South Boulder Mines (ASX: STB) has ticked off another major milestone at the Colluli Potash Project in Eritrea, with an Engineering Scoping Study confirming the viability of the project – while delivering some very positive outcomes.
The next step is a Definitive Feasibility Study scheduled for delivery in early 2013, followed by production in 2016.
The highlights from the study is a conservative start-up base case to produce an initial 1 million tonnes per annum of standard MOP (KCl) has been determined – which would utilise shallow open pit mining methods for 11 years.
Where the study really gets interesting, is that there is scope to significantly increase production rates and mine life to plus 50 years based on sulphate of potash.
Substantial production upside is expected from the large resource, with the deposit remaining open in many directions.
South Boulder is continuing to test these extensions, with resource definition and delineation drilling continuing.
The current resource consists of 564.4 million tonnes at 18.60% KCl, for a total contained potash of 104.9 million tonnes.
Importantly, some of the resource sits in the higher confidence categories, with Measured 133.7 million tonnes at 17.55% KCl, Indicated 343.3 million tonnes at 17.38% KCl, and Inferred 87.3 million tonnes at 24.96% KCl.
The study was completed by ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH (ERCOSPLAN) with input from a number of independent mining organisations and professionals under the guidance of Dr. Chris Gilchrist.
IMPORTANT MAJOR BENEFITS FOR COLLULI
- Metallurgical tests have confirmed froth flotation of Sylvinite as the preferred processing route with estimated recoveries in excess of 80% and with significant scope to increase.
- Processing facility to be built at the Colluli site with subsequent road transport of damp potash to a drying, storage and port facility in the Anfile Bay area located 70 kilometres from the project.
- Marketing study identifies the general Asian region, particularly India and China, as the key export market for South Boulder Potash.
- Estimated total capital expenditure guidance is in the range of US$500 to US$750 million (Average capex for Greenfield projects is >US$1.0 billion per 1 million tonnes of MOP production capacity).
- Numerous project funding options have been identified, evaluated and are available.
- South Boulder continues to have overwhelming support from the Eritrean Government to build a long term economically and environmentally sustainable resource project.
Adding to the newsflow for South Boulder, further project details and economic modelling will be available in next month.
THE NEXT STEP – DEFINITIVE FEASIBILITY STUDY
South Boulder has now committed to progress a Definitive Feasibility Study, scheduled for completion in the next 14 to 17 months.