Name and Location
Colluli potash project, Danakil, Eritrea.

Client
The Colluli Mining Share Company (CMSC) is a joint venture (JV) between the Eritrean National Mining Company (ENAMCO) and South Boulder Mines, with each company having an equal stake in the company. CMSC is responsible for the development of the project.

Project Description
The prefeasibility study (PFS) completed on the Colluli potash project has highlighted the economically robust nature of the project, which is expected to become one of the world’s most significant and lowest-cost potassium sulphate operations.

The Colluli resource comprises three potassium-bearing salts – sylvinite, carnallitite and kainitite.

These salts are suitable for high-yield, low-energy input and the production of potassium sulphate (SOP), which is a high-quality potash fertiliser carrying a price premium over the more common potassium chloride.

The project will be completed in phases. The first phase will comprise 425 000 t/y of SOP, with the second phase adding 425 000 t/y of SOP, starting production in year five.

The PFS envisages the construction of:
• an openpit potash mine located within the Danakil depression;
• ore-processing facilities at the mine site;
• evaporation ponds at the mine site;
• a new product export terminal at Ras Hafele, in Anfile bay, on the Red Sea coast;
• a new 75 km product haulage road connecting the mine site and port facility;
• a seawater pipeline from the port site to the mine site; and
• an accommodation camp and administration facility at the mine site.

The proposed processing method is the most commonly used, low-cost process for the production of SOP by adding potassium chloride (sylvite) with kainite from the kainitite.

Kainitite represents about 50% of the Colluli resource, with the remaining salts comprising sylvinite and carnallitite, which are commonly used in the production of potassium chloride.

Net Present Value/Internal Rate of Return
Phase I of the project has an after-tax net present value (NPV), at a 10% discount rate, of $462-million and an after-tax internal rate of return of 22.3%.

Phase II has an after-tax NPV, at a 10% discount rate, of $864-million and an after-tax internal rate of return of 24.7%.

Value
Phase I of the project is estimated at $442-million and Phase II at $282-million.

Duration
Construction of the project is expected to start in 2016 and production in 2018.

Latest Developments
South Boulder has reported a maiden Joint Ore Reserves Committee-compliant reserve of 1.1-billion tonnes, grading 10% potassium oxide, for 205-million tonnes SOP at its Colluli project.

An estimated 287-million tonnes of the reserve has been classified as proven, with a further 820-million tonnes classified as probable.

South Boulder MD Paul Donaldson has said that the maiden reserve is an “outstanding result” for Colluli and has reaffirmed the significance of the project’s resource.

“The shallow mineralisation of the potassium-bearing salts in combination with highly favourable ambient conditions, allowsfor opencut mining of the resource, giving high resource recovery.”

Donaldson has noted that the large mineral resource and associated reserve estimate allows for substantial project growth and product diversification over time.

Once the definitive feasibility study for the two-phase production of sulphate of potassium has been completed, work will begin on the pipeline of projects that will expand the project to its full potential.

Key Contracts and Suppliers
Lycopodium (PFS).

On Budget and on Time?
Not stated.

Contact Details for Project Information
South Boulder Mines, tel +61 8 6315 1444 or email info@southbouldermines.com.au.