Date: Friday, 01 February 2019
Published by Robyn Wainwright, Editorial Assistant
Colluli is execution ready. Danakali and CMSC are focused on logistics and other technical collaboration aspects with offtake partner EuroChem, operational contracts, operations readiness, funding and corporate social responsibility initiatives.
In December 2018 CMSC executed a mandate to provide fully underwritten debt finance facilities of US$200M (the Facility) to fund the construction and development of Colluli. African development financial institutions (DFIs) African Export-Import Bank (Afreximbank) and Africa Finance Corporation (AFC) are acting as Mandated Lead Arrangers. Executing the debt finance mandate (Mandate) is a critical project financing and execution milestone for CMSC and Danakali.
Afreximbank and AFC are highly reputable African DFIs with extensive experience in providing project financing to African projects across the continent and were chosen as Mandated Lead Arrangers due to their extensive African project finance experience and the strength of their investor reach. In 2017 Afreximbank was lead or co-lead arranger on 11 syndicated debt transactions totalling over US$3Bn. In the same period AFC was mandated on over US$1Bn of transactions.
“The execution of the Mandate represents a significant milestone for the Colluli project funding. We are very pleased to be partnering with strong, experienced African financial institutions. Initial bank due diligence and subsequent negotiations have significantly advanced the project financing process and built on the finalisation of the binding offtake agreement with EuroChem placing CMSC in strong position to advance Colluli,” says Chief Financial Officer of Danakali, Stuart Tarrant.
Since execution of the Mandate, momentum has continued with respect to engagement with the Mandated Lead Arrangers. The Company and its debt advisor, Endeavour Financial, are working with the Mandated Lead Arrangers to advance their due diligence. The due diligence is necessary for the Mandated Lead Arrangers to obtain credit approval and includes:
All workstreams are progressing in parallel with each resulting in a report to the Mandated Lead Arrangers. The Mandated Lead Arrangers and their advisers are also reviewing the provisions of the draft commercial contracts (Engineering Procurement Construction Management (EPCM), power, mining), as they become available. A site visit to Colluli by the Mandated Lead Arrangers and their advisors is expected to take place in the March 2019 Quarter.
Outside of the CMSC senior debt process, the Company continues to move the Project’s funding requirements forward through the following avenues:
A video interview with Executive Chairman, Seamus Cornelius, post the execution of the Mandate can be found at the following link.
Colluli and Massawa port site visit – EuroChem engagement continues Danakali hosted a senior delegation from EuroChem in Eritrea, with visits to the Massawa port and Colluli, and meetings with key stakeholders in Asmara, including Eritrean Government Ministries and ENAMCO. EuroChem noted their positive impressions of Colluli, Massawa port, and Eritrea more broadly as a result of the visit. The Company and CMSC are pleased to continue their engagement with EuroChem with respect to logistics and product optimisation, after the signing of a binding take-or-pay offtake agreement for 100% (minimum 87%) of Colluli Module I SOP in 2018.