South Boulder’s (ASX: STB) flagship project is the world class Colluli Potash Fertilizer Project in Eritrea where mine production of 1Mt p.a. is scheduled for 2016 or sooner from the world's first open cut potash mine.
South Boulder also operates the Duketon Project in Western Australia where there is demonstrated potential for gold, nickel sulphide and base metal mineralisation.
South Boulder Mines: new potash discoveries at Colluli underpin resource upgrade
12 June 2012
South Boulder Mines (ASX: STB) which is on-track to become the world’s first open pit potash producer, has yet again extended the mineralised zone at the Colluli Project in Eritrea, after successful drilling discovered more high grade near surface potash.
The latest highlight is 3.07 metres of Sylvinite at 36.67% KCl from 96.43 metres, with the mineralisation identifying the strong potential to extend the project’s existing JORC Resource of 1.08 billion tonnes at 18% KCl for 194 million tonnes of potash.
The near term exploration target is 1.25-1.75 billion tonnes, with a Feasibility Study underway targeting 1Mtpa production by 2016.
Lorry Hughes, managing director, commented on the new discovery and said that the results continue to confirm the robust nature of the resource and the potential for further expansion.
“The new Central zone will certainly boost the overall economics of this expanding project. Drilling and Definitive Feasibility Study activity is in full swing and there will be strong news flow in the near term.”
Resource definition and extension drilling as well as metallurgical, hydrogeological and geotechnical programs are ongoing at Colluli with results to be released as they come to hand.
Across at the new Central zone of mineralisation which sits between the existing resource areas A and B, drilling has intersected high-grade sylvinite as an immediate extension to mineralisation previously intersected.
Contained in a total 14.55 metre potash interval was 2.84 metres of high-grade Sylvinite from 63.53 metres.
The combination of the shallow nature of this additional mineralisation, its high-grade and location means it has strong potential to boost Colluli’s economics, particularly in the early phase of the project.
The resource extension drilling is being undertaken in parallel with the metallurgical drilling which is being done as part of the Feasibility Study, which is due for completion next year.
This study would enable South Boulder to be in production no later than 2016.
The Scoping Study, which indicates the Colulli Project is expected to be technically and economically feasible and has the potential to be a long life project capable of delivering attractive investment returns, was based on annual production of one million tonnes of potash.
However, this figure could be increased in line with further expansion in the project’s JORC Resource.
South Boulder is well funded with $20 million in liquid assets plus option conversions ($6.7 million).
Colluli is in a prime infrastructure location to service the world’s largest growth market for potash, being Asia, with the project just 65 kilometres to the proposed port
and storage facilities.
An engineering Scoping Study completed in November 2011 demonstrated a pre-tax NPV of US$1.33 billion with start-up capital costs of US$0.74 billion.
This study was based on Stage 1 production of 1 million tonne of KCl annually from the potash mineral cylvite, a zone which represents only a small part of the overall deposit. The study investigated a 17-year open pit operation and forecast an internal rate of return of 40.6%.
As an indication of the growth potential of Stage 1, the study only included around 16% of the potash contained within the previous October 2011 resource estimate.
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Received on Tue Jun 12 2012 - 10:43:46 EDT