(MENAFN - ProactiveInvestors - Australia) South Boulder Mines (ASX: STB) is on track to become the world's first modern open pit potash producer, with the potential strong upside of the stock not lost on North American investors.
Colluli has the lowest CAPEX per tonne in the industry, with the potential for a mine life in excess of 50 years, producing both MOP and Sulphate of Potash.
South Boulder will raise A9.5 million via a share placement at 0.95 cents to North American investors - and to private equity group Meridian Capital International Fund. Each share has a one-for-two free listed option exercisable at A1.50 within two years of issue.
The funds will be used to complete Definitive Feasibility Studies and to start early access works, while also providing working capital. The placement will be made under South Boulder's 15% placement capacity.
Discussions with potential strategic partners are also underway.
Colluli currently hosts a Measured, Indicated and Inferred JORC Resource of 1.08 billion tonnes at 18% KCl for 194 million tonnes of potash, and has a near term 1.25-1.75 billion tonne Exploration Target.
A Feasibility Study is underway targeting 1Mtpa production by 2016, and with low forecast CAPEX of US0.74B - there is enormous potential to improve economics.
The defining factor for Colluli is the strategic position, ideally located to sell potash into the world's largest growth market " Asia. Negotiations are also underway with Eritrean Government to sell 30% equity stake and complete approvals.
The placement is being completed by Sprott Private Wealth LP and affiliates, with Sprott committed to placing 5.26 million shares (A5 million) to North American investors.
The remaining 4.74 million shares (A4.5 million) will be issued to private equity group Meridian Capital International Fund (Meridian).
The A4.5 million placement will settle on 29 June 2012 and the balance on or before 17 July 2012.
Valuation - cheapest development cost in the Potash Industry
Where ths story becomes even more interesting for South Boulder is that the company has the cheapest development cost in the Potash Industry.
South Boulder has economics of 736 US/tonne of KCl Capacity, and when compared to some of the major names such as BHP Billiton (Blur) 1,030, Verde Potash (Cerrado Verde) 1,090 and BHP again (Jansen) 1,505 - South Boulders economics become even more compelling.
And with Colluli being only one of the few Greenfields potash deposits developed in the next 10 years - investors may not be able to enter for the stock at current low levels for too much longer.