TIDMDNK
RNS Number : 1233B
Danakali Limited
28 January 2020
Announcement Tuesday, 28 January 2020
============= =========================
Colluli Sulphate of Potash Project update
EPCM Phase 1 commenced
-- CMSC's Owner's team established and embedded in to EPCM
Consultants Project team
-- Phase 1 EPCM FEED review commenced by DRA Global
-- Purchase Agreement for the Reverse Osmoses plant nearing
completion
-- Phase 2 to commence mid-February, followed by geotechnical
investigation
Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company),
is pleased to provide an update on the progress made within Phase 1
of the Engineering, Procurement and Construction Management (EPCM),
with a number of workstreams commenced.
Project Team
The Colluli Mining Share Company (CMSC) Board approved the
establishment of the Owner's Project Team, which includes key
project personnel led by Project Director, Tony Harrington. All
Owner's Team personnel will be based at the DRA Global (DRA)
Project office in Johannesburg during the first three EPCM phases.
Turner & Townsend, a multinational professional services
company, will also be providing a number of key members for all
phases.
FEED review, Water and Geotechnical Study
Further to issuing of the Notice to Proceed, DRA has started the
review of the Colluli Front End Engineering Design (FEED), which
includes developing and establishing of Project Systems, Project
Controls and Progress measurement monitoring.
DRA has also commenced project management activities and
mobilised its own engineering group for the Process Plant and
associated infrastructure work, which has started in Johannesburg.
The Water Intake Area (WITA) design is being undertaken and
commenced at the DRA office in Cape Town.
The agreement for the purchase of the Reverse Osmoses (RO) plant
is nearing completion, with the order for critical equipment on
track for February. This facility will be used to provide potable
and construction water prior to the commissioning of the main
Anfile Bay WITA. Delivery of the RO plant to site is to coincide
with mobilisation of the Early Works Contractor. The plant will
consist of a pre-tested desalination facility for the on-site bores
and portable water.
Phase 2 will start mid-February, followed by geotechnical
investigation works that will commence in March 2020. Data
collected will help optimise the geotechnical foundation design and
outline any other investigation work if required going forward.
Project Director, Tony Harrington, said: "I am very pleased with
the progress achieved since commencement. We are near completion in
formalising our partnership with DRA and are firmly moving into
development phase with some key works and activities in progress.
As part of the Mobilisation phase (1 & 2) the Project Team has
put in place a robust execution strategy as a basis of delivery
throughout the life of the project, which includes controls
services, procurement and contracts and logistics coordination,
engineering and construction management and HSE."
For more information, please contact:
Danakali
Niels Wage Todd Romaine
Chief Executive Officer Chief Sustainability Officer
+61 8 6189 8635
Corporate Broker - Numis Securities UK IR/PR - Instinctif Partners
John Prior / James Black / Paul Mark Garraway / Sarah Hourahane / Dinara
Gillam Shikhametova
+44 (0)20 7260 1000 danakali@instinctif.com
+44 (0)207 457 2020
Visit the Company's website: www.danakali.com
Follow Danakali on LinkedIn:
www.linkedin.com/company/danakali-limited
Subscribe to Danakali on YouTube:
www.youtube.com/channel/UChGKN4-M4lOvPKxs9b-IJvw
Announcement authorised for release by the CEO of Danakali.
Appendix A: About DRA and Turner & Townsend
DRA is a diversified global engineering, project delivery and
operations management group headquartered in Perth, Australia, with
an impressive track record spanning more than three decades. Known
for its collaborative approach and extensive experience in project
development and delivery, as well as turnkey operations and
maintenance services, DRA delivers optimal solutions that are
tailored to meet clients' needs.
With expertise in the areas of project development, mining,
mineral processing, plant optimisation, operational readiness,
systems integration, operations & maintenance and related
water, energy, industrial and infrastructure requirements, DRA
delivers truly comprehensive solutions to the resources sector. DRA
employs over 4,500 people and offers flexible engineering &
operations management services worldwide through 18 offices.
For more information visit www.draglobal.com.
Turner & Townsend is a multinational professional services
company headquartered in Leeds, United Kingdom, with extensive
expertise in project management consulting to the mining,
infrastructure and property sectors. As an independent consultancy,
it is committed to achieving high standards of openness and
transparency across all aspects of a project. Turner & Townsend
employ over 6,000 people in 110 offices across 45 countries with
presence in Africa, Asia Pacific, Europe, Middle East and the
Americas.
For more information visit www.turnerandtownsend.com.
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 Sulphate of 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 known potash deposit. The resource is amenable
to open cut 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
Sulphate of Potash or 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.
Development Finance Institutions, Africa Finance Corporation
(AFC) and African Export Import Bank (Afreximbank), have obtained
formal credit approval to provide CMSC with US$200M in senior debt
finance. The credit documentation was executed in December 2019,
allowing drawdown of CMSC senior debt on satisfaction of customary
conditions precedent. This represents the majority of funding
required for the development and construction of the Colluli. AFC
has also executed a Subscription Agreement to make a US$50M
strategic equity investment in Danakali. The receipt of the first
tranche of US$21.6M (A$31.8M) allowed commencement of the
development. Second tranche will consist of approximately US$28.5M
(A$42.0M) and is expected in March 2020.
Project execution has commenced and SOP production is expected
during 2022. 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) 0 Equiv.
and 7% Kieserite. The Mineral Resource contains 303Mt @ 11% K(2) 0
Equiv. and 6% Kieserite of Measured Resource, 951Mt @ 11% K(2) 0
Equiv. and 7% Kieserite of Indicated Resource and 35Mt @ 10% K(2) 0
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.
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
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