Colluli potash resource tops 1 billion tonnes
South Boulder Mines Ltd (ASX:STB) is pleased to announce that the JORC/NI43-101 Compliant Mineral Resource Estimate for the flagship Colluli Potash Project now stands at 1.08 billion tonnes @ 18% KCl* for 194Mt of contained potash.
This represents an 85% increase in contained potash with mineralisation starting from just 16m below surface.
The expanded resource is expected to substantially improve the already robust economics of an open pit mine at Colluli. Importantly, the shallow deposit is open in many directions and is expected to grow further with the current resource extension drilling program.
An engineering scoping study (ESS) completed in November 2011 demonstrated a pre-tax NPV12 of US$ 1.33bn with start-up capital costs of US$ 0.74bn.
This study was based on Stage 1 production of 1Mt of KCl p.a. from the potash mineral Sylvite, 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 ESS only included ~16% of the potash contained within the previous October 2011 resource estimate. Studies are currently underway to incorporate additional zones of potassium minerals to further enhance the overall commercial outcomes.
South Boulder Managing Director Lorry Hughes said the resource increase provided more strong evidence of the outstanding outlook for Colluli.
“This upgrade further confirms Colluli as a Tier 1 asset”. Mr Hughes said. “The 17-year mine life indicated in the scoping study will definitely be extended.”
“In addition, the scoping study didn’t consider substantial production increases that are apparent from this huge resource. Over the course of the definitive feasibility study, the upside will be included to demonstrate
the significance of Colluli in relation to the global potash market.”
South Boulder is fast tracking the world’s first open cut potash mine which is located approximately 70km from a proposed export site at Anfile Bay on the Red Sea coast and proximal to major international shipping routes.
Negotiations have commenced with the Government of Eritrea for its purchase of a paid participating interest in the Colluli Project (see ASX announcement dated 26th of March 2012) which is the precursor to the formation of the Joint Venture Share Company and the ultimate granted Mining Exploitation License.
The Company has strong support from the Eritrean Government to build an economical long term, environmentally sustainable resource project.