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Danakali LSE listing approaches completion

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World Fertilizer,

Danakali Ltd has released a statement confirming its intention to seek admission to the Standard Segment of the Official List of the Financial Conduct Authority (FCA) and to trading on the London Stock Exchange (LSE) main market.

Admission and trading in the ordinary shares is expected to begin on or around 24 July 2018 at 8.00 a.m. BST. The company’s ordinary shares will remain listed on the Australian Stock Exchange (ASX). Danakali is a potash company focused on the development of the Colluli Potash Project in Eritrea.

Danakali has a market capitalisation of approximately AUS$193 million and its key shareholders include Well Efficient (13.3%), JP Morgan Asset Management UK (7.7%) and Capital Group (6.3%). Danakali’s core strategy is to become a leading sulfate of potash (SOP) producer through the development of the Colluli Potash Project. This project represents one of the lowest cost, shallowest and most advanced greenfield SOP development projects globally. It is 100% owned by Colluli Mining Share Co. (CMSC), which is a 50:50 joint venture (JV) between Danakali and Eritrean National Mining Corp. (ENAMCO).

According to Danakali, the project comprises a JORC-2012 compliant ore reserve estimate of 1100 million t at 10.5% K2O for 203 million t of contained SOP equivalent, allowing an almost 200 year mine life. The project will be developed utilising a modular approach with production from Module I expected to produce 472 ktpa of SOP, and Module II will increase SOP production to 944 ktpa.

Front-end engineering and design (FEED) confirmed a post-tax project NPV of US$902 million and IRR of 29.9% for Colluli Modules I and II. Recently, the company announced an offtake agreement CMSC and EuroChem Trading GmbH. EuroChem will take, pay, market and distribute up to 100% (minimum of 87%) of Colluli’s Module I SOP production.

In the statement, Danakali states its belief that the admission will increase its reach to institutional investors in the UK, Europe, Africa and the Middle East, increase share trading liquidity, and further raise the profile of the project.

Seamus Cornelius, Danakali Executive Chairman, said: “We are delighted to announce our formal intention to list on the LSE. This has been a key strategic objective for us this year, along with the signing of the offtake agreement with EuroChem and the completion of the FEED study.

“The LSE listing provides us with additional access to sophisticated investors in London and internationally with a strong appetite for advanced stage development projects and a good understanding of the African mining and resource environment.

“Danakali presents an attractive investment opportunity through providing exposure to one of the most advanced and economically attractive SOP projects globally with a post-tax project valuation of US$902 million and IRR of 29.9% for Modules I and II, expected first quartile operating costs, industry leading capital intensity, and an almost 200-year mine life. The Colluli deposit is unrivalled in the SOP industry.

“We, and our partner ENAMCO, are excited to be progressing the development of this world-class project, and delivering a long-term and stable supply of premium fertilizer for years to come. It also promises to be a major contributor to the Eritrean economy through exports, employment and skills. We look forward to bringing Colluli into production, and building value for our shareholders and stakeholders.”

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