South Boulder Mines raises A$9.5 million for Eritrea potash

IRJ - June 26 - South Boulder is raising A$9.5 million through a share placement to fund completion of the definitive feasibility study and other work associated with its Colluli Potash Project in Eritrea.

The placement is being completed at 95 cents a share by Sprott, which has committed to placing 5.26 million shares  to North American investors. The remaining 4.74 million shares will be issued to private equity group Meridian Capital International Fund.

The company is targeting an exploration target of 1,250 to 1,750 million tonnes (MT) at 18 to 20 per cent KCI (muriate of potash). Muriate of potash accounts for some 90 to 95 per cent of potash fertilisers worldwide. Operating costs are projected to be $100 per tonne (/t) with processing coming in at $50/t. Production is expected to be no later than 2016.

Carole Ferguson, analyst at Fairfax, said: “We are pleased to see the company has raised funds for this potash project which has a high quality resource…While the economics of the project are good, Eritrea is an expensive place to mine as the government could potentially take almost 65 per cent of the value through a combination of government share, royalties and taxes”.

The government has 10 per cent free carry with the option to buy a further 30 per cent - there is a 3.5 per cent royalty on the potash and corporate tax rate of 38 per cent.

“Government participation should bring useful capital to the project and co-operation on the mining licence to take this project to production,” she added.  

Add to: del.icio.us | Digg | NewsVine | Mixx | FaceBook | Twitter