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Staged development of Colluli viable option - South Boulder

21st March 2013

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) - Potash developer South Boulder Mines on Thursday told shareholders that a staged development of its Colluli potash project, in Eritrea, could provide some economic benefits when compared with the previous two scoping studies.

The two scoping studies, completed in 2011 and 2012 respectively, was based on the development of a one-million-ton-a-year and a two-million-ton-a-year processing facility.

However, South Boulder said on Thursday that, in parallel with a definitive feasibility study currently being undertaken, the company had also modelled the staged development of the Colluli project, starting at a one-million-ton-a-year operation, and expanding to a two-million-ton-a-year operation.

At a potash price of $450/t, the staged development would have a net present value of $1.3-billion, at a discount rate of 7%, and an internal rate of return of 15.1%.

Total capital exploration would amount to some $1.2-billion, which was significantly lower than the two-million-ton-a-year scoping study estimate of $1.5-billion.

The staged development expected construction to start in 2014, with expansion capital only required by 2017, if potash production started in 2016. The project was expected to reach a steady-state production of two-million tons a year by 2020.

South Boulder said on Thursday that the current definitive feasibility study on the project was some 50% completed, with key items on the work programme, such as environmental monitoring, geological block modelling, and the finalisation of hydrogeological modelling continuing, along with resource optimisation, and market and product analysis work.

The company said that it was also in discussions with strategic investors regarding the potential for third-party investment in the project. It added that the involvement of a strategic investor was likely to be a necessity to fund the required capital for construction.

Edited by Creamer Media Reporter

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