THE prefeasibility study (PFS) into the Colluli potash project, in Eritrea, has estimated that the project would require an initial investment of some $442-million.
The PFS examined a two-module development with an expected production of 425 000 t/y sulphate potash for the first five years of operation, increasing to 850 000 t/y for the remainder of the proposed 30-year mine life.
ASX-listed South Boulder Mines said on Wednesday that the Phase 1 development would include a project-owned and -built road, as well as a 900 000 t/y product export terminal.
Phase 2 of the project development would require a further capital investment of some $282-million, but would in part be funded through project cash flows.
During Phase 1 operations, the Colluli project was expected to have a net present value of $462-million and an internal rate of return of 22.3%, which would increase to $845-million and 24.7% respectively at the start of Phase 2 operations.
“We are extremely pleased with the highly favourable outcomes of the PFS for the development of the Colluli potash project,” said South Boulder MD Paul Donaldson.
The PFS was based on a 1.28-billion-tonne resource, containing some 152.7-million tonnes of potassium oxide.
Openpit mining would be conducted using conventional truck and shovel methods to access the ore, and average total cash cost for Phase 1 has been estimated at $210/t, dropping to $189/t during Phase 2.
First production was slated to start in 2018.
South Boulder and its joint venture partner Eritrean National Mining Company had taken the decision to move the project to the definitive feasibility study (DFS) stage by the third quarter of this year.
“We have already commenced optimisation testwork for the process plant and as we continue the DFS work, we will further advance conversations with strategic partners to assist with development of this globally significant project,” said Donaldson.