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South Boulder Mines Eyes Key Feasibility Studies For Colluli Potassium Sulphate

South Boulder Mines (ASX: STB) continues to advance its Colluli Potash Project in Eritrea which is a large, high grade potassium bearing resource close to surface in an emerging potash province.

Key feasibility studies will be released in 2015 providing further detail and progression on development options.

At Colluli over 1 billion tonnes of potassium bearing salts have been defined, which are suitable for the production of potash fertilisers

It is one of only three major deposits containing kainite salt (key salt for SOP production) in solid form globally.

The joint venture with the Eritrean National Mining Company (ENAMCO) is a key plank for project success.

Recently a strategic share placement to Kam Lung Investment Development Company (KLID) was completed at a premium, with KLID holding an option for a further purchase of shares upon securing a binding offtake agreement for potassium sulphate.

Key advantages of the project are its close proximity to coast, while being located geographically favourable relative to key markets.

Its shallow mineralisation supports Colluli as open pit - a proven, safer mining method, with better overall resource recovery than underground and solution mining,

Colluli hosts a highly-favourably suite of potassium bearing salts for low cost production of potassium sulphate (SOP or sulphate of potash) using simple mineral processing units (flotation and mixing).

Commercial grade SOP has already been produced from a Colluli sample.

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

South Boulder and the Eritrean National Mining Company (ENAMCO) are equal shareholders of the Colluli Mining Share Company (CMSC) which will develop the Colluli Potash project.

Potash demand drivers include: Increasing global population +80 million people annually; Decreasing arable land; and Changing dietary preferences.

What is Potassium sulphate (NYSEARCA:SOP)

SOP is a high value potash fertiliser, which provides both potassium and sulphur in soluble forms.

It has a lower alt index than MOP (no chloride), and is suitable for chloride sensitive crops such as fruit, berries, vines, nuts, coffee and tobacco.

SOP is ideal for arid areas where chlorides cannot be washed away, and is used when soil or irrigation water salt levels are high and MOP is undesirable.

Other key Colluli advantages

- No communities within the exploration tenements.
- Process can accommodate seawater - consistent and unlimited water supply to be piped from the Red Sea coast to the Colluli site. No major abstraction from local aquifer.
- Unsealed coastal road runs within 60km of the Colluli site.
- Simple logistics for minesite consumables (only 180km from Massawa port).
- No clearing required.
- Ease of access for construction equipment and mining fleet.

Adopting the principles of modularity

South Boulder has also adopted a modular development philosophy offering expandability rather than a single large scale development.

This has the impact of reducing capital risks; optimising processes; better capital management; and ease of expandability.

Its infrastructure solution is also based on modularity, simplifying logistics and reducing earthworks.

Colluli potential identified by Hong Kong investor

The completed strategic share placement to KLID at a premium has an option for further purchase upon securing a binding offtake agreement for potassium sulphate.

The deal also gives KLID the option to buy an additional 8 million shares, exercisable at $0.35 cents upon securing a binding offtake deal for potassium sulphate on commercial terms acceptable to the CMSC board.

Analysis

Over 1 billion tonnes of potassium bearing salts have been defined which suitable for the production of potash fertilisers.

Significantly, it is one of only three major deposits containing kainite salt (key salt for SOP production) in solid form globally. There are also limited low cost potassium sulphate resources in the world.

The joint venture with the Eritrean National Mining Company (ENAMCO) is a key plank underpinning project success.

Colluli is strategically located closer to port than potassium sulphate peers with trucking a low cost option to access port, with deepwater access at Anfile Bay suitable for loading vessels up to Panamax size.

Metallurgical testwork has verified the process design and high potassium yields and identified a simple, commercially proven, low energy, high yield process.

The project is also located in a stable jurisdiction, with mining an important component of the country's economic development - with government supporting new entrants to the industry.

The KLID investment and potential for offtake is a further positive.

Upcoming milestones:

- Final metallurgical report and associated mass balances.
- Completion of mining study.
- Finalisation of resource review.
- Initiation of pilot plant for DFS.
- DFS drilling and completion of hydrogeology work.
- Aggregation of operating and capital costs.
- Submission of second tranche of environmental submissions.
- Finalisation of the pre-feasibility study and lock in module size.
- Commencement of funding discussions.

With Pre-feasibility completion is planned for February 2015 and DFS by mid 2015, there are significant milestones ahead and price catalysts.

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

Major shareholders include Sprott Asset Management with 10.96% and Kam Lung Investment Development with 7.17%.

South Boulder management hold around 13%.

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