http://www.proactiveinvestors.com.au/companies/news/56604/south-boulder-mines-attracts-funding-from-hong-kong-investor-for-colluli-56604.html
South Boulder Mines attracts funding from Hong Kong investor for Colluli
Wednesday, July 30, 2014 by Proactive Investors
It appears by securing KLID as an investor in the Colluli Project, the
CMSC board and South Boulder now have a Chinese partner to secure an
offtake agreement.
South Boulder Mines (ASX:STB) shares are set to trade higher after the
company attracted investment from the Hong Kong based Kam Lung
Investment Development Company (KLID).
The company will issue to KLID 10 million shares at $0.185 to raise
A$1.8 million, which is a 13% premium to STB's 30 day VWAP.
The importance of the placement also delivers South Boulder a
strategic investor who is on the lookout for a binding offtake
agreement.
South Boulder and the Eritrean National Mining Company (ENAMCO) are
equal shareholders of the Colluli Mining Share Company (CMSC) which
will develop the Colluli Potash project.
The placement injects more funds into the company and adds to the $9
million cash balance at the end of June 2014, and will support the
completion of the Pre-Feasibility Study.
Funds will also be allocated to pilot laboratory tests on the process
design for potassium sulphate production from all salts in the Colluli
resource.
Paul Donaldson, managing director for South Boulder commented: "We are
pleased to have Kam Lung Investment Development Company as part of our
register as a significant shareholder.
"They have expressed a strong desire to support the success of the
project and as part of that commitment are now helping the Colluli
Mining Share Company (CMSC) secure offtake arrangements for potassium
sulphate produced from the resource.
"Our joint venture partner, the Eritrean National Mining Company
(ENAMCO) has been supportive of this arrangement and we continue to
work together to ensure the success of the project."
Pre-Feasibility work advancing
South Boulder said that the Pre-Feasibility study work has been
progressing well since the variations made to the development strategy
to consider the process of all potassium bearing salts in the
resource.
The company considers that the unique composition of the resource, its
close proximity to the coast, and shallow mineralisation (which
commences at only 16 metres) are key strategic advantages for the
economics of the project.
Options for KLID
The deal also gives KLID the option to buy an additional 8 million
shares, exercisable at $0.35 cents upon securing a binding offtake
deal for potassium sulphate on commercial terms acceptable to the CMSC
board.
This agreement is in effect for a period of 6 months from the date
that the current Pre-Feasibility results are released to the market.
Colluli's world-class resource
The Colluli resource is a unique combination of potassium bearing
salts suitable for the production of potassium fertilisers.
It hosts 1 billion tonnes of potassium salts and has a current JORC
Compliant Measured, Indicated and Inferred Resource.
This is comprised of 261.81Mt at 17.94% KCl or 11.33% K2O of Measured
Resources, 674.48Mt at 17.98% KCl or 11.36% K2O of Indicated Resources
and 143.50Mt at 18.00% KCl or 11.37% K2O of Inferred Resources.
The total is 1,080 Mt at 18.0% KCl or 11.35% K2O (total contained
potash of 194.09Mt KCl or 122.61Mt K2O).
Progression
Since announcing positive results from scoping work completed in late
2013 which considered processing all potassium bearing salts, South
Boulder has reinvigorated its project with a ramp up of activity,
including:
- The transport corridor and Anfile bay export area have been approved
- demonstrating the partnership between South Boulder and the Eritrean
National Mining Company (ENAMCO) is working well;
- A new study manager has been appointed, along with key personnel for
mine planning, geotechnical work, environmental and processing;
- Metallurgical testing including evaporation and brine tests appear
to be well underway;
- Process flow diagrams have been completed; and
- South Boulder has reaffirmed that it is pursuing Potassium Sulphate
as the process product in contrast with the original development which
focussed on potassium chloride.
Analysis
It appears by securing KLID as an investor in the Colluli Project, the
CMSC board and South Boulder now have a Chinese partner to secure an
offtake agreement.
This allows the project team to focus on the delivery of the
Pre-Feasibility and Feasibility Studies.
While the studies appear to have made significant progress, it appears
that STB are ensuring that work can continue seamlessly through to DFS
completion in 2015 and are not waiting too long to bolster their cash
position.
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Received on Wed Jul 30 2014 - 09:18:22 EDT