Danakill depression. The project totals
1.2 billion tonnes of potash. The company has applied for a mining
license and is hoping to start production in Q4 of 2015.
Received on Wed May 15 2013 - 21:14:19 EDT
