TIDMDNK
RNS Number : 4500O
Danakali Limited
01 June 2020
Announcement Monday, 1 June 2020
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AFC investment update
- Danakali and AFC have agreed on a deadline extension to
satisfy remaining conditions precedent for Tranche 2 funding
- AFC remains committed to Colluli and reiterates confidence in
delivery and success of the Project
- Danakali is well funded to complete current planned
activities
Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company),
provides today an update on Tranche 2 of Africa Finance Corporation
("AFC" or "the Corporation") equity funding (Tranche 2), which was
first announced on 3 December 2019.
As announced on 31 March 2020, the Tranche 2 funding had been
deferred to allow for the stabilisation of market and global
conditions. DNK and AFC have agreed to an extension to the deadline
for Tranche 2 completion to on or before 21 November 2020. The
extension allows time for satisfaction of the remaining CPs and is
considered necessary in response to, amongst other things, the
constraints arising from global restrictions imposed due to the
COVID-19 pandemic.
With the receipt of Tranche 1 of AFC's investment of US$21.5m
(A$31.8m) in December 2019, Danakali remains well funded for
planned corporate initiatives and to complete the current
activities related to EPCM Phase 2 (refer announcement 21 May
2020). Tranche 2 (US$28.5m: A$42.0m) is part of the overall funding
package for the development and construction of the Colluli
Sulphate of Potash Project (Colluli or the Project) in Eritrea. The
Project remains on track for production during 2022 as outlined in
DNK's Quarterly Report (refer to announcement 30 April 2020).
Niels Wage, Chief Executive Officer, commented : "We are pleased
to announce this extension. The progress reflects the constructive
dialogue and partnership between the Company and AFC, which is
highlighted by the recent appointment to the Board of AFC's Samaila
D Zubairu, President and CEO, and Taiwo Adeniji, Senior Director
for Investment Operations and Execution as Non-Executive
Directors."
Samaila D Zubairu, President and CEO of AFC, commented: "AFC
continues to be a great supporter of Colluli and we are confident
in Danakali's competence to successfully deliver the Project. We
remain committed to our US$150m funding across the CMSC Senior Debt
and equity investments."
Announcement authorised for release by the Board of
Danakali.
For more information, please contact:
Danakali
Niels Wage Mark Riseley
Chief Executive Officer / +61 Corporate Development Manager / +61
8 6189 8635 8 6189 8635
Corporate Broker - Numis Securities UK IR/PR - Instinctif Partners
John Prior / James Black / Paul Mark Garraway / Dinara Shikhametova
Gillam / Sarah Hourahane
+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
About AFC
AFC is Africa's leading infrastructure solutions provider
created to help mobilise and channel required capital towards
driving Africa's economic development. AFC offers a unique value
proposition as an Africa-focused multilateral financial institution
covering 3 complementary service areas: project development,
financial advisory and principal investing. In addition to these
core services AFC has significant experience and expertise in
project management and will ensure that the objectives of all
parties involved are met through careful monitoring of the project
from beginning to end. AFC's core mission is to address Africa's
infrastructure development needs while seeking a competitive return
on capital for its shareholders.
AFC invests in five sectors of infrastructure: Power, Natural
Resources (Oil & Gas, and Mining), Heavy Industries and
Telecommuniations, Transport & Logistics and has to date
invested over US$6 billion across 30 African countries. AFC is the
second highest investment grade rated multilateral financial
institution in Africa with an A3/P2 rating from Moody's Investor
Service, and its members include 27 African countries and Member
States. For more information, visit www.africafc.org
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$21.5M (A$31.8M) allowed commencement of the
development.
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.
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. 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.
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.
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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.
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END
UPDWPUGPAUPUGGG
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