RA, listed on the London Stock Exchanges AIM board, specialises in building, operating and maintaining facilities in remote and challenging conditions across Africa, providing complex humanitarian, governmental, mining, and other commercial developments and services, Danakali says. 2 0 obj The project has a 200-year lifecycle and is expected to start operating in 2022. and mag chloride to be commercialized with minimal further processing required. Our 3 Top Picks. Colluli is located about 75 kilometres from the Red Sea coast, making it among the most accessible premium potash deposits globally. The border with Sudan was closed until early 2019 because relations were so bad. The agreement can be further extended by three years if mutually agreed upon. seriously, this Man is a lobbyist of TPLF A group designated as a Terrorist Organisation in Ethiopia. Open-cut mining is a proven mining method for salts, and its safer and more cost-effective than underground mining which allows for better overall resource recovery. However, China has set its sights on the country and perhaps it will receive large amounts of Chinese FDI in the future. (as referred to in ASX announcements of 3 October 2022, 1 December 2022, and 12 January 2023), it . <> It is a member of the African Union, the UN and the Intergovernmental Authority on Development which deals with issues around drought and desertification in the Horn of Africa but it is the only African country (out of 55) not to sign up to the African Continental Free Trade Area, the huge free trade area that went live on 1 January 2021. Net to Danakali's 50% interest, Module I is projected to generate NPV-10 of 242 million, on average delivering an undiscounted FCF of US$43 million per year, with a post-finance IRR of 29.7%; module I&II is projected to generate NPV-10 of 439 million, on average delivering an undiscounted FCF of US$85 million per year, with a post-finance IRR of 31.3% (Table 1). Danakali, an Australian company that has been developing the Colluli potash project in Eritrea, was recently granted permission by the Eritrean Ministry of Energy and Mines to commence commercial production at Colluli. EuroChem is an outstanding partner with global reach and extensive fertiliser capabilities. Materials handling trials have also been completed to determine the anti-caking requirements for the final SOP product. On the financial front, a key step was taken last month when Danakali, which has a 50-50 joint venture covering Colluli with the government of Eritrea, signed a $200 million funding mandate. advance its sustainable development agenda, which are 13 priority Sustainable The Colluli potash project is a low-cost, long-life sulphate of potash (SOP) fertiliser project under development by the Colluli Mining Share Company, a 50-50 joint venture partnership between the Australian start-up Danakali and the Eritrean National Mining Corporation. Danakali, currently undervalued and standing for a massive re-rating upon the first production, should be considered by risk-tolerant investors with a long time horizon. It is actually resistant to the wests oppression in the most pure sense of the term. Posted by Daniel Gleeson on 21st August 2020. Eritrea has huge tourism potential, but it is hard for foreign visitors to obtain a visa. With a growing world population, demand for food will increase, while the availability of arable land is expected to shrink. After all considerations and government taxes, Danakali said it expects to receive approximately $121m. The asset has the potential to produce other fertilizer We have recently upgraded our technology platform. The project is the only known source of potash that allows extraction of the fertilizer in solid form. Surface mining allows controlled extraction, predictable production rates and efficient stockpiling of additional economic salts know to us. as being forecasted back in 2015 has been removed from the supply side (Fig. Select LanguageChinese (Simplified)EnglishGerman Earth Moving Worldwide (EMW) was selected to provide mining services for the Colluli potash project in December 2019. Mobile data does not exist. second phase of development, as the project has a possible 200-year plus It also has access to solar, wind and geothermal energy systems the East African rift. Economic resources for Sulphate of Potash (SOP) production are scarce, and Colluli is favourably positioned to supply the worlds fastest-growing SOP markets. It is strategically important as it has access to the Red Sea, the Suez Canal and to Europe, as well as to the waters of the Persian Gulf and beyond to the Indian Ocean. endobj (2) live portfolios for both capital appreciation and income generation. The open-cut, high-grade potash project is being developed by Colluli Mining Share Company (CMSC), a 50:50 joint venture partnership between Australias Danakali and Eritrean National Mining Corporation (ENAMCO). x][sF~w""s)d;9>u^v0@ROcTE&Agdjyr8_N>}\O_,g|yrqKbzlwGouQB b-*dkGO?-M^e1?!;=^RxGN{t2k JSUUSx=ce :jc`s>h. 5. 8. Installation of an export terminal at Anfile Bay would decrease the length of the land transport route from 230 to only 87 km, thus further lowering the logistics costs required to satisfy the multi-commodity trade in and out of Eritrea. Danakali is developing the tier-1 Colluli potash project, Eritrea, which boasts the world's lowest costs and >200 years of mine life. Artists impression of the plant at the Colluli project. The project has now obtained all licenses and permits within the license area and has also been granted all required permits, licences and authorisations for infrastructure construction and development outside the Colluli mining license area. Colluli is a major sulphate of potash (SOP) project located in Eritrea, Eastern Africa. This post has been syndicated from a third-party source. 4. The Danakil Depression that commences in Eritrea and extends up to 300km into Ethiopia, is believed to contain more than six billion tonnes of potassium bearing salts. I'd like to emphasize that the articles contributed by these authors are the product of their respective independent research and analysis. The Perth-basedminer noted that despite covid-19 restrictions, engineering, procurement and construction management (EPCM) activities have continued as scheduled. Potash is an important fertiliser. The Eritrean government, through ENAMCO, has a 50% interest in the Colluli project. As a natural resources industry expert with years of successful investing experience, I conduct in-depth research to generate alpha-rich, low-risk ideas for the member of The Natural Resources Hub (TNRH). We need a bit of money.' Please. Invest in t. Subject to conditions, the deal with Chinese company Sichuan Road and Bridge Group is expected to be finalized between March and May next year, leaving Danakali with $121 million cash, of which 90% will be distributed back to shareholders. The stock chart of Danakali, modified from this source. Installation of an export terminal at Anfile Bay would decrease the length of the land transport route from 230 to only 87 km, thus further lowering the logistics costs required to satisfy the multi-commodity trade in and out of Eritrea. The Colluli project is a 5050 joint venture between South Boulder Mines and the government-owned Eritrean National Mining Corporation. Colluli has a JORC-2012 compliant Measured, Indicated and Inferred Mineral Resource estimate of 1,289Mt @11% K20. Therefore, a wide moat that's rarely seen in miners of other commodities can be found among potash miners, such as Nutrien Ltd (NTR), as discussed by fellow Seeking Alpha authors. It also provides off-takers with additional confidence on Project certainty and fundability, supporting the finalisation of binding bankable offtake agreements. inequalities, climate action, peace, justice and strong institutions and The relative location of the Colluli resource to these critical markets gives it a significant logistics advantage and unrivalled access to the potash markets of the future. Below, let's look at Danakali Ltd. (DNK.ASX) (OTCPK:SBMSF) (OTCPK:DNKLY), which operates in Eritrea. Demand for fertiliser is driven by population and economic growth which directly translates to food demand. In July 2013, major producer Belaruskali broke up with former Belarusian Potash Company cartel partner Uralkali, and in a move to grab market share, signed a potash sales contract for the Chinese market at US$315/t MOP. Open-cut solid salt mining beats underground solid salt mining, lacustrine brine, and playa brine in operating costs. The project also involves the construction of a heavy fuel oil-based power plant on-site to meet the electricity requirement. 3). .goog-text-highlight {background-color:transparent !important;box-shadow:none !important;} Shareholders are slated to . It also said that all vendor and contractor packages have now been received. At Colluli, the JORC-2012 compliant mineral resource is estimated at 1,289 Mt at 11% K2O for 260 Mt of contained SOP equivalent. At a SOP price of US$650/tonne, annual production would generate revenue equivalent to . At a forward P/FCF multiple of 2.6X for Module I (2022-) and 1.3X once Module II comes on-stream in 2028, Danakali appears to be undervalued. The Colluli Potash Project (Project, Colluli) is 100% owned by Colluli Mining Share Company (CMSC,) a 50:50 Joint Venture between Danakali Limited (DNK) and Eritrean National Mining rporation (ENAMCO) Codes: ASX: DNK, SO3-FRA, SO3-BER. Extraction of the salts in solid form is a crucial positive differentiator of Colluli. The stock seems to be agitating for a breakout in recent weeks (Fig. 3. The country also boasts impressive marine tourist sites, a wide range of flora and fauna, and scenic terrain. To the southeast of the teeming herds of wildlife in the Okavango Delta inBotswana, an offshoot of the Lundinminingdynasty is extending its search for the worlds biggestdiamonds. Colluli Potash Project is a 50:50 Joint Venture between Danakali Limited and the Eritrean National Mining Company (ENAMCO). The potassium salt composition in the resource provides the option to diversify the potash product suite as the Project grows. In the sprawling mining sector, potash mining is unique in that potash mines typically last decades to even centuries, thus forcing the miners to deploy capital for the long-term return, and that transportation of bulk-tonnage potash tends to lead to regional monopolies. Across the country, an estimated two-thirds of households are impacted by food insecurity. Eritreas north-eastern and eastern parts have an extensive coastline along the Red Sea, strategically located along the Maritime Silk Road. I recommend a book by Martin Plaut, a senior researcher at Londons Institute of Commonwealth Studies and former Africa Editor of the BBCs World Service called Understanding Eritrea: Inside Africas Most Repressive State (https://www.hurstpublishers.com/book/understanding-eritrea-2/). 1 0 obj In 2019, the country received only $67.1m in foreign direct investment (FDI) inflows against $61m in 2018, according to the World Bank. These circumstances have resulted in it becoming one of the most isolated states in the world.