TIDMDNK
RNS Number : 7884X
Danakali Limited
02 September 2020
Announcement Wednesday, 2 September 2020
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Colluli Project Update
EPCM Phase 2 Complete - updated FEED and Schedule; Optimisation
opportunities defined
-- EPCM Phase 2 deliverables from DRA review has been completed
-- Project now benefits from a more defined scope and de-risked
design and the robustness of the FEED results have been
confirmed
-- Design optimisations identified with environmental and economic improvements:
o Beach Well intake confirmed for Water Intake Treatment Area
(WITA) with lower environmental impact
o Dry harvesting method from backend recovery ponds with less complex processing design
o Selection of RA International as camp provider gives Colluli
access to a fit for purpose, manufactured camp.
Danakali Limited (ASX: DNK, LSE: DNK, Danakali, or the Company)
is pleased to provide this project update of the 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).
FEED Updated : We are pleased to advise that EPCM Phase 1 and 2,
which relate to the process plant and associated infrastructure
work have been completed. These phases provide greater certainty of
scope definition following the third-party review by DRA
Global.
Optimisation : In the EPCM Phases 1 and 2 a number of
optimisation opportunities were identified. Examples are:
o WITA area: A trade-off study has confirmed the use of a Beach
Wells intake method is preferred in lieu of a subsea intake
pipeline. This optimisation is beneficial to the environment,
minimising risk to the subsea and coastal habitats by avoiding
onshore pipeline construction and offshore installation.
Furthermore, the design eliminates chlorine dosing and improves the
quality of the discharge water as the pre-treatment feedwater
requires less chemicals.
o As announced on 20 August 2020, RA International was selected
as the preferred Camp provider. With a pre-manufactured, high
quality camp that is containerised and ready to mobilize, it can be
installed at a significant discount and immediate economic benefits
are created. The short availability of this camp significantly
de-risks our execution schedule and allows an earlier commencement
of site activities.
Niels Wage, CEO of Danakali, commented: "I am pleased to
announce the results of this review update giving increased
certainty and understanding of the Colluli Project schedule. The
detail review process again validates the robustness of the project
and previous technical studies. It is also pleasing to see that a
number of optimisation opportunities in the process are established
that will further de-risk the project".
Tony Harrington, Project Director of Danakali, commented: "In
phases 1&2 of the EPCM work we have been working closely with
DRA on the review of the 2018 FEED study; I am pleased to see that
original FEED study is very robust and we have progressed to a more
defined scope and de-risked design, an example of this, that I am
proud of, is our WITA study results that among other things
demonstrates a lower environmental impact than in our already
approved Social Environmental Impact Assessment and the Social
Environmental Management Plan.
Announcement authorised for release by the Board of
Danakali.
F or more information, please contact:
Danakali
Niels Wage Mark Riseley
Chief Executive Officer Corporate Development Manager
+61 8 6189 8635 +61 8 6189 8635
Corporate Broker - Canaccord UK IR/PR - Instinctif Partners
James Asensio / Angelos Vlatakis Mark Garraway / Dinara Shikhametova
+44 (0)20 7523 4680 / Sarah Hourahane
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
Refer to ASX Announcement on 29 Jan 2018 headed "FEED completion
confirms Colluli as the most advanced and economically attractive
SOP greenfield development project". All material assumptions
underpinning the FEED results continue to apply and have not
materially changed.
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.
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.
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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