South Boulder Mines lowers OPEX and CAPEX at Colluli Potash Project

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SOP production from kainitite brine proving commercially viable

Positive implications for upcoming Allana Potash SOP focused PEA due in December – January

South Boulder Mines lowers OPEX and CAPEX at Colluli Potash Project

South Boulder Mines (ASX:STB) has completed the prefeasibility study preliminary process design for potassium sulphate (Sulphate of Potash) production at its Colluli Potash Project in Eritrea.

Additional metallurgical test work has reduced Capex and Opex from the initial design. This, along with improved yields, is expected to have a positive economic impact on the project.

Achieving all this through a simple, proven and reliable process with low energy inputs and high yields is another positive.

Potassium yields of more than 80% have been achieved to date with higher yields expected from the brine recovery circuit.

The company expects to deliver the Pre-Feasibility Study in February 2015 and the Definitive Feasibility Study in mid-2015.

South Boulder has been pursuing a modular and scalable approach towards developing the project, which has a large resource of 1 billion tonnes of potassium bearing salts, all of which are suitable for the production of potash fertilisers, and is close to the coast.

The company also has a relationship with the Eritrea Government. It and the Eritrean National Mining Company (ENAMCO) are equal shareholders of the Colluli Mining Share Company (CMSC) which will develop the Colluli Potash project.

“The most exciting thing about the Colluli development path is that we actually lower our cost base to make a product with a substantial price premium,” managing director Paul Donaldson said.

“We are extremely happy with the progress the project team has made on the processing plant design and testwork.

“The simplicity of the process, the utilisation of all potassium bearing salts, the highly favourable yields and the robustness of the mine plan are positioning the project for an exciting future.

“Colluli is a potash resource of global significance and the work that has been done over the past 18 months is creating a solid platform that underpins a compelling development story.

“We are looking forward to the completion of the preliminary feasibility study, and are in the process of collecting samples to provide feed material to pilot a number of elements of the process to support the definitive feasibility study.

“Building a platform for growth and adopting the principles of modularity, resource utilisation and risk mitigation are at the core of our go forward strategy, and the Colluli Mining Share Company board is aligned to that approach.”

Preliminary Process Design

As part of the PFS processing design, the company has successful completed further metallurgical test work that was resulted in the elimination of some grinding and thickening infrastructure from the initial process design.

Potassium yields from flotation tests in excess of 80% have been achieved from test work to date.

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.

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.

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.

Colluli is also the closest SOP resource to the coast globally and has the most favourable coastal access from the Danakil depression.

It is 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.

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

The switch to SOP production has also resulted in a substantial reduction in strip ratio to 2.3:1 from 14:1, which has in turn reduced estimated mine cost to $75 per tonne from $224 per tonne.

Mine life has also soared to 200 years from the previous 17 years.

The production process is also simple and proven.

Colluli’s key salts – kainite and sylvite – can be purified using simple liberation and conventional flotation processes.

The combination of the purified salts results in an ambient temperature, high yield conversion directly to SOP.

In addition, Colluli has the advantage of starting with salts rather than brine, which reduces footprint size, improves reliability of productivity, and reduces complexities of brine chemistry management.

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.

Drilling to secure samples for chemical analysis is underway while field work has also been completed to confirm the location of the recovery ponds for the processing plant; map and inspect the road route between Colluli and Anfile Bay; and determine suitability of material along the route as road aggregate.

Analysis

Proactive Investors believes the improved capital and operating costs combined with improved yields from Colluli are expected to have a material positive economic impact for South Boulder Mines.

To add to the attraction, the use of floatation to process Colluli salts is a low cost and well understood process that could place the project in bottom quartile of operating costs for SOP production.

We also continue to highlight other drawcards at Colluli such as the large 1 billion tonne, the suitability of the resource for SOP production, its proximity to coast, the modular approach to development and the company’s relationship with the Eritrea Government.

Share price kickers ahead include:

– Finalising the Resource in the third quarter of 2014;
– Results from Colluli drilling;
– Delivery of the Pre-Feasibility Study in February 2015;
– Delivery of the Definitive Feasibility Study in mid-2015;
– Completion of the Social Environmental Impact Assessment in the third quarter of 2015; and
– Mining Licence application in fourth quarter of 2015.

The company is well-funded with $9 million in cash at the end of June 2014, and also recently attracted a $1.8 million investment from the Hong Kong based Kam Lung Investment Development Company (KLID).

KLID will look to secure an offtake deal for potassium sulphate on commercial terms acceptable to the CMSC board.

Sourced here  http://www.proactiveinvestors.com.au/companies/news/57964/south-boulder-mines-lowers-opex-and-capex-at-colluli-potash-project-57964.html

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Related posts

–  Allana Potash Initiates Preliminary Economic Assessment On Production Of Sulphate Of Potash

–  Allana Potash’s Underappreciated Rich Potassium Sulphate (SOP) Resource – An Analysis

–  Africa’s First MOP/SOP Producer Could Be A Game Changer

–  Ethiopia’s rich Danakhil MOP & SOP resource may prove a National Treasure in a thirsty & hungry future

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