South Boulder Seals Eritrean Potash Joint Venture

Australia’s South Boulder Mines signed a 50/50 joint venture agreement with ENAMCO for its Colluli potash project in Eritrea.
Australia’s South Boulder Mines signed a 50/50 joint venture agreement with ENAMCO for its Colluli potash project in Eritrea.

By South Boulder,

South Boulder Mines (ASX: STB) (“South Boulder” or “the Company”) is pleased to announce that it has completed and signed a Shareholders Agreement with the Eritrean National Mining Corporation (ENAMCO) outlining the key joint venture terms covering the Colluli Potash Project’s development.

The Shareholders Agreement has been signed by the parties and approved by ENAMCO and the South Boulder Board.

The signing of the Shareholders Agreement enables the joint venture company, Colluli Mining Share Company (CMSC), to be formally incorporated and established. This in turn will pave the way for all the relevant licenses to be transferred to CMSC, which will own and operate the Colluli Potash Project.

Key terms of the Shareholders Agreement are outlined below:

ENAMCO and STB will each hold a 50% ownership in the Project through a newly formed company, Colluli Mining Share Company, (“CMSC”);

• It is proposed that Project Development Costs for initial development will be funded 70% by debt and 30% by equity;

• To the extent that third party commercial debt is not available for 70% of Project Development Costs, STB will be required to provide the debt to CMSC on arms’ length commercial terms;

• The balancing 30% project equity required for initial Development Costs will be funded by STB. STB will be entitled to recoup 50% of this equity as a preferential payment from 50% of the Project cashflows (subject to ongoing funding requirements of CMSC) that would have otherwise been available to all equity holders; and;

• CMSC will have a Board of 5 being 3 members from STB and 2 from ENAMCO.

South Boulder’s CEO, Paul Donaldson, said the completion of the Shareholders Agreement represented an important milestone for the Colluli Project, crystallising the arrangements first outlined in May this year and providing significant certainty regarding the economic and fiscal basis on which the Project can be developed.

“We are pleased to have signed this material agreement, which secure and clarify the project ownership structure and will assist us in discussions with strategic investors and potential financiers,” he added.
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