South Boulder Mines Eritrea shares on the rise

Friday, August 24, 2012 by Bevis Yeo

South Boulder Mines’ (ASX: STB) shares have risen 12.64% today to an intra day high of A$1.025 on volume of more than 550,000 shares.

The company has made progress towards increasing the high grade resource inventory and improving project economics of its Colluli Potash Project in Eritrea.

Recent drilling has returned results including 4.26 metres of Sylvinite at 34.46% KCl from 70.24 metres including 1.98 metres at 44.92% KCl from 70.24 metres in Hole Col-054.

This was part of the new assays from resource extension diamond drilling that continues to highlight potential extensions to the current Measured, Indicated and Inferred JORC Resource of 1.08 billion tonnes at 18% KCl for 194 million tonnes of potash.

Assays from drilling at the Central target zone have also returned consistent shallow high-grade Sylvinite mineralisation from holes Col-057, 058, 060 & 062 with the last hole returning 2.84 metres of Sylvinite at 31.22% KCl from 65.53 metres.

South Boulder is also expected to soon release its revised engineering Scoping Study, which is due later this quarter.

This will be based on mining and processing the Sylvinite and Carnallite mineralisation together.

Carnallite mineralisation, which makes up about 20% of the JORC Resource, was not included in the original Scoping Study.

Early investigations had found that a simple solar decomposition circuit can be added to the processing route to allow potash to be extracted from Carnallite mineralisation.

Processing costs for Carnallite are expected to be only marginally higher than the corresponding processing cost for the Sylvinite mineralisation.

Colluli is being developed as the world’s first, modern, open pit potash mine, with initial production scheduled for 2016 or sooner.

It will also be one of a few “Greenfields” potash mines to come into production in the next 10 years with an excellent location that provides much sought after infrastructure as it is about 70 kilometres from the Red Sea Coast and major shipping routes to Asia.

Analysis

With the recent re-tracement in share price, provides an excellent opportunity for the value investor to acquire further shares – given the milestones reached over the past year.