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Danakali releases financial report for 2018

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World Fertilizer,

Danakali Ltd., the potash company focused on the development of the Colluli Potash Project in Eritrea, has announced its Full Year Results for the year ended 31 December 2018.

Key operational highlights

  • Completion of the Front End Engineering Design (FEED) Study, confirming Colluli as the most advanced stage greenfield SOP project globally with industry leading capital intensity, first quartile costs, a project level NPV of US$902 million and IRR of 29.9% for Module I & II.
  • Updated JORC-2012 compliant Ore Reserve report for Colluli completed as part of FEED, estimating:
  • ? 1100 Mt @ 10.5% K2O Ore Reserve
    ? 203 Mt of contained SOP equivalent
    ? Expected mine life of almost 200 years at FEED production rates
  • Signed binding take-or-pay offtake agreement with global partner EuroChem Trading GmbH (EuroChem) for up to 100% of Colluli Module I SOP production for an initial 10-year term, with an option to extend a further 3 years.
  • Successful admission to trading on the London Stock Exchange (LSE) Main Market, helping to increase the company’s reach to international institutions and raise the profile of the Project.
  • Significant positive developments in Eritrean-Ethiopian relations including signing of peace treaty.
  • CMSC’s Social and Environmental Management Plans (SEMPs) were agreed and finalised following an extensive review process by the Eritrean Ministry of Land, Water & Environment’s Department of Environment.
  • DRA Global confirmed as preferred Engineering Procurement Construction & Management (EPCM) contractor for Colluli.

Key financial highlights

  • Cash position of AUS$9.6 million as at 31 December 2018.
  • Executed non-binding indicative US$200 million debt term sheet and associated mandate with highly reputable African development finance institutions (DFIs) the African Export-Import Bank (Afreximbank) and Africa Finance Corporation (AFC), to fund construction and development of Colluli.

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