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South Boulder Mines Continues To Tick Off Milestones At Colluli

South Boulder Mines (ASX:STB) has made significant progress with its Colluli Potash Project in Eritrea, which is prospective for the production of potassium sulphate (NYSEARCA:SOP).

Highlights in recent months includes the production of commercial grade SOP, flotation testwork with yields in excess of 80% and favourable metallurgical tests that could reduce capital and operating costs.

The company has also finalised the Pre-Feasibility Study process plant design and completed PFS drilling ahead of schedule and under budget.

Other drawcards for Colluli are its large 1 billion tonne resource, its proximity to coast, the modular approach to development and the company's relationship with the Eritrea Government.

The PFS is on track for delivery in early 2015. A Definitive Feasibility Study is also in progress with delivery expected in mid-2015.

SOP has historically enjoyed a 35% price premium over potassium chloride though this has grown to over 80%, making it likely that Colluli would produce additional revenue of more than US$290 per tonne.

South Boulder is also well funded with cash at hand of $10.2 million as at 30 September 2014.

Potassium Sulphate Production

Earlier this month, the company produced commercial-grade SOP from a Colluli Project sample, with the metallurgical testing conducted at the Saskatchewan Research Council laboratory in Canada.

This was achieved by combining decomposed kainite and sylvite under ambient conditions, affirming the simple, high yield process design developed for feasibility studies.

Testing will continue to refine the processing route, with a pilot plant to add robustness to the DFS plant design.

Samples are currently being collected with pilot work expected to commence soon.

Improved CAPEX and OPEX

The production of commercial-grade SOP follows testwork which achieved potassium recoveries exceeding 80% from flotation testing.

This has eliminated grinding and some thickening infrastructure from initial process design, reducing capital and operating costs.

Overall recovery will be further enhanced by capturing the brines leaving the processing plant and processing them through a series of recovery ponds.

The precipitated potassium salts from the recovery ponds will be reclaimed and combined with the processing plant feed streams.

Resource, Drilling and Mine Plan

Samples from the drilling program, which included twinning of selected resource holes, have been deployed to Germany and are undergoing analysis.

The resource review by AMC Consultants is expected to be completed in the next quarter and will be used for the determination of the maiden reserve.

Drilling completed during the September quarter was used to collect resource data to support final pit designs and assess trafficability of the different materials within the resource to support mining fleet requirements and mine method.

Mine planning work is well advanced and has demonstrated a robust mine plan which can access all salts from various parts of the resource simultaneously.

This reduces working capital requirements for mining in the early stages of the Project.

Information obtained from the drilling campaign is being used to finalise the mining method.

Previous mining studies were based on the use of conventional drill and blast practices.

Focus has shifted to more detailed analysis of free dig of the clastic layers above the potash salts, and surface mining of the potassium bearing salts.

This method will reduce dilution, improve salt separation, eliminate the need for any explosives within the mining operation and potentially eliminate the need for primary crushing of the feed salts, which will further reduce capital and operating costs of the processing plant.

The mining pre-feasibility study is expected to be completed early in the next quarter.

Infrastructure and Process Design

Mapping of the logistics route between the Colluli mine site and Anfile Bay was completed along with key infrastructure locations including recovery ponds, processing plant and feed stockpiles.

Pond seepage rate calculations were completed for evaporation ponds, supporting trade off studies for the installation of pond liners.

The first 3D model of the processing plant has been developed with process flow diagrams updated to reflect modified process plant design following the extension of metallurgical testwork.

A pond harvesting solution was identified for pre-feasibility study costings.

The current infrastructure solution includes floating pond dredges for extracting salts from the recovery ponds and recycling them back through the processing plant, thus reducing the surface area of recovery ponds and saving on working capital.

The organisational structure and initial headcount were both finalised for pre-feasibility study calculations.

Village room selection was completed and room numbers have been finalised for site village design.

Social and Environmental Impact Assessment

The first series of baseline studies were submitted to the Eritrea Ministry of Environment while the second tranche is expected to be submitted during the next quarter.

Ongoing stakeholder engagement and updates took place with the local communities on the Project.

The haul road between the Colluli mine site and Anfile Bay is designed to by-pass local communities to avoid noise and maximise safety of local people.

Finance

Discussions are continuing with potential strategic investors for the Colluli Project and the engagement of potential financial advisors has begun.

Development of the financial model to incorporate the final PFS mining method and processing design is nearing completion.

The outcomes from this economic model will be released to market upon finalisation of financial inputs at conclusion of the PFS, which is expected in February 2015.

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