Elemental Minerals reveals best potash intersection yet at...

Elemental Minerals reveals best potash intersection yet at Dougou Prospect

Tuesday, September 04, 2012 by John Phillips

The significance of the latest potash discoveries at the Sintoukola licence is that they provide additional support for Elemental's strategy to develop a centralised processing facility capable of scaling-up and servicing a number of mines across the licence.

Elemental Minerals (ASX: ELM, TSX: ELM) continues to discover very high levels of potash at the Sintoukola Project in the highly prospective Congo basin - which could become a major potash producer.

At the Dougou Prospect, a borehole intersected a thick sylvinitic Hangingwall Seam of 36.41% K2O (57.66% KCl) for 4.47 metres, including an interval of 1.74 metres at 39.91 K2O (63.20% KCl).

Iain Macpherson, chief executive officer, commented: “The exceptional quality of this intersection exceeds expectations and highlights the quality of the Dougou Prospect."

The significance of this section is that it is thicker than the intersections of the Hangingwall Seam at Kola which range from 2.46 to 3.75 metres.

Dougou is 15 kilometres southwest of the Kola Deposit.

Another plus with the drilling at Dougou is that it has unearthed a new set of high-grade sylvinite seams which occur around 10 metres above the Hangingwall Seam, including 3.93 metres at 22.74% K2O (36.01% KCl) - which has been named the “Top Seam”.

Macpherson added, "With planned further drilling at Dougou we would like to repeat the success of our resource drilling at Kola; this time exclusively targeting the mineralisation of the Hangingwall and Top Seam."

Astute investors will be already aware that the Kola deposit is a potash asset of global significance - and with the addition of the Dougou Prospect, the full potential scale of both the Sintoukola Project and the Congo basin are beginning to emerge.

At Kola, the Measured and Indicated Sylvinite Resource recently increased 38% to 573Mt at 20.92% K2O (33.13% KCl), while the Inferred sylvinite Resource jumped 82% to 475Mt at 20.39% K2O (32.27% KCl).


Dougou prospect back story

The Dougou prospect covers an area 10 kilometres by 20 kilometres, and most importantly for any possible future exports is that it is located only 21 kilometres from the coast and the planned product port facilities at Tchiboula.

Macpherson said that the company will shortly commence further exploration at both Dougou and Kola, targeting similar sylvinite intersections in both the Hangingwall and Top Seams.

"These results further point to the potential scale of the Sintoukola licence and support our operational strategy in developing a centralised processing facility capable of scaling-up and servicing a number of mines across the licence.

"We are increasingly confident that Sintoukola and indeed the broader Congo Basin, has the potential to become a major potash producing province that will help meet the long-term market demand for potash.”

Elemental owns 93% of the Sintoukola Potash Project, located on the Republic of Congo coastline.


Analysis

The potential of Elemental has not been lost on the broader broker community, with Canadian investment bank Northern Securities last month placing a buy rating on the stock and a 12-month share price target of $2.70 - which is around three-and-a-half times the last traded price in the low to mid $0.70 range.

Northern Securities said at the time: "Investors seeking the best of potash projects are well served by buying shares of Elemental".

Adding further support, Patersons Securities recently placed a price target of $1.35 on the stock, with Canada's National Bank Financial placing a C$1.10 price target.