Eritrea Potash
South Boulder Mines Ltd (ASX: STB) (“South Boulder” or “The Company”) wishes to provide an update on negotiations with the Eritrean Government regarding its participation interest in the Colluli Potash Project.
In March 2012, South Boulder provided the Eritrean National Mining Corporation (“ENAMCO”) with a proposal for ENAMCO to acquire a 30% paid participating interest in the Colluli Potash Project (in addition to ENAMCO’s right to a free-carried 10% interest).
During the course of the negotiations and the ongoing development of the Colluli Potash Project, it became apparent to both the Eritrean Ministry of Energy and Mines (“MOEM”) and South Boulder that Colluli is a strategic and significant asset.
As a consequence, South Boulder has agreed to submit an alternative proposal for ENAMCO to participate in the Colluli Potash Project by way of a 50/50 profit share, where South Boulder would pay 100% of the development costs.
The profit share negotiations need to address a range of matters, with a keen focus on potential financing strategies. In this regard, both the MOEM and South Boulder intend to work together in good faith to determine the appropriate structure and commercial arrangements to develop the Colluli asset.
In discussions MOEM has made it clear that it fully supports the development of the Colluli Potash Project by South Boulder and is keen to conclude negotiations to enable licensing and development to proceed in a timely and expeditious manner.
November 6, 2012 at 10:39 am
The Ministry of Energy and Mines has all but destroyed all trust in the rule of law, fairness, ethical behaviour and business acumen of the Eritrean Government in the area of mining, exploration and production investment. All other areas would be advised to take heed.
As a small shareholder of South Boulder Mines (SBT) – it appears the apparent greed and perceived unethical behaviour of the Eritrean Government – to take a company hostage and rob it when it has invested so much time and money is unbelievable. A proposed 50% / 50% split on ownership as well as demanding STB pay all establishment costs is bordering criminal and is beyond reasonable.
This has caused many shareholders (small and large) to lose substantial value on their investments. Shares plummeted approx. 35%.
What a short sighted decision that will be damaging to the perceived integrity and trust in the Eritrean Govt.
Regards
Brian B
(Australia)