TIDMDNK
RNS Number : 4472X
Danakali Limited
30 April 2019
Announcement Tuesday, 30 April 2019
============= =======================
For ASX version with pictures visit the ASX website:
https://www.asx.com.au/asx/share-price-research/company/DNK
QUARTERLY REPORT
For the period ending 31 March 2019
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the Company)
is pleased to provide this quarterly update on the activities and
financial position of the Company and its Colluli Potash Project
(Colluli or the Project), located in Eritrea, East Africa. The
Project is 100% owned by the Colluli Mining Share Company (CMSC), a
50:50 joint venture between Danakali and the Eritrean National
Mining Corporation (ENAMCO).
Highlights
-- Significant CMSC senior debt funding progress
- Financier due diligence satisfied for US$200M of senior
debt
- AFC and Afreximbank moving through internal approvals required
for credit approval
-- Mr. Niels Wage appointed as CEO after an extensive global
search(1)
- Mr. Wage brings invaluable experience from former senior
management roles at BHP, including Vice President Potash and Vice
President Freight
- Mr. Wage's appointment is timely as Danakali finalises project
funding and moves into project development
-- Independent UNDP report identifies Colluli's ability to boost
Eritrean economy and support the country's Sustainable Development
Goals(2)
- Examines Colluli's potential to enhance the delivery of the UN
Global Goals for Sustainable Development in Eritrea
- Concludes that Colluli could significantly boost the Eritrean
economy with associated benefits to agricultural productivity,
training and employment
-- Mr. Tony Harrington promoted to Project Director
- Reflects Mr. Harrington's deep skills and experience in
project execution in emerging jurisdictions
- Highlights Colluli is at 'shovel ready' development stage
Key activities planned for the June 2019 Quarter
-- Finalise CMSC senior debt credit approval
-- Progression of project execution
- Tendering of EPCM sub-contracts
-- Danakali Annual General Meeting to be held on Monday, 27 May
2019(3)
Financial position
-- Cash position of A$7.6M as at 31 March 2019
Project
Project update - Colluli is 'shovel ready'
Colluli is 'shovel ready' pending funding. Danakali and CMSC are
focused on logistics and other technical collaboration aspects with
offtake partner EuroChem, operational contracts, operations
readiness, funding and corporate social responsibility initiatives.
Risk assessments and compliance checks are ongoing to support
execution and operations readiness. Additionally, Danakali is
looking into organic certification for Colluli's products.
Project financing - AFC and Afreximbank progressing through
internal approvals towards credit approval
Mandated Lead Arrangers (MLAs), AFC and Afreximbank, have
completed due diligence and commenced the internal approval
processes required ahead of credit approval for US$200M of CMSC
senior debt.
Outside of the CMSC senior debt process, the Company continues
to move the Project's funding requirements forward through the
following avenues:
-- extensive awareness exercises carried out to further raise
the profile of Danakali and Colluli;
-- ongoing discussions with strategic, institutional and private
client investors and brokers globally; and
-- moving towards financial close for Colluli Module I in
parallel with the CMSC senior debt process.
The Company is carefully working towards achieving the further
funding requirements at the optimal time and on the optimal terms.
It is Danakali and CMSC's aim to commence project execution this
year.
Operational contracts - Ongoing progression and assessment
including tenders for EPCM sub-contractors
Specific conditions of final contracts agreed at CMSC level for
EPCM, mining services and power. Major contracts have been reviewed
by the legal counsel appointed by the MLAs. Feedback has been
received with respect to senior debt compatibility and no material
gaps exist.
Execution preparedness continues, including ongoing
collaboration with DRA Global. Several sub-contractor visits to
Asmara, the Port of Massawa and Colluli were held during the first
quarter of 2019. Potential mechanical services and camp provider
sub-contractors were among those that carried out preliminary due
diligence ahead of CMSC issuing tender packages.
UNDP Report - The UNDP highlights Colluli's potential(4)
A report prepared by independent consultants that was initiated
and funded by the United Nations Development Programme (UNDP) on
the potential contributions of the Project to Eritrea's Sustainable
Development Goals (SDGs) was released during the March 2019 Quarter
(the Report). The Report can be viewed on the Company's website via
this link:
http://www.danakali.com.au/the-colluli-project/undp-report.
The Report asserts that the size of Colluli's deposit and length
of mine life give it the potential to boost Eritrea's economy and
agriculture. SOP fertiliser can be used to grow high value fruits,
nuts and vegetables and promote food security in Eritrea and Africa
more broadly.
The Report concludes Colluli can significantly boost the
Eritrean economy through 5 areas of direct impact and meaningfully
advance the Sustainable Development Agenda of Eritrea, in
particular with respect to 13 out of the 17 defined UN SDGs.
Colluli's 5 areas of direct impact and corresponding 13 SDGs
Area of direct impact
------------------------------ ------------------------------------------------------------------
Production,
Economic potash and
Sustainable development value People Environment Fiscal other mineral
goals generated & society impacts impacts fertilisers
------------------------------ ----------- ----------- ------------ --------- ---------------
1 No poverty NS NS HP HP
------------------------------ ----------- ----------- ------------ --------- ---------------
2 Zero hunger HP HP
------------------------------ ----------- ----------- ------------ --------- ---------------
3 Good health & wellbeing NS HP NS
for people
------------------------------ ----------- ----------- ------------ --------- ---------------
4 Quality education NS NS NS HP NS
------------------------------ ----------- ----------- ------------ --------- ---------------
5 Gender equality NS HP HP
------------------------------ ----------- ----------- ------------ --------- ---------------
6 Clean water & sanitation HP
------------------------------ ----------- ----------- ------------ --------- ---------------
7 Sustainable economic growth HP HP
& decent work
------------------------------ ----------- ----------- ------------ --------- ---------------
8 Industry, innovation & HP HP
infrastructure
------------------------------ ----------- ----------- ------------ --------- ---------------
9 Reduced inequalities HP HP
------------------------------ ----------- ----------- ------------ --------- ---------------
10 Responsible consumption HP
& production
------------------------------ ----------- ----------- ------------ --------- ---------------
11 Climate action HP
------------------------------ ----------- ----------- ------------ --------- ---------------
12 Peace, justice & strong HP HP
institutions
------------------------------ ----------- ----------- ------------ --------- ---------------
13 Partnerships for the HP HP HP
goals
------------------------------ ----------- ----------- ------------ --------- ---------------
HP = High potential; direct impacts of Colluli have high
potential to make a positive and significant contribution to
Sustainable Development Goals
NS = Natural synergies; direct impacts of Colluli have natural
synergies with Sustainable Development Goals, however further
actions are needed
"From a global perspective the Project is a very interesting
case and can be considered a significant step ahead in terms
of the relationship between the resource industry and the development
agenda of the host country, and how to understand mining contributions
beyond the traditional direct economic effects."
Senior Economist and joint author of the Report, Cristian Parra
"Colluli is much more than a great mining asset. Not only does
it have outstanding grade, size, location and simplicity; Colluli's
products will also help farmers and support food security in
Eritrea, across Africa and beyond. The Report effectively highlights
the alignment between Danakali and, our partners, ENAMCO in ensuring
the Project is successfully executed. We look forward to working
with ENAMCO to ensure Colluli reaches its full potential for
the benefit of all stakeholders."
Executive Chairman of Danakali, Seamus Cornelius
Corporate
New CEO appointed - Mr. Niels Wage appointment positions
Danakali for near and long-term advancement and building of
shareholder value(5)
Following a thorough global search for potential CEO candidates,
Mr. Wage was appointed as CEO in the March 2019 Quarter due to his
extensive and relevant industry experience, clear leadership
capabilities, and passion for the Colluli Potash Project and
Eritrea.
Mr. Wage brings significant potash, trading and logistics
experience to the team. Prior to joining Danakali he held a number
of senior management roles at BHP, including Vice President Potash,
Vice President Freight and Vice President Diamonds. At BHP he was
also responsible for marketing, sales and supply chain for the
Jansen Potash Project. Mr. Wage previously worked in trading and
logistics for Cargill and Vopak. He has also held a series of
directorships including joint ventures between Japanese firms
K-line, Daiichi and JFE Steel and BHP, the International Plant
Nutrition Institute and RightShip. He holds a Master's Degree in
Business Economics from the University of Amsterdam and has
completed the International Directors Programme at global business
school INSEAD.
Mr. Wage joined Danakali in June 2018 as Chief Commercial
Officer (CCO). As CCO, Mr. Wage assisted the
Company with building and maintaining industry relationships
including interacting with CMSC's offtake partner, EuroChem. He has
also been involved in investigating the multicommodity and
logistics optimisation potential of the Project, further developing
CMSC's product sales strategy, advancing Danakali and CMSC's social
and environmental agenda, and supporting funding, project execution
and operations readiness processes.
"I look forward to building value for shareholders by working
closely with the Danakali team, joint venture partners ENAMCO
and other stakeholders to move rapidly towards production from
Colluli. I am privileged to be able to contribute to a unique
project that has the potential to positively change the lives
of people in Eritrea and across the region while helping to deliver
the substantial and environmentally sound increases in global
food supply required in the coming decades."
Danakali CEO, Niels Wage
Watch a recent video interview with Mr. Wage here:
https://www.youtube.com/watch?v=_VH9ndzsF3I
Project Director - Mr. Tony Harrington promoted to Project
Director
Mr. Tony Harrington was recently promoted to the role of Project
Director (from Project Manager). He brings a depth of experience to
his role as well as Eritrean and wider developing nation
insight.
Mr. Harrington has over 35 years' experience managing the
delivery of projects across a diverse range of commodities, mineral
processing units and jurisdictions including East Africa, West
Africa, Southern Africa, China, Europe, UK and Australia.
Mr. Harrington has spent the majority of the last 9 months in
Eritrea. He has been progressing EPCM, operations readiness and
other project execution processes.
Mr. Harrington was interviewed following his appointment:
Could you elaborate on your previous experience, particularly as
relevant for leading project execution at Colluli?
"I have had a lot of experience over the years in development
projects in various parts of the world, mainly Africa, but also
Asia, Europe and Australia. In previous roles I have been known as
'Mr. Fix It'; someone that can be called on to drive strong
outcomes in troubled or difficult projects.
In 2012, I worked on the 0.3 billion dollar expansion of the
Lumwana Copper Mine, a large copper mine and processing facility
with a plant production rate of 25Mtpa in Zambia close to the
Democratic Republic of Congo border. The project was finished on
time and on budget.
I also project managed the 0.3 billion dollar Kwale Mineral
Sands Project in Kenya, the country's first major mining venture.
We finished with around double the intended nameplate throughput
allowing an expected average production of 470ktpa of mineral sands
products. The Kwale Project has since won awards related to
sustainable development and is well known for its strong culture of
Corporate Social Responsibility.
I was also involved as Construction Manager and became Project
Manager at the Jinfeng Biox Gold Project in China. At the time it
was the first western developed mine built in China. A similar
structure to CMSC, it was a joint venture between the Chinese
Government and Sino Gold, an Australian company. The Chinese
Government expected a 7 to 10 year project, but we aimed for 3 to 4
years. We had the mine operating in 40 months - from start to
finish, quite an achievement. The project won an award from the
Chinese Government because there were over 7 million man hours
without any lost time through injuries."
What is a key learning from your experiences in developing
projects?
"Change control. Too often changes in development strategy can
be made without the necessary analysis and assessment. Change
decisions can be made expecting a certain positive result but can
end up leading to a cascading negative effect on other and often
unexpected parts of the project. It is very important to keep
control and understand change. Even if change is done well and
doesn't add further dollars, it almost always adds time.
There are a lot of issues that will need to be addressed during
a project, this can lead to distraction. It's very important that
you always keep everyone focused on what needs to be achieved and
when, always drive towards the end result to make the project
successful."
Having spent significant time in Eritrea, what insights can you
give into the country?
"There has been quantum change since the signing of the peace
agreement and the opening of borders. During the peace process in
July 2018 there were several public celebrations, both formal and
informal, around Eritrea. All the celebrations I witnessed were
about happiness, peace, hope, and the ability to see cross border
families.
There has been a lot more traffic on the road, particularly
Ethiopian trucks going into Massawa, and a marked increase in the
numbers of people in Asmara and Massawa. More products, including
white goods and other commodities, have been imported from Ethiopia
which has increased competition and driven prices down. This is
seen as a strong positive."
What are you currently focusing on in Eritrea?
"While I'm here I'm doing a number of things, including
assessing current resources and team in-country, to better
understand our capabilities as we go into the execution phase.
Based on that understanding and review, an organisation structure
is set up and we can build our Owner's Team. I want to utilise as
much of our current skills and capacity as possible, and ensure we
have the additional support where required. Community, human
resources, and safety are among the areas I am and will be
prioritising.
I am also ensuring we have consistent interactions with the
Eritrean Government and our joint venture partners ENAMCO. These
relationships are very strong."
What will be your first steps once Danakali achieves project
funding?
"I will send a letter of intent to preferred EPCM contractor DRA
so that they can ramp-up their workforce. We will kick-off the
project and carry out Phases 1 and 2 of the EPCM plan [see below].
In parallel, I will start mobilising Colluli's Owner's Team. Part
of the Owner's Team ramp-up scope will be to set up internal
project control systems, internal reporting systems, and
re-evaluate the current FEED study from a practical project
execution perspective. We will then sit down with DRA and work
through an updated FEED schedule, utilise and assess independent
work and check differences between the Owner's Team and DRA, agree
a position, and move into Phase 3."
Colluli EPCM phases
Phases 3-6:
Phase 2: Detailed engineering,
Phase 1: Capital estimate and procurement, construction
FEED review schedule and project management
============================================================ ========================================================= ===============================================
* Mobilise EPCM Owner's Team * Complete updates to scope of work * Finalisation of engineering design, deve
lopment and
drafting
* Critical review of FEED in context of EPCM * Investigate optimisation opportunities
methodology
* Finalisation of vendor packages, and pro
* Develop optimal execution strategy curement
* Finalise geotechnical test work
* Relocate camp * Finalisation and award of site contracts
* Purchase critical equipment including reverse osmosis
plant
* Review and agree on capital estimates and schedule * Construction
* Commissioning and ramp-up
============================================================ ========================================================= ===============================================
Proactive Investors One2One Forum - Strong engagement with
institutional investors and private clients(6)
Executive Chairman, Seamus Cornelius, presented at the Proactive
Investors One2One Forum in London. The event showcased Danakali to
sophisticated and private investors, private client brokers, fund
managers, financial institutions, hedge funds, analysts and
journalists. See a copy of the presentation here:
http://www.danakali.com.au/images/stories/corporate-presentations-and-company-infromation/2019/20190307_proactiveinvestors_one2one_presentation.pdf
The Company also carried out institutional and private client
engagement exercises in London, Australia and New York during the
first quarter of 2019.
Eritrea
EU Investment - Announcement of EUR20M investment to build
Eritrean roads
The European Union (EU) announced a EUR20M investment to build
roads between Eritrea's port cities and Ethiopia's border(7) . The
Commissioner for International Cooperation and Development, Neven
Mimica, met with Eritrean President, Isaias Afwerki, to explore
ways for the EU and Eritrea to enhance political relations(8) .
"The European Union is committed to support Eritrea and Ethiopia
in delivering their historic peace agreement, which ended twenty
years of conflict. To back this, we are launching a EUR20 million
programme to rebuild the roads connecting both countries. This
will boost trade, consolidate stability, and have clear benefits
for the citizens of both countries through the creation of sustainable
growth and jobs."
EU Commissioner, Neven Mimica(9)
The rapprochement has already reduced the price of basic
commodities, from which the Eritrean population is significantly
benefitting(10) .
Capital
Cash
Consolidated cash on hand was A$7.6M as at 31 March 2019.
Securities
During the first quarter of 2019, the Company issued no fully
paid ordinary shares.
As at 31 March 2019, there were a total of 264,422,398 fully
paid ordinary shares on issue.
The following unlisted options were issued during the first
quarter of 2019:
-- 1,724,015 unlisted options with an exercise price of A$1.031
each expiring 24 January 2022
-- 583,000 unlisted options with an exercise price of A$1.108
each expiring 13 March 2022
As at 31 March 2019, there were a total of 5,297,015 unlisted
options on issue at various exercise prices and expiry dates. There
were no unlisted options that lapsed during the quarter. There were
no new unlisted options exercised during the first quarter of
2019.
As at 31 March 2019, there were a total of 1,315,000 performance
rights on issue. No performance rights lapsed during the first
quarter of 2019. There were no new performance rights issued during
the first quarter of 2019.
Change of address
The Company's Principal Place of Business and the Registered
Office changed effective 1 March 2019. The
new address is as follows:
Danakali Limited
Level 11, 125 St Georges Terrace
Perth WA 6000
Phone: +61 8 6189 8635
Interests in mining tenements
The 7 Mining Licenses awarded to CMSC span over 60km(2) of the
100km(2) Mining Agreement area(11) .
Tenement holdings
Tenement: Colluli,
Eritrea
=========== ==========
Nature Owned
of
interest
=========== ==========
License Mining
type Licences
=========== ==========
Current
equity 50%
=========== ==========
There was no change in tenement holding during the first quarter
of 2019.
For more information, please contact:
Danakali
Niels Wage William Sandover
Chief Executive Officer Head of Corporate Development
+61 8 6189 8635 & External Affairs
+61 499 776 998
Corporate Broker - Numis Securities UK IR/PR - Instinctif Partners
John Prior / Matthew Hasson / David Simonson / Sarah Hourahane
James Black / / Dinara Shikhametova
Paul Gillam danakali@instinctif.com
+44 (0)20 7260 1000 +44 (0)207 457 2020
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
---------------------------------------------------------
Danakali Limited
ABN Quarter ended ("current quarter")
--------------- --------------------------------------
57 097 904 302 31 March 2019
Consolidated statement of cash Current quarter Year to date
flows $A'000
(3 months)
$A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation - -
(b) development - -
(c) production - -
(d) staff costs (244) (244)
(e) administration and corporate
costs (601) (601)
1.3 Dividends received (see note - -
3)
1.4 Interest received 30 30
1.5 Interest and other costs of - -
finance paid
1.6 Income taxes paid - -
1.7 Research and development refunds - -
1.8 Other (provide details if - -
material)
---------------- -------------
Net cash from / (used in)
1.9 operating activities (815) (815)
----- ------------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) property, plant and equipment - -
(b) tenements (see item 10) - -
(c) investments - -
(d) other non-current assets - -
2.3 Cash flows from loans to - -
other entities
2.4 Dividends received (see note - -
3)
Other - Funding of Joint
2.5 Venture (1,171) (1,171)
---------------- -------------
Net cash from / (used in)
2.6 investing activities (1,171) (1,171)
------- ----------------------------------- ---------------- -------------
3. Cash flows from financing
activities
3.1 Proceeds from issues of shares - -
3.2 Proceeds from issue of convertible - -
notes
3.3 Proceeds from exercise of - -
share options
3.4 Transaction costs related - -
to issues of shares, convertible
notes or options
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
3.9 Other (provide details if - -
material)
---------------- -------------
3.10 Net cash from / (used in) - -
financing activities
------- ----------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 9,551 9,551
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (815) (815)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (1,171) (1,171)
4.4 Net cash from / (used in) - -
financing activities (item
3.10 above)
4.5 Effect of movement in exchange - -
rates on cash held
---------------- -------------
Cash and cash equivalents
4.6 at end of period 7,565 7,565
------- ----------------------------------- ---------------- -------------
5. Reconciliation of cash and Current quarter Previous quarter
cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 7,565 9,551
5.2 Call deposits - -
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- -----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 7,565 9,551
---- ----------------------------------- ---------------- -----------------
6. Payments to directors of the entity and Current quarter
their associates $A'000
Aggregate amount of payments to these parties
6.1 included in item 1.2 and 2.5 132
----------------
6.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
----------------
6.3 Include below any explanation necessary to understand
the transactions included in items 6.1 and 6.2
----- -----------------------------------------------------------------
Item 1.2 includes aggregate amounts paid to directors including
salary, directors' fees, and superannuation (excluding the
reimbursement of expenses)
7. Payments to related entities of the entity Current quarter
and their associates $A'000
7.1 Aggregate amount of payments to these parties -
included in item 1.2
----------------
7.2 Aggregate amount of cash flow from loans -
to these parties included in item 2.3
----------------
7.3 Include below any explanation necessary to understand
the transactions included in items 7.1 and 7.2
---- ----------------------------------------------------------------
8. Financing facilities available Total facility Amount drawn
Add notes as necessary for amount at quarter at quarter end
an understanding of the position end $A'000
$A'000
8.1 Loan facilities Nil Nil
------------------- ----------------
8.2 Credit standby arrangements Nil Nil
------------------- ----------------
8.3 Other (please specify) Nil Nil
------------------- ----------------
8.4 Include below a description of each facility above, including
the lender, interest rate and whether it is secured or
unsecured. If any additional facilities have been entered
into or are proposed to be entered into after quarter
end, include details of those facilities as well.
---- -------------------------------------------------------------------------
9. Estimated cash outflows for next $A'000
quarter
9.1 Exploration and evaluation -
9.2 Development -
9.3 Production -
9.4 Staff costs (183)
9.5 Administration and corporate costs (441)
9.6 Other - Funding of Joint Venture (1,902)
9.7 Total estimated cash outflows (2,526)
---- -----------------------------------
10. Changes in tenements Tenement Nature of interest Interest Interest
(items 2.1(b) reference at beginning at end
and 2.2(b) above) and location of quarter of quarter
10.1 Interests in - - - -
mining tenements
and petroleum
tenements lapsed,
relinquished
or reduced
----- --------------------- -------------- ------------------- -------------- ------------
10.2 Interests in - - - -
mining tenements
and petroleum
tenements acquired
or increased
----- --------------------- -------------- ------------------- -------------- ------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: (Joint Company Secretary) Date: 30 April 2019
Print name: Melissa Chapman
Notes
1. The quarterly report provides a basis for informing the
market how the entity's activities have been financed for the past
quarter and the effect on its cash position. An entity that wishes
to disclose additional information is encouraged to do so, in a
note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with
Australian Accounting Standards, the definitions in, and provisions
of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this
quarterly report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A,
the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
About Danakali
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the Company)
is an ASX- and LSE-listed potash company focused on the development
of the Colluli Potash Project (Colluli or the Project). The Project
is 100% owned by the Colluli Mining Share Company (CMSC), a 50:50
joint venture between Danakali and the Eritrean National Mining
Corporation (ENAMCO).
The Project is located in the Danakil Depression region of
Eritrea, East Africa, and is 75km from the Red Sea coast, making it
one of the most accessible potash deposits globally. Mineralisation
within the Colluli resource commences at just 16m, making it the
world's shallowest potash deposit. The resource is amenable to open
pit mining, which allows higher overall resource recovery to be
achieved, is generally safer than underground mining, and is highly
advantageous for modular growth.
The Company has completed a Front End Engineering Design (FEED)
for the production of potassium sulphate, otherwise known as SOP.
SOP is a chloride free, specialty fertiliser which carries a
substantial price premium relative to the more common potash type;
potassium chloride (or MOP). Economic resources for production of
SOP are geologically scarce. The unique composition of the Colluli
resource favours low energy input, high potassium yield conversion
to SOP using commercially proven technology. One of the key
advantages of the resource is that the salts are present in solid
form (in contrast with production of SOP from brines) which reduces
infrastructure costs and substantially reduces the time required to
achieve full production capacity.
The resource is favourably positioned to supply the world's
fastest growing markets. A binding take-or-pay offtake agreement
has been confirmed with EuroChem Trading GmbH (EuroChem) for up to
100% (minimum 87%) of Colluli Module I SOP production.
A non-binding indicative term sheet and mandate for the
provision of US$200M in senior debt funding to CMSC has been
executed with Mandated Lead Arrangers Africa Export Import Bank
(Afreximbank) and Africa Finance Corporation (AFC).
The Company's vision is to bring Colluli into production using
the principles of risk management, resource utilisation and
modularity, using the starting module (Module I) as a growth
platform to develop the resource to its full potential.
Competent Persons Statement (Sulphate of Potash and Kieserite
Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 1,289Mt @11% K(2) O Equiv.
and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K(2) O
Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K(2) O
Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K(2) O
Equiv. and 9% Kieserite of Inferred Resource.
The information relating to the Colluli Mineral Resource
estimate is extracted from the report entitled "Colluli Review
Delivers Mineral Resource Estimate of 1.289Bt" disclosed on 25
February 2015 and the report entitled "In excess of 85 million
tonnes of Kieserite defined within Colluli Project Resource adds to
multi agri-commodity potential" disclosed on 15 August 2016, which
are available to view at www.danakali.com.au. The Company confirms
that it is not aware of any new information or data that materially
affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources or
Ore Reserves, that all material assumptions and technical
parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The
Company confirms that the form and context in which the Competent
Person's findings are presented have not been materially modified
from the original market announcement.
Competent Persons Statement (Sulphate of Potash Ore Reserve)
Colluli Proved and Probable Ore Reserve is reported according to
the JORC Code and estimated at 1,100Mt @ 10.5% K(2) O Equiv. The
Ore Reserve is classified as 285Mt @ 11.3% K(2) O Equiv. Proved and
815Mt @ 10.3% K(2) O Equiv. Probable. The Colluli SOP Mineral
Resource includes those Mineral Resources modified to produce the
Colluli SOP Ore Reserves.
The information relating to the January 2018 Colluli Ore Reserve
is extracted from the report entitled "Colluli Ore Reserve update"
disclosed on 19 February 2018 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
Competent Persons Statement (Rock Salt Mineral Resource)
Colluli has a JORC-2012 compliant Measured, Indicated and
Inferred Mineral Resource estimate of 347Mt @ 96.9% NaCl. The
Mineral Resource estimate contains 28Mt @ 97.2% NaCl of Measured
Resource, 180Mt @ 96.6% NaCl of Indicated Resource and 139Mt @
97.2% NaCl of Inferred Resource.
The information relating to the Colluli Rock Salt Mineral
Resource estimate is extracted from the report entitled "+300M
Tonne Rock Salt Mineral Resource Estimate Completed for Colluli"
disclosed on 23 September 2015 and is available to view at
www.danakali.com.au. The Company confirms that it is not aware of
any new information or data that materially affects the information
included in the original market announcement and, in the case of
estimates of Mineral Resources or Ore Reserves, that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
AMC Consultants Pty Ltd (AMC) independence
In reporting the Mineral Resources and Ore Reserves referred to
in this public release, AMC acted as an independent party, has no
interest in the outcomes of Colluli and has no business
relationship with Danakali other than undertaking those individual
technical consulting assignments as engaged, and being paid
according to standard per diem rates with reimbursement for
out-of-pocket expenses. Therefore, AMC and the Competent Persons
believe that there is no conflict of interest in undertaking the
assignments which are the subject of the statements.
Quality control and quality assurance
Danakali exploration programs follow standard operating and
quality assurance procedures to ensure that all sampling techniques
and sample results meet international reporting standards. Drill
holes are located using GPS coordinates using WGS84 Datum, all
mineralisation intervals are downhole and are true width
intervals.
The samples are derived from HQ diamond drill core, which in the
case of carnallite ores, are sealed in heat-sealed plastic tubing
immediately as it is drilled to preserve the sample. Significant
sample intervals are dry quarter cut using a diamond saw and then
resealed and double bagged for transport to the laboratory.
Halite blanks and duplicate samples are submitted with each
hole. Chemical analyses were conducted by Kali-Umwelttechnik GmBH,
Sondershausen, Germany, utilising flame emission spectrometry,
atomic absorption spectroscopy and ion chromatography.
Kali-Umwelttechnik (KUTEC) has extensive experience in analysis of
salt rock and brine samples and is certified according by DIN EN
ISO/IEC 17025 by the Deutsche Akkreditierungsstelle GmbH (DAR). The
laboratory follows standard procedures for the analysis of potash
salt rocks chemical analysis (K(+) , Na(+) , Mg(2+) , Ca(2+) ,
Cl(--) , SO(4) (2-) , H(2) O) and X-ray diffraction (XRD) analysis
of the same samples as for chemical analysis to determine a
qualitative mineral composition, which combined with the chemical
analysis gives a quantitative mineral composition.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company's intentions.
All statements in this document, other than statements of
historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company's filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company's ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions in
connection with the distribution of this announcement. Any failure
to comply with such restrictions may constitute a violation of the
securities laws of any jurisdiction outside the United Kingdom.
(1) DNK announcement, 25-Mar-19
(2) DNK announcement, 30-Jan-19
(3) DNK announcement, 24-Apr-19
(4) DNK announcement, 30-Jan-19; Danakali and its Board take no
responsibility for the content of the Report, nor does the Company
or its Board endorse or warrant the accuracy of any content of the
Report
(5) DNK announcement, 25-Mar-19
(6) DNK announcement, 7-Mar-19
(7) African News, 8-Feb-19
(8) CNBC Africa, 18-Feb-19
(9) CNBC Africa, 18-Feb-19
(10) European Commission, 8-Feb-19
(11) ASX announcements, CMSC enters into Mining Agreement for
world class Colluli Potash Project, 1 February 2017, and Award of
Mining Licenses for world class Colluli Potash Project, 1 February
2017
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDPGUWGCUPBGCB
(END) Dow Jones Newswires
April 30, 2019 02:00 ET (06:00 GMT)
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