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South Boulder Mines On Track To Complete PFS For Colluli Potash

South Boulder Mines (ASX:STB) has a busy year ahead with the company focused on advancing both the Pre-Feasibility and Definitive Feasibility studies for the Colluli Potash Project in Eritrea.

PFS work for production of potassium sulphate (NYSEARCA:SOP) from Colluli is scheduled for completion in February 2015.

SOP is a premium potash fertiliser which achieves a higher price in the market relative to the more common potassium chloride due to its use on higher value crops such as fruits, vegetables, nuts and coffee. It enjoyed continued price growth throughout 2014.

In addition, the recent raising of $2.05 million to Hong Kong based Special Purpose Vehicle, Well Efficient Limited, at a 6% premium will be used to complete the DFS work.

Colluli is a very large, long life, at surface deposit, that is highly amenable to open cut mining methods and is in close proximity to the coast.

It contains over 1 billion tonnes of potassium bearing salts suitable for the production of potash fertiliser in the Danakil depression, an emerging potash province where over 4 billion tonnes of measured and indicated potassium bearing salts have been identified.

The company continues to work with the equal partner Eritrean National Mining Company (ENAMCO) to develop the Colluli Potash Project.

On completion of the feasibility studies for the production of SOP, the potential economic upside associated with the other materials within the resource including magnesium sulphate, magnesium chloride, gypsum and salt will be explored.

The pre-feasibility study is underpinned by a highly capable team of consultants including Lycopodium, Global Potash Solutions, AMC Consultants, Knight Piesold, MBS Environmental and PRDW.

In May 2014, South Boulder appointed James Durrant as the Colluli study manager to oversee and manage the project teams, in-country support and data collection.

SOP Market Outlook

SOP prices have climbed throughout the year to their second highest level on record as a direct consequence of inadequate supply.

There are limited greenfield developments for SOP outside of China and none that have coastal access to match Colluli.

With an additional 80 million people per annum on the planet, fertiliser growth will continue into the future to feed a growing population.

This in combination with reduction in arable land, and changing dietary preferences means the potassium sulphate market will continue to expand.

Projections estimate SOP demand growth of more than 2 million tonnes over the next decade, and the Colluli project has the potential to meet the requirements of the future and transform to a resource of global significance.

Colluli Potash Project

The Colluli Potash Project is located within the Danakil Potash belt and has a shallow Resource of 1 billion tonnes of potassium bearing salts, all of which are suitable for the production of potash fertilisers.

It is also just one of three projects globally to contain kainite salt - the key salt for Sulphate of Potash (SOP) production - in solid form.

Being just 75 kilometres to the designated loading point at Anfile Bay and 180 kilometres from the Port of Massawa - a 4 berth bulk and container terminal, Colluli is also the closest SOP resource to the coast globally and has the most favourable coastal access from the Danakil depression.

The project's location on the east coast of Africa also allows the product to be export to Asia and Europe.

In late 2014, the company commenced pilot testing of the Colluli process design at the Saskatchewan Research Council in Saskatoon, Canada. This has already produced Commercial grade SOP.

Other work carried out in 2014 included:

- Appointment of AMC Consultants to conduct a comprehensive review of the resource model in preparation for assigning a maiden ore reserve to the project;
- Allocation of Anfile Bay and the road transport corridor by the Eritrean Ministry of Energy and Mines to provide certainty on the project logistics;
- Completion of pre-feasibility level metallurgical testwork;
- Completion of pre-feasibility process plant design and associated flowsheets;
- Finalisation of mining method, fleet composition and pit designs;
- Initiation of process optimisation testwork for the definitive feasibility study;
- Submission of first tranche of environmental baseline assessments; and
- Extension of exploration license.

Analysis

There is news flow ahead for South Boulder Mines as it moves to complete the Colluli Pre-Feasibility Study in February.

This will be followed by the Definitive Feasibility Study, which will provide a clear picture on the project's value.

Share price catalysts ahead are:

- Completing metallurgical optimisation testwork and piloting program;
- Finalising the definitive feasibility study process layout;
- Assembling and appointing a technical review committee;
- Progressing capital and operating cost estimates based on optimised process configuration; and
- Progressing funding discussions to advance the project to construction as efficiently as possible.

The company will also ensure it has the right people to continue project development, complete and submit the remaining baseline assessments and submit the environmental management plan and mining license application.

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