Eritrea has not received the positive attention it deserves in the press. Eritrea has enjoyed a period of economic stability and managed to avoid the famines that plague other states in the Horn of Africa. Far from relying on foreign aid, Eritrea has proven to be resilient and self sufficient, successfully developing agriculture and essential infrastructure such as water distribution and irrigation.
South Boulder’s Colluli Project in Eritrea is 90% More Prolific than Expected
South Boulder Mines (ASX: STB), which is developing a large potash deposit in Eritrea, has announced that its flagship Colluli mine is more productive than originally suspected. Last month, South Boulder had indicated that the initial Stage 1 open pit mining had a potential value of USD$1.33 billion and an internal return rate of 40.6%.
That optimism prompted a search for off-take and development partners resulting in direct interest from the Eritrean National Mining Corporation (ENAMCO), which has offered to acquire an additional 30% stake in Colluli. ENAMCO already had a 10% stake in the project. South Boulder remains the sole proprietor of the mine in the exploration phase after which the Eritrean government has the option to take 30% participation. Typically, governments can demand as much as 50% or 60% stakes in mining projects.
This morning South Boulder announced that it has upgraded the Colluli potash mine to a first tier asset in view of the results of the JORC/NI43-101 Compliant Mineral Resource Estimate indicating 85% increase in reserves. South Boulder had set an ambitious production target of anywhere from 2 to 10 million metric tons of potash a year by 2017, which represents from 4 to 18% of the world’s current total potash production of 55 million tons. Initial production is set to begin in 2016 at a projected and conservatively estimated rate of 1 million tons/year. In October 2011, the Company estimated the Colluli mine to have a potential production of 564 million tons. The recent study shows that potential to be 1,079 million tons or 91% more productive than originally thought. The actual amount of contained KCl (potassium chloride or potash) has now been revised from 104.96 to 194.09 million tons or 85% more at 18% grade, while mineralization begins at only 16 meters below the surface. South Boulder expects to complete the final Feasibility Study, next year.
Managing Director, Lorry Hughes, noted that estimates for Colluli mine’s life, at first stated to be around 17 years, would have to be revised upward in view of the study’s findings, making Colluli one of the most important potash mining projects in the world. Eritrea has not received the positive attention it deserves in the press. Eritrea has enjoyed a period of economic stability and managed to avoid the famines that plague other states in the Horn of Africa. Far from relying on foreign aid, Eritrea has proven to be resilient and self sufficient, successfully developing agriculture and essential infrastructure such as water distribution and irrigation. The Colluli project also draws attention to Eritrea’s overall mining potential. Until the South Boulder project, mining in Eritrea was limited. In the 1920’s and 30’s, the Italian colonizers conducted small scale mining but never at an industrial level. Now, thanks to a prolonged period of stability, Eritrea should begin to draw increased attention to its mineral resources and the government has been very supportive. Vancouver based Sunridge Gold Corporation (TSX VENTURE: SEC) is developing an important base and precious metals projects in the area of Asmara while Toronto listed Nevsun Resources (TSX: NSU) is developing a gold project at Bisha. Barrick Gold (ABX. TO) has also indicated an interest in developing projects in Eritrea.
The Colluli deposit is part of the Danakil Depression in Ethiopia and Eritrea (which were one country until 1992), identified as one of the most prolific and accessible potash producing areas in the world. The area remained unexplored throughout the 1990’s because of persisting military disputes between Eritrea and Ethiopia. Colluli is close to Eritrean ports on the Red Sea, facilitating export. With the potential for more political stability and the sheer size and accessibility of the Colluli deposits, South Boulder could make Eritrea one of the most important potash producers in the world in the next few years.
http://www.potashandphosphate.com/2012/ ... ected.html