Danakali - Colluli Potash Project – Progress Update

Danakali - Colluli Potash Project – Progress Update

West Perth-based, Eritrean focused potash developer Danakali has put in place eight sulphate of potash MoUs with multinational partners, as it moves the Colluli project into its next phase of development. The combined offtake volume under the MoUs exceeds 800,000tpa and reinforces the strong interest shown to date in the high quality product to be produced from the project, on which a Definitive Feasibility Study was completed at the end of November last and development work is continuing.


Highlights

8 Sulphate of potash (SOP) offtake Memorandums of Understanding (MOUs)signed with multinational parties
Combined MOU volumes exceed 800ktpa (twice the volume of module I)
Strong interest in the ultra-high quality Colluli SOP
Offtake discussions progressing towards binding agreements

Danakali Limited (ASX:DNK) (“Danakali” or the “Company”) provides the following update with respect to its 50% owned Colluli Potash Project (“Colluli”) in Eritrea, East Africa. The project is 100% owned by the Colluli Mining Share Company (“CMSC”).

Memorandums of understanding

Danakali has signed non-binding memorandums of understanding (“MOUs”) with 8 multinational parties throughout Northern Africa, Europe, Middle East and North America for the offtake of sulphate of potash (“SOP”) from Colluli. High quality representative samples produced from the Colluli resource were provided for quality control assessment by prospective customers.

The combined offtake volumes in the MOUs exceed 800ktpa in both standard and granular form, which compares to Colluli’s design production capacity of 425ktpa (Module I only). Engagement with potential Asian customers has yet to commence, and represents strong potential for additional product volume interest.

Approvals Process

The Colluli DFS has been submitted to the Eritrean Ministry of Energy and Mines. DFS due diligence will be conducted as a pre-requisite to the award of a mining license. Social and environmental impact assessments and associated management plans have been completed to the Equator Principles (a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects). Danakali and CMSC have completed post DFS stakeholder engagements.

Colluli DFS

Over the past twelve months Danakali and CMSC have made significant progress at Colluli. The project team released a highly favourable definitive feasibility study (“DFS”) on 30 November 2015, which was completed by high quality, industry recognised mining, engineering, civil and environmental consultants. The DFS highlights that Colluli is the premier premium potash and multi-agri commodity investment opportunity globally.

The favourable suite of potassium bearing salts, shallow mineralisation, proximity to coast and simple, proven processing technology combine to give Colluli an industry leading capital intensity, bottom quartile operating costs, low incremental growth capital and unrivalled product diversification potential. These outcomes are underpinned by a massive 1.1 bt ore reserve which delivers an estimated mine life of over 200 years at the DFS production volumes.

Location

The Danakil basin potentially contains the largest unexploited potash geological setting in the world. The positively unique attributes of the Colluli resource however, give it a distinct advantage over other developments. Eritrea is at the epicentre of booming population growth and ideally located to supply the key fertiliser markets of the future.

Capital Raising

Danakali successfully completed a raising of approximately A$5.5m in March 2016 to commence front end engineering design work, initiate the mine contract tendering process, complete the mining approvals process, secure offtake arrangements, progress strategic relationships, and secure project funding and working capital.

Danakali Managing Director, Paul Donaldson, commented:

“We are happy with the progress that has been made to date on the Colluli project. The outcomes of the DFS demonstrate that Colluli is positively unique. No other potash project in the world has the growth, product diversification and upside potential of Colluli. The signed MoUs and negotiations underway with potential offtakers highlight that SOP is, and will continue to be, a product in high global demand.”

To view the full announcement click here.

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