see my post the other...

see my post the other day

http://www.hotcopper.com.au/post_threadview.asp?fid=2&tid=1376714&msgno=357145#357145

i also spotted this article from Minesite , cheers


February 09, 2011

South Boulder Is Targetting A Billion Tonnes Of High Grade, Shallow Potash In Eritrea.

By Charles Wyatt / www.minesite.com

It is not often that a share price in a company virtually quadruples in the space of three months, but that is what has happened at ASX-listed South Boulder Mines. We wrote about it at the beginning of December, and in the short time that's elapsed since then the shares have risen from A$1.25 to A$3.88 - an excellent Christmas present for those that jumped on for the ride. Not that Minesite is a tipping sheet in any way - perish the thought - but we are always looking for interesting stories of companies that appear to have been overlooked by investors.

Only the other day Our Man In Oz highlighted Beadell Resources as another one that appears to have crept under the radar in spite of its big gold resource in Brazil. The only other thing the two have in common is that Brazil and Eritrea, where South Boulder has its flagship potash deposit, are not countries that traditionally set Aussie investors on fire. They took a long time to warm to West Africa, which is now familiar ground after Paydirt's Africa Down Under conference in Perth last August accelerated things, so perhaps they are getting even more ambitious.

The media spotlight has switched to Eritrea in recent weeks, as a result of the unrest in Tunisia, Egypt, Lebanon and Yemen. The US instigated UN sanctions on the country just over a year ago as it favours Eritrea's neighbour Ethiopia. But Ethiopia has no ports as Eritrea lies between it and the Red Sea. And, as access to the Suez Canal depends on clearance through the Red Sea the US Government may have to rethink its list of friends in the area. This is especially important after the way Obama seems to be treating Mubarak, but the Eritreans are a proud people and will not be won over easily. As far as mining companies are concerned, however, it is proving to be an excellent country in which to operate. The ambassador in London came to a Minesite conference last year to confirm the mining-friendly attitude of his government, and the mining code is based on that of the Northern Territory, which should provide further comfort for Australian investors.

On the telephone from Perth, Lorry Hughes, South Boulder's managing director, confirms that he is getting ready for a roadshow in Canada and the US that will take place at around the time of PDAC. It will be interesting from two angles. First, Canadians know quite a bit about potash in Saskatchewan, and publicity about it reached an all time high last year when BHP Billiton bid zillions for Potash Corporation. The difference is that the Colluli deposit in Eritrea is shallower and it is situated only 200 kilometres from the deep water port of Massawa from which it can be shipped to East Africa, the Middle East and the Far East. Transport costs are key to profitability for bulk mineral operations and Saskatchewan is right in the middle of Canada so costs go up when route to market is taken into account. As to American investors, they will find themselves in a quandary, and possibly in disagreement with the policy of their own government.

South Boulder is by no means desperate to make new friends, however. On the contrary, it has entered 2011 in a strong financial position, as a result of a A$7 million raising completed towards the end of last year at A$2.00 per share. This was at a premium to the share price at the time, although it looks a pretty big discount now. But that just demonstrates how well the company has performed in a short time. The placees were Sprott Asset Management, who must be a happy bunch to have doubled their money in a few weeks, and that will also be also noted by Canadian investors. A further A$1.13 million was raised from the conversion of options, so the company enters a year of exploration with plenty of ammunition. It has already announced a maiden resource estimate for Colluli of 548 million tonnes grading 19% potassium chloride (KCl). This includes 119 million tonnes at 23% KCI. Thus the total potash content is 102 million tonnes, and this is down to a depth of between 22.20 metres to 64.80 metres. The company has now upped its exploration target to around one billion tonnes at similar grades.

The deposit is open in all directions, and also boasts some hot spots grading up to 44% KCI, so this new target looks a reasonable bet. In any case it will soon become clear how things are progressing, as an upgrade to the resource is due to be announced shortly, once outstanding assay results from another twelve holes are received. In the meantime drilling and a geophysical survey are underway and an engineering scoping study will take a look at the economics of various production scenarios. The restraining factor will probably be road transport from the mine to the port.

Lorry Hughes wants to emphasise that South Boulder also has a number of gold projects on the under-explored Duketon greenstone belt north of Laverton in Western Australia, as well as a joint venture with Independence Group targeting nickel in the same area. Independence, which is earning a 70 per cent interest at Duketon, has just announced the acquisition of Jabiru Metals, so is in the public eye at the moment. The latest bit of news from South Boulders operations in this part of the world is that more massive sulphides are being intersected at depth at the Rosie nickel-copper-platinum group metal prospect. Significant zones of brecciated, stringer and disseminated sulphides are also being intersected.

It is still early days, but the South Boulder tenements are certainly in the right place, as they sit between the Windarra nickel discovery and BHP Billiton's Collurabie discovery. Independence is clearly pushing things on as quickly as possible and mining leases have been issued for the Rosie and C2 prospects. It is always a good thing to have projects in reserve, but for now South Boulder is being treated by investors as a potash company, and a good one at that.