South Boulder Mines (ASX: STB) has once again expanded the resource at the Colluli Potash Project in Eritrea which is fast tracking towards becoming the world's first open cut potash mine.
The sustained exploration success at the project by South Boulder has culminated in a 85% increase in the contained potash, with the resource now 1.08 billion tonnes at 18% KCl for 194 million tonnes of potash.
Most importantly for the future ease of extraction, mineralisation starts from just 16 metres below the surface.
Lorry Hughes, managing director, commented on the positive news saying that the upgrade further confirms Colluli as a Tier 1 asset, and that the 17 year mine life indicated in the Scoping Study will definitely be extended.
"In addition, the scoping study didn't consider substantial production increases that are apparent from this huge resource.
"Over the course of the definitive feasibility study, the upside will be included to demonstrate the significance of Colluli in relation to the global potash market."
Negotiations have commenced with the Government of Eritrea for its purchase of a paid participating interest in the Colluli Project, which was announced last month, and is the precursor to the formation of the Joint Venture Share Company and the ultimate granted Mining Exploitation License.
Resource upgrade impact - more to come
The outcome of the jump in resources at Colluli is the positive impact on improving the already robust economics of an open pit mine. Importantly, the shallow deposit is open in many directions and is expected to grow further with the current resource extension drilling programs.
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.