South Boulder Mines Release Resource Estimate for Colluli Project in Africa: 1.1 Billion Tonne Ore Reserve

- May 19th, 2015

South Boulder Mines (ASX:STB) announced its resource estimate for the Colluli Potash Project in Eritrea, East Africa: 1.1 billion tonnes of potassium bearing salts at 10% potash comprising 287 million tonnes proven and 820 million tonnes probable ore reserve, with a contained sulphate of potash of approximately 205 million tonnes.

South Boulder Mines (ASX:STB,OTCMKTS:SBMSF) announced its resource estimate for the Colluli Potash Project in Eritrea, East Africa: 1.1 billion tonnes of potassium bearing salts at 10% potash comprising 287 million tonnes proven and 820 million tonnes probable ore reserve, with a contained sulphate of potash of approximately 205 million tonnes.

Highlights:

  • Maiden JORC (2012) potassium salt Ore Reserve estimate of 1.1billion tonnes at 10%K2O equivalent
  • 287 million tonne Proved Ore Reserve
  • 820 million tonne Probable Ore Reserve
  • Over 85% of Measured and Indicated Resource included in Ore Reserve Estimate
  • Ore Reserve estimate based on JORC 2012 Mineral Resource Estimate and Colluli Prefeasibility Study released in February 2015
  • Substantial project upside and capacity potential
  • More than 200 year mine life at modelled sulphate of potash (SOP) production rates
  • Colluli potassium salt combination capable of producing a diverse range of potash products including (SOP), potassium magnesium sulphate (SOP-M) and potassium chloride (Muriate of Potash or MOP)

As quoted in the press release:

The 1.1 billion tonne Ore Reserve comprises 287 million tonnes of Proved and 820 million tonnes of Probable Ore Reserve shown below in Table 1. The estimate is based on the Mineral Resource estimate reported in February 2015, and was prepared under the direction of the Competent Person using accepted industry practice and reported according to the 2012 JORC Code.

The Ore Reserve is based on Measured and Indicated Mineral Resources, and 3D resource block models developed in January 2015 from geostatistical assessment of predominantly diamond drillhole sample results. The Mineral Resource is converted to Ore Reserve by developing the diluted resource model and applying pit optimisation and mine scheduling to determine economically viable blocks to recover and process.

Modifying factors, including mining, metallurgical and long term cost assumptions, are summarised below in Appendix A in the form required by the JORC Code 2012 (referred to within the JORC Code as “Table 1”) as a checklist or reference when preparing Public Reports on Exploration Results, Mineral Resources and Ore Reserves.

After consideration of mining, metallurgical, social, environmental, statutory and financial aspects of the Project, the Proved Ore Reserve estimate is based on Mineral Resources classified as Measured, while the Probable Ore Reserve estimate is based on Mineral Resources classified as Indicated.

… Summary of Material Information

Mining

Open pit mining method. For potash and rock salt layers within the resource, 110t class surface miners directly loading 90t class rear dump trucks have been selected and modelled. Similar continuous miner technology is used in underground potash mines.

For clastic overburden and bischofite, 190t and 110t class excavators and 90t class rear dump trucks have been selected and modelled. Clastic overburden will be pushed down to excavators by 50t track bulldozers. This method is commonly used in open pit operations and well understood.

The choice of mining method enables selective extraction of the potash ore units, minimising mining dilution and ore loss, and eliminating the requirement for drill and blast. Staggered benches in the pit development level stripping ratio over the mine-life, enhance economics and provide consistent plant feed.

Optimum pit limits were determined using Gemcom Whittle 4X computer software. Process plant feed targets were maintained in the mine schedule using Minemax Scheduler strategic mine scheduling software and XPAC mine production scheduling software. The optimisation and schedules considered Measured and Indicated Resources only.

The Ore Reserve includes dilutant materials that are expected to be mined with the potassium salts, as determined by adding “skins” of dilution to the contact horizons of the relevant potassium containing horizons.

The content of the pit designs includes the in situ Ore Reserve and 4.5 billion tonnes of waste material, resulting in a life of mine stripping ratio of 3.6 waste tonnes to 1.0 ore tonne.

Financial analysis completed in February 2015 showed that, at that time, the future revenues to be derived, and costs incurred to access those revenues, produce a viable project using the assumptions presented in this estimate. The costs to complete and commission the mine and plant to process for a 30 year period were considered.

Processing

The commercially proven and well understood process involves the combination of decomposed kainite with sylvite which results in an ambient temperature conversion to potassium sulphate. Excess brine will be treated in evaporation ponds to precipitate potassium bearing salts which will be recycled to the plant for recovery. Benchtop and pilot plant tests conducted at the Saskatchewan Research Council (SRC) prove the process design and process flow diagrams used for the PFS. The process design was validated by an appointed Technical Review Committee in February 2015.

The SOP product will be dried and sized to produce granular, standard and potentially soluble products which will be shipped for export.

Bench scale metallurgical testwork using samples that reasonably represent the mining schedule has been completed to determine chemical and mineral analysis of the samples, liberation and flotation characteristics of all potassium salts, decomposition rates and retention times, decomposition ratios, precipitate sizing and evaporation rates.

Product Pricing

A long term price of US$586 per tonne FOB at Anfile Bay was used for the Ore Reserve estimate.

South Boulder Mines Managing Director, Paul Donaldson, said:

This is an outstanding result and reaffirms the significance of the Colluli resource. The shallow mineralisation of the potassium bearing salts in combination with highly favourable ambient conditions, allows open cut mining of the resource, giving high resource recovery. Important to note is the unique mineralogical composition of the Danakil evaporite deposit, which allows the production of a diverse range of potash products including sulphate of potash (SOP), potassium magnesium sulphate (SOP-M) and potassium chloride (MOP). The very large Mineral Resource and associated Ore Reserve estimate allows the project substantial growth and product diversification over time. Once the definitive feasibility study for the two phase production of SOP has been completed, work will commence on the logical pipeline of projects that will grow the project to its full potential.

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