South Boulder Mines has a definite claim to fame - holding onto the world's shallowest potash deposit in Eritrea, a country in the Horn of Africa.

That very project is called Colluli and it is moving along in leaps and bounds.

It has already achieved a much anticipated maiden JORC resource that includes 548 million tonnes at 18.58% KCl, for total contained potash of 102 million tonnes - including 119 million tonnes at 23.14% KCl.

But South Boulder Mines hasn't rested on its laurels, recently boosting the exploration target even further.

It now stands at 750 million tonnes to 1.25 billion tonnes at 18-20% KCl.

South Boulder managing director Lorry Hughes said the maiden resource and the expected update represented the first stage of a mining engineering study that would examine the highest production capacity for open pit mining.

The study will investigate a range of production methods, from an annual rate of one million to 10 million tonnes.

And the company has a relatively easy road ahead compared to its peers, due to the shallow nature of the deposit.

The resource sits between 22 and 65 metres from the surface, with mineralisation open in all directions.

"We have the world's shallowest potash deposit, which not only makes exploration easy, it should also allow one of the cheapest mining costs for potash across the globe," Hughes said.

"Most of the rest of the world's production comes from very deep underground mines.

"It is like comparing the economics of a deep underground gold mine to a shallow open cut mine - the economics are completely different.

"As no one else is mining potash in an open pit it is incomparable."

Hughes said, like gold, the company did not need 10gpt to make an underground mine work.

"We already have it and all we need is two to three grams per tonne, bulk tonnage, and we have a serious long-term mine that will produce substantial profits for decades," he said.

Another plus for the project is its close proximity to infrastructure facilities - based 70km from the shallow abandoned port of Mersa Fatma and 160km southeast of the operating deepwater port of Massawa.

"The added potential to utilise solar evaporation, solution mining techniques and the proximity to major shipping lanes make the already attractive project even more attractive," Hughes said.

He said the project would reap further benefits thanks to close proximity to Asian and European markets.

"Eritrea is tipped [to] be one of the strongest growing economies on the globe this year and this is all due to exploration and mining activity," he said.

"Not only are we ramping up exploration and feasibility study work, a number of other foreign companies are mining and conducting advanced mining studies."

He said it meant the company was able to point to other projects and show that commercial deals could work there.

"We have the most advanced potash project in Eritrea and now there are two other companies exploring for potash on neighbouring projects."

Adding another string to the company's bow, Hughes said a resource upgrade was already expected at Colluli following some outstanding drilling results.

"Our production will be relatively straight forward, as the potash is contained within potash minerals which can be processed using standard techniques," Hughes said.

And, with two drill rigs positioned at the site, a resource upgrade is set for early in the March quarter.

In addition, a scoping and feasibility study is planned to be completed by the middle of this year.

Hughes said all operations were in good stead, thanks to the company's experienced team.

"Chris Gilchrist, a former potash company executive, recently joined the group, bringing with him great experience in potash mineral processing, and port and rail operations," he said.

"And that experience will really come in handy because Colluli is located close to the coast and has an abandoned railway line running through it."

Hughes said the deposit had already generated a huge buzz for the company, increasing its profile.



"We have been experiencing a lot of institutional support over the past year and now I expect that to increase further as we have defined a JORC resource," Hughes said.

"The in ground value of the resource is currently about $US40 billion and it is not lost on institutions that the project is world class."

However, he said some Australian investors had been a bit slow on the uptake, as they're unfamiliar with potash fundamentals.

"A bit of research will show the average punter that there is a whole world out there that follows potash, and for good reason," Hughes said.

"The mines are big, they have long lives, the product is in high demand and you can make a lot of money from it - just ask BHP Billiton what they think."

He said the media had also lavished a great deal of attention on the project as well.

"You don't have to be a rocket scientist to figure it out," he said.

"We've increased over 1000 per cent in share price over the past year and that makes for a pretty interesting story.

"The overall equity market loves stories like ours - there are a lot of pretenders and hopefuls out there, but our story is very real."

He said the project was also making waves across the world.

"Colluli has global appeal too, as the whole world wants potash, so people are watching from far and wide," Hughes said.

"I'm constantly in contact with groups from North America, Europe and Asia."

Historically, the project's shallow potash bearing horizons were identified in 1968, when the former Ethiopian Potash Company (EPC) undertook drilling.

Hughes said the historic data was very scant and difficult to locate, so South Boulder Mines had to start from scratch.

"Now we have proved the concept that there is potash there and compiled a resource for the first time," he said.

"There is huge scope for our exploration target of 750 million tonnes to 1.25 billion tonnes at 18 to 20% KCl - which is fairly conservative considering the area we have been looking at."

He added there was also huge potential for more potash at depth and in other areas of the tenement.

"Once we have done some more geophysical surveys, we will get out and look some more," Hughes said.

"Interesting though from an investment point of view, we look like we have already got enough resources to support a very significant project for about 50 years."

But Colluli isn't the only feather in South Boulder Mines' cap, it's also trying its luck with the Duketon nickel and gold projects in Western Australia.

Duketon hosts a new high grade massive nickel-copper-PGE [platinum group elements] sulfide discovery, with a best intersection of 5.2m at 9.13% nickel, 1.09% copper and 0.21% cobalt.

"Our gold project is less advanced, however it is showing potential for multiple new discoveries in a highly underexplored greenstone belt," Hughes said.

The company's other 100% owned fertiliser projects in Western Australia include Lake Disappointment in the Gibson Desert and Cardabia in the Carnarvon Basin.

These projects are currently up for divestment, as they have become non-core.

Hughes said the company's interest in potash would pay off.

"Potash is a generic term for potassium salts - its primary use is as an ingredient in agricultural fertilisers," he said.

"What's good about it is there is no known substitute for potassium as a plant nutrient - so it puts suppliers in a good position."

*This report, first published in the March 2011 edition of RESOURCESTOCKS magazine, was commissioned by South Boulder Mines