potash, nickel, pge's and gold.

Believe there is an potential rerating story in STB over the next few weeks and months as exploration progresses on their;

Nickel/PGE - Duketon Greenstone (Rosie) nickel jv with IGO in WA

Gold - Duketon Greenstone gold

Potash - Colluli Project, Eritrea.

The latter project was given more attention last week by BHP's offer for No1. potash producer PotashCorp. This move signals that potash, not existing cash cows copper, coal, oil/gas or iron ore....is BHP's preferred commodity to plug plus $40B into (similar size to RIO's bid for Alcan....).

The race will now be on for who's next in the sector, and if STB's recent drilling success translates into a sizeable JORC latter in the year to supply the targeted 1.5 Mtpa operation for +20 years, would expect STB to be one of the limited number of potash development companies on the asx.

Interestingly, the reason STB went from sub 20c to just over $1 earlier this year is the drilling success at their nickel jv with IGO, not Colluli. STB and IGO have started to show that the Rosie prospect can contain high grade nickel and associated PGE's with the company later claiming the discovery as the best emerging nickel sulphide
project on the asx.

For those who know the company it is easy to see almost all the value and trading volume has been around results and analysis at Rosie. Its likely that almost all of STB's value is still being attributed to further exploration success at Rosie with Colluli for free imo....

Compare this with asx listed ELM, with 125M shares trading at 40c, the company has yet to drill a hole on their potash project in the Congo (not DRC). This is not to say ELM are overvalued, but just highlights the discrepancy in value between two projects.

The STB sp has retraced from $1 levels and now consolidated above 55c, with drilling progressing on Colluli and drilling scheduled to start again at Rosie (with IGO putting 3-4 rigs to produce an initial JORC and start feasibility studies over the coming qtrs) this leaves significant upside in sp to return and break previous highs.

South Boulder Mines STB

67.6M shares
~35M options at various strike prices
A$6M in cash and investments

Pros

Right place, right time and right people.
Management converting options and buying on market.
High director ownership
Greenfields, high grade nickel discovery, free carried by experienced operators in the same sector in IGO
Associated PGE content at Rosie could significantly reduce operating costs.
Drilling at Colluli has intersected potash over 4.5 km2.
BHP highlights potash is the right sector to be in.
Bullish projections for supply demand of potash to 2020.
Region around Colluli has previous potash production, close to infrastructure and port, BHP and other potash companies also have leases adjacent to STB.


Cons
Commodity price risk; Nickel and Potash
Company will require ongoing funding at Colluli.
Investor appetite for projects in Eritrea
Delay continues with obtaining drilling approvals at Rosie


Further on potash and STB;


BHP presentation offer for Potash corp of saskatchewan
http://www.asx.com.au/asxpdf/20100818/pdf/31ryyj375j6x2v.pdf


Potashcorp presentation rejection of BHPB offer and investor presentation.
http://www.potashcorp.com/media/POT_2010_Investor_Presentation_10-08-23.pdf
http://www.potashcorp.com/media/POT_2010_UBS_Basic_Materials_Conf.pdf


STB investor presentation
http://www.asx.com.au/asxpdf/20100819/pdf/31rzcc20xcgs5q.pdf


STB Eritrean Potash: Overview
http://www.southbouldermines.com.au/projects/eritrean_potash/overview_ep/



STB in the news;
http://www.southbouldermines.com.au/images/uploads/Wall_Street_Journal_-_fertile-future-for-phosphate_and_potash_28-06-2010.pdf?phpMyAdmin=1bd01278398afe2def79ae9abee3d160


STB wise owl research report
http://www.southbouldermines.com.au/images/uploads/STB_Research_Report_Wise_Owl.pdf?phpMyAdmin=1bd01278398afe2def79ae9abee3d160


Chart;

Re-rating off the back of drill results from Rosie in March April this year which included an unfilled possible breakaway gap. Consolidation since then has seen strong support at 55c with resistance at 75-80c, weekly volume is just starting to pick back up with BHP release and first results at Colluli this month. A release indicating drilling starting at Rosie would also be positive.