New High Grade Potash Zone Discovered at Colluli
By John Phillips,
South Boulder Mines (ASX: STB) continues to deliver a positive newsflow from the Colluli Potash Project in Eritrea, with the latest instalment a new high grade potash zone. This discovery comes just a week after the resource almost doubled to 1.08 billion tonnes at 18% KCl for 194 million tonnes of potash, and bodes well for future resource upgrades.
The combination of the shallow nature of this additional mineralisation, and the high-grade and strategic location, means it has strong potential to boost Collulis economics, particularly in the early phase of the project.
The latest discoveries come from resource extension diamond drilling in between two existing resource zones at the project, with South Boulder saying that there is clear potential for potash to be largely continuous between the existing resources – which will be further tested.
New discovery highlights include:
5.09 metres of high-grade sylvinite from 100.34 metres (within a total 15.86 metres potash interval);
6.12 metres of sylvinite from 68.34 metres, including 2.93 metres of high-grade sylvinite from 70.17 metres (within a total 16.12 metres potash interval);
2.93 metres of high-grade sylvinite from 88.49 metres in between Area A and B (within a total 13.34 metres potash interval); and
2.02 metres of high-grade sylvinite from 53.89 metres in between Area A and B (within a total 16.17 metres potash interval).
Lorry Hughes, managing director, said the new sylvinite drilling results show excellent correlation with previous drilling and has the potential to further improve the economics of the project.
“The new discovery is likely to make a material improvement to the already-robust Stage 1 production schedule and mining costs of the worlds first open pit potash mine. The shallow depth of the resource is the key difference between Colluli and other potash resources currently being mined. Most existing mine production is from depths of greater than 500m and to depths of up to 1,500m below surface. We expect to convert a large portion of our resources to mineable reserves because we can utilise open pit mining as opposed to low- conversion underground or solution-mining methods.”
HIGHLY ATTRACTIVE PRE-TAX NPV
An engineering Scoping Study completed in November 2011 demonstrated a pre-tax NPV of US$1.33 billion with start-up capital costs of US $0.74 billion.
This study was based on Stage 1 production of 1 million tonne of KCl annually from the potash mineral cylvite, a zone which represents only a small part of the overall deposit. The study investigated a 17-year open pit operation and forecast an internal rate of return of 40.6%.
As an indication of the growth potential of Stage 1, the study only included around 16% of the potash contained within the previous October 2011 resource estimate. Studies are currently underway to incorporate additional zones of potassium minerals to further enhance the overall commercial outcomes.