The Conversation (0)
South Boulder Mines (ASX:STB) released its Pre-Feasibility Study for the Colluli Potash Project in Eritrea, Africa, demonstrating that it can be brought into production with the potential of a low operating cost.The Pre-Feasibility Study confirmed a total cash cost of US$189/t of SOP, a 100+ year mine life, and expected production output of 425kt per annum of SOP, increasing to 850kt per annum from Year 5. The Study also examined a two-module development over a 30 year mine life, with the large 1.289Bt resource having the ability to accommodate substantial expansions.
As quoted in the press release:
Highlights:
- PFS demonstrates Colluli is expected to become one of the world’s most significant and lowest cost potassium sulphate operations
- Operations will focus on the production of high quality potassium sulphate (SOP) – a speciality potassium fertiliser with a price premium over the more common potassium chloride (MOP)
- World’s shallowest known potassium bearing evaporite deposit
- Only 75km to proposed Product Export Terminal on the coast
- 1.289Bt resource at 10.76% K2O for 152.7Mt contained K2O (97% measured and indicated) supports a +100 year mine life
- PFS examines a two-module development over a 30 year mine life, but the large 1.289Bt resource can accommodate substantial expansions
- Open pit mining using conventional truck and shovel (no blasting)
- Development Capital for Phase I of US$442 million (including US$48 million contingency)
- Phase I development capital includes project owned/built road and 900kt per annum Product Export Terminal (PET)
- Expected production output of 425kt per annum of SOP, increasing to 850kt per annum from Year 5
- Bottom quartile C1 mine gate cash cost of US$141/t of SOP (LOM Average)
- Total cash cost of US$189/t of SOP (LOM Average)
- Assumed real average SOP price of US$588/t FOB Anfile Bay – determined through a comprehensive market study
- Average undiscounted after tax cashflow of US$186 million per annum over 30 year mine life (LOM Average)
- Undiscounted after tax cumulative cashflow of US$5.1bn over 30 year mine life
- Significantly leveraged to rising fertiliser prices
- Substantial opportunities to improve project economics remain
- Approval granted from both STB and CMSC boards to progress to definitive feasibility study (DFS)
- Approvals and permitting processes commenced
- DFS to be completed in Q3 2015, with first production planned for 2018
South Boulder Managing Director, Paul Donaldson, said:
We are extremely pleased with the highly favourable outcomes of the pre-feasibility study for the development of the Colluli Potash Project, and the endorsement of both the STB and Colluli Mining Share Company (CMSC) Boards to move the Project forward to complete the definitive feasibility study in Q3 2015. We have already commenced optimisation testwork for the process plant, and as we continue the definitive feasibility work, we will further advance conversations with strategic partners to assist with development of this globally significant project.”
Click here to read the South Boulder Mines (ASX:STB) press release
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