Please find below an excerpt from an interesting article by Dr. Alex Cowie in ‘Diggers and Drillers’ about South Boulder Mines, Eritrea, the Red Sea and the future potential of potash in terms of increasing global demand for fertilizer products needed to improve crop efficiency and agricultural output.

I’ll be up front about this. South Boulder is a speculative investment.

It may not be for the faint of heart. Its potash deposit is still in its infancy. And it’s two or three years until production. It’s also based in one of the riskier parts of Africa, Eritrea: a country that still disputes its border with Ethiopia.

So why have I bypassed my usual insistence on low-sovereign risk countries?

Because this potash deposit is too good to miss.

South Boulder is at early exploration stage of its 100% owned Colluli potash project. Progress has been very fast here. Drilling started on the edge of the Red Sea just six months ago, and the company has already announced its first resource figure of 548 million tonnes of potash. Let me put that in context. It is already almost half the size of Potash Corp’s 1132-million-tonne resource… currently the largest in the world. Not bad for half a year’s work.

But what is even more remarkable is that this 548-million-tonne figure only factors in THREE of the 17 holes drilled so far. The other 14 are being tested right now. And the results will be factored into a new resource figure that you can expect to see before the end of March.

The company believes the resource figure will grow much higher, as they more than doubled the upper range of the exploration target to 1250 million tonnes. Whether this happens or not remains to be seen. But it would make it the largest deposit in the world. Is it really possible? Let’s just say I reckon they’re being conservative! If you take into account that three holes has enabled a JORC compliant 548 million tonnes (Mt) inferred resource, you could infer 17 holes gets you to over 3100 Mt.

Of course, nothing is ever that simple in mining. But even if you halve that estimate – to be safe – you’re still looking at 1550 Mt. And that still exceeds Potash Corp’s figure. And the company is planning a lot more drilling yet.I need to point out that most of this will be in inferred category, which is only the first hierarchy of resource classification. More good drilling results between the current holes will be needed to upgrade it to a ‘measured’ resource that you could be more confident of.

The 17 drill results so far have been very consistent. But this is typical of a deposit created by an ancient sea bed drying out. Millions of years ago this was an inlet of the Red Sea.

The land changed and the inlet was cut off from the sea. So it dried up into a twenty metre thick layer of potash, which then got covered over by a shallow layer of rock.

So it’s not like a gold or copper deposit where the grade can vary from one metre to the next. Potash deposits are more like a coal deposit, where you get a predictable blanket lying across the whole basin. It’s also important to point out that they have only scratched one small corner of their exploration license…..

To read the full article please visit http://www.portphillippublishing.com.au/osi/

Please note that Diggers and Drillers requires you to subscribe to their paid content to be able to read the full article.