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  • South Boulder Mines Gains More Certainty With ENAMCO Agreement Over Colluli Potash Project 0 comments
    Nov 10, 2013 8:18 PM

    South Boulder Mines (ASX: STB) stands to benefit after signing a shareholders agreement with the Eritrean National Mining Corporation (ENAMCO) regarding over the Colluli Potash Project.

    The agreement provides that ENAMCO will continue its involvement with the large potash project and sets out agreement terms.

    The Colluli project has a potash resource of 1.08 billion tonnes at 18% KCl for 194 million tonnes of contained potash.

    The agreement outlines that ENAMCO and STB will each hold a 50% ownership in the Project through a newly formed company, Colluli Mining Share Company.

    Project Development costs for initial development will be funded 70% by debt and 30% by equity.

    If commercial debt is not available for 70% of Project Development costs, STB will be required to provide the debt to CMSC on arms' length commercial terms.

    The balancing 30% project equity required for initial Development costs will be funded by STB.

    STB will be entitled to recoup 50% of this equity as a preferential payment from 50% of the Project cashflows (subject to ongoing funding requirements of CMSC) that would have otherwise been available to all equity holders.

    CMSC will have a Board of 5 being 3 members from STB and 2 from ENAMCO.

    The signing of the new agreement does seem to provide more certainty regarding the economic basis on which the project can be based including project ownership structure.

    Which should assist STB going forward attracting a strategic investor as well as ongoing financing.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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