ASX Release 3rd April 2017 Power generation bids complete for World Class Colluli Project
Danakali Limited (ASX:DNK) is pleased to advise that all bids for power generation for the Colluli potash project have been received, and that a comprehensive evaluation of the tenders has commenced. The bidding process followed an expressions of interest phase which was completed in January1. Colluli is the most advanced greenfield SOP development in the world and is making good progress towards construction.
Tender documents have been received from a group of highly reputable power providers with extensive experience in both Africa and other developing jurisdictions. The bids were based on the power generation technical specifications determined in the definitive feasibility study. These specifications are currently being refined as part of the front-end engineering design (FEED) process which commenced in January and is progressing well.
Evaluation of the bids from the shortlisted parties is expected to be completed by late April, after which the preferred service provider will be selected and commercial terms finalised.
The definitive feasibility study for the Colluli project contemplated power generation utilising a build own operate transfer (BOOT) model, which formed the basis of the formal tendering process.
Managing Director, Paul Donaldson said "We are pleased to be advancing our contracting process and we look forward to the evaluation of the power generation bids, as well as the selection and appointment of our preferred power generation service provider. We are also very happy with the high level of interest we have received to date, which is a clear endorsement of both the project and the jurisdiction. The front- end engineering process is progressing well, and we are currently hosting a visit of site engineers within Eritrea for detailed engagements with local service providers and completion of detailed logistics studies for the delivery of the plant components."
Danakali Limited, in conjunction with the Eritrean National Mining Corporation (ENAMCO), is developing the world class Colluli Potash Project located in the Danakil region of Eritrea, East Africa. Colluli is the largest and shallowest known evaporite deposit in the world with a solid form ore reserve estimate of over 1.1bn tonnes2.
Permitting for the project was completed in February 2017, providing the Colluli Mining Share Company (CMSC) exclusive rights to apply for mining licenses within the Colluli tenements. Seven mining licenses have also been granted. Colluli is the most fundable and economically attractive advanced stage SOP greenfield sulphate of potash (SOP) development in the world.
The project demonstrates outstanding economics including industry leading capital intensity, bottom quartile operating costs, close proximity to coast and key markets and unrivalled product diversification potential.
Globally recognised, and highly reputable engineering and construction firm, Fluor was appointed as the lead for the FEED process for the project2. Fluor is a highly reputable, globally recognised engineering and construction firm with extensive experience in potash and Africa.
Approval of the social and environmental impact assessment (SEIA) for the project was given by the Ministry of Land, Water and Environment in December 2016. The award of the Mining Agreement and Mining License for the project was completed in February.
ASX announcement, January 2017
ASX announcement, M ay 2015
For more information, please contact:
Paul Donaldson Managing Director
+61 8 6315 1444
About Danakali Ltd
Danakali is an ASX listed company and 50% owner of the Colluli Potash Project in Eritrea, East Africa. The company is currently developing the Colluli Project in partnership with the Eritrean National Mining Corporation (ENAMCO).
The project is located in the Danakil Depression region of Eritrea, 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 potash deposit. The resource is amenable to open pit 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 definitive feasibility study for the production of potassium sulphate, otherwise known as SOP. SOP is a chloride free, specialty fertiliser which carries a substantial price premium relative to the more common potash type; potassium chloride.
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) with 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.
Our vision is to bring the Colluli project into production using the principles of risk management, resource utilisation and modularity, using the starting module as a growth platform to develop the resource to its full potential.
Competent Persons Statement (Rock Salt Resource)
Colluli has a JORC 2012 compliant Measured, Indicated and Inferred Mineral Resource estimate of 347Mt @97% NaCl. The resource contains 28Mt @ 97% NaCl of Measured Resources, 180Mt @ 97% NaCl of Indicated Resources and 139Mt @ 97% NaCl of Inferred Resources.
The information relating to the Colluli Rock Salt Mineral Resource estimate was compiled by Mr. John Tyrrell. Mr. Tyrrell is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) and a full-time employee of AMC. Mr. Tyrrell has more than 25 years' experience in the field of Mineral Resource estimation. He has sufficient experience relevant to the style of mineralisation and type of the deposit under consideration, and in resource model development, to qualify as a Competent Person as defined in the JORC Code.
Mr Tyrrell consents to the inclusion of the information relating to the rock salt Mineral Resource in the form and context in which it appears
Competent Persons Statement (Sulphate of Potash Resource)
Colluli has a JORC 2012 compliant Measured, Indicated and Inferred Mineral Resource estimate of 1,289Mt @11% K20. The resource contains 303Mt @ 11% K20 of Measured Resources, 951Mt @ 11% K20 of Indicated Resources and 35Mt @ 10% K20 of Inferred Resources.
The information relating to the 2015 Colluli Mineral Resource estimate was compiled by Mr. John Tyrrell, under the supervision of Mr. Stephen Halabura M. Sc. P. Geo. Fellow of Engineers Canada (Hon), Fellow of Geoscientists Canada, and as a geologist with over 25 years' experience in the potash mining industry. Mr. Tyrrell is a member of the Australian Institute of Mining and Metallurgy and a full-time employee of AMC. Mr. Tyrrell has more than 25 years' experience in the field of Mineral Resource estimation.
Mr. Halabura is a member of the Association of Professional Engineers and Geoscientists of Saskatchewan, a Recognised Professional Organisation (RPO) under the JORC Code and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code).
Mr. Tyrrell & Mr. Halabura consent to the inclusion of information relating to the 2015 Resource Statement in the form and context in which it appears.
Competent Persons Statement (Sulphate of Potash Reserve)
The November 2015 Colluli Ore Reserve is reported according to the JORC Code and estimated at 1,113Mt @10% K2O Equiv. The Ore Reserve is classed as 286Mt @ 11% K2O Equiv Proved and 827Mt @ 10% K2O Equiv Probable. The Competent Person for the estimate is Mr Mark Chesher, a mining engineer with more than 30 years' experience in the mining industry. Mr. Chesher is a Fellow of the AusIMM, a Chartered Professional, a full-time employee of AMC Consultants Pty Ltd, and has sufficient open pit mining activity experience relevant to the style of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the JORC Code. Mr Chesher consents to the inclusion of information relating to the Ore Reserve in the form and context in which it appears.
In reporting the Mineral Resources and Ore Reserves referred to in this public release, AMC Consultants Pty Ltd acted as an independent party, has no interest in the outcome of the Colluli Project and has no business relationship with Danakali Ltd 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 Consultants Pty Ltd 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-UmwelttechnikGmBHSondershausen, Germany utilising flame emission spectrometry, atomic absorption spectroscopy and ionchromatography. Kali- Umwelttechnik (KUTEC) Sondershausen1 have extensive experience in analysis of salt rock and brine samples and is certified according by DIN EN ISO/IEC 17025 by the Deutsche
AkkreditierungssystemPrüfwesen GmbH (DAR). The laboratory follows standard procedures for the analysis of potash salt rocks chemical analysis (K+, Na+, Mg2+, Ca2+, Cl-, SO 2-, H2O) 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.