Ann: Colluli Potash Resource Upgrade , page-9

South Boulder Mines boosts potash JORC Resource confidence categories at Colluli
Tuesday, October 04, 2011 by John Phillips

The significance of the 130% increase in the Measured and Indicated potash resources at Colluli is that the new resource will underpin the Definitive Feasibility Study, along with potential new ore reserve calculations. South Boulder Mines (ASX: STB) continues to deliver a positive news flow from the Colluli Potash Project in Eritrea, with today no exception.

South Boulder has boosted the Measured and Indicated resource categories 130%, boosting the overall JORC Resource to 564.40 million tonnes at 18.60% KCl for 104.96 million tonnes of contained potash - which is easily extractable due to being within 100 metres of the surface.

The significance of the confidence upgrade is that the new resource will underpin the Definitive Feasibility Study, along with potential new ore reserve calculations.

Another plus for South Boulder is that the latest results continue to support the Exploration Target of 1.25 to 1.75 billion tonnes at 18-20% sylvinite KCl.

High grade sylvinite portion

One of the most interesting aspects about Colluli is the upper portion of the deposit.

This shallow resource unit contains high grade KCl of 130.39 million tonnes at 27.02% KCl for 35.23 million tonnes of contained potash, which is in the Measured, Indicated and Inferred categories at Area A, and an Inferred resource at Area B.

Why this resource is so important is that close to 95% of global potash production is extracted from mining sylvinite.

This resource is the basis of the current engineering scoping study into low cost production of 1 to 2 million tonnes annually of potash from open pit mining by 2016, or potentially sooner.

The next step for South Boulder

As South Boulder continues to progress operations at Colluli, the company said a further near term resource expansion is expected upon compilation of pending drilling results completed from within the current resource areas.

Boosting the potential for continued potash hits, is that the resource is open in many directions, and drilling will continue in adjacent areas to test for additional potash and resource interpretations.

The company added that a number of structures have been interpreted to constrain the shallow resource and these have been derived from gravimetric, surface mapping and drilling results.

Further drilling is required on either side of these structures to determine if mineralisation continues beyond the structures, with high priority targets already identified west of Area B and zones between Area A and B.

Exploration and development activity is currently focused on, metallurgical sampling and testwork, mining engineering design, hydrogeological and environmental assessment and project approvals to support the Definitive Feasibility Study.

Eritrea - an east African country

Eritrea is a stable jurisdiction that is fully supportive of South Boulder activities, with the project awarded to the company by an open tender process.

The deal structure is as follows:

- Exploration Phase, South Boulder 100% ownership;

- After Mining Lease and BFS, the Government receives 10% of the project for free and can purchase up to another 30% of the project at fair value;

- The 40% is a full equity participation interest, Government to pay 40% of operating and capital costs;

- 3.5% royalty on potash and corporate tax rate of 38%; and

- The deal structure paves the way for a secure and reliable partnership.

http://www.proactiveinvestors.com.au/companies/news/20343/south-boulder-mines-boosts-potash-jorc-resource-confidence-categories-at-colluli-20343.html