ERITREA – Danakali, a company developing the Colluli Potash Project, has secured a further US$50 million investment from its ally Africa Finance Corporation (AFC), which will allow it to speed up development of its world-class Colluli Sulphate of Project (SOP) in Eritrea.
The company has entered into a subscription agreement with AFC for a placement of fully paid ordinary shares to raise the funds needed to begin production of SOP, a premium grade fertilizer, in 2022.
Upon the placement’s completion, AFC will hold 32% of Danakali, granting the company’s rights to nominate up to two directors to Danakali’s board.
Colluli has the potential to produce 944,000 tonnes of SOP, a premium grade fertilizer, over its 200-year plus mine-life.
The Perth-based company received last year a US$200 million senior debt facility from AFC. Together with African Export Important Bank (Afreximbank), the financial institution has provided the majority of the overall funding for Colluli, which is expected to become one of the world’s most significant and lowest cost sources of SOP.
In October, the company said it would spend US$1.4 million until the end of the year to build the mine, considered a game changer for Eritrea’s economy.
“The government will benefit from the longer-term development of the project, and the expected significant boost to royalties, taxation and exports, and from jobs and skills and economic development of the region,” chief executive Niels Wage said.
The document estimated that Colluli would contribute 3% of the country’s GDP by 2021 and 50% of the nation’s exports by 2030, while providing 10,000 direct and indirect local jobs.
In the initial phase of operation, Wage said, Colluli would produce more than 472,000 tonnes a year of SOP. Annual output could rise to almost 944,000 tonnes if Danakali decides to go ahead with a second phase of development, as the project has a possible 200-year plus mine-life.
The asset has the potential to produce other fertilizer products, such as Sulphate of Potash Magnesium (SOP-M), muriate of potash (MOP) and gypsum, along with rock salt.
There is also potential for kieserite and mag chloride to be commercialized with minimal further processing required.