Danakali Ltd’s (
ASX:DNK) updated sulphate of potash ore reserve provides an expected mine life of circa 200 years at proposed production rates at the Colluli Potash Project in Eritrea.
The reserve is 1.1 billion tonnes at 10.5% potassium oxide for 203 million tonnes of contained sulphate of potash (SOP) equivalent.
Colluli’s reserve was updated as part of the Front End Engineering Design (FEED) phase, which investigated options to improve production and cost outcomes.
Danakali engaged recognised consultants for the development of FEED and associated cost estimates, including many who were involved with the Colluli definitive feasibility study (DFS).
This provided the engineering team with a high level of specific Colluli expertise and study continuity.
Based on two processing modules
The ore reserve estimate is based on a plant configuration comprising two processing modules and offsite water infrastructure to support the site water requirements.
Colluli’s reserve comprises 285 million tonnes at 11.3% potassium oxide of proven ore reserve and 815 million tonnes at 10.3% of probable reserve.
It is the third SOP reserve estimate for the project and replaces the reserve reported on 30 November 2015.
85% of resource included
More than 85% of measured and indicated SOP resources are now included in the reserve estimate.
The resource remains open to the southeast of Area A and to the west of Area B.
FEED investigations continued after mine planning for reserve estimation was complete, including an alternative water supply option for the second plant module from groundwater sources at the project site.
This alternative option has an immaterial impact on the reserve estimate, but yields improved project economics.
Colluli also has a JORC 2012-compliant measured, indicated and inferred rock salt resource estimate of 347 million tonnes at 96.9% sodium chloride.
The FEED study has improved the economics of Colluli, delivering industry-leading capital intensity and first quartile operating costs.
It has confirmed Colluli as the world’s most advanced and economically attractive SOP greenfield development project.
No other known project of this type has completed FEED, which provides offtakers and funders with a high level of detail and accuracy.
Key near-term milestones
Danakali is focused on offtake, funding, and project execution in 2018 and key milestones are:
- Progress negotiations to final binding offtake agreements;
- Final EPCM negotiations with shortlisted bidders;
- Final mining negotiations with shortlisted bidders;
- Final power negotiations with the preferred power provider Inglett and Stubbs International;
- Finalise debt arrangements with commercial lenders.
