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(GC) Danakali secures $200m loan for Eritrean mining project

Posted by: Semere Asmelash

Date: Monday, 23 December 2019

Danakali secures $200m loan for Eritrean mining project

AdobeStock_Potash_230_150
By Mariam Meskin
 
01.15 PM

Danakali, an Australian potash company, has raised a $200m credit facility from African lenders. Proceeds of the syndicated facility will go towards funding the planned Colluli potash project in Eritrea.

Colluli Mining Share Company, in which Australia's Danakali and Eritrea's National Mining Corporation each own 50%, has raised a seven year $200m senior secured loan.

The loan was provided by Africa Export Import Bank (Afreximbank) and Africa Finance Corporation (AFC). The two mandated lead arrangers provided $100m each. 

The loan follows the announcement earlier this month of AFC's $50m equity investment commitment to Danakali, bringing the total funding for the project to $250m. 

The margin on the loan is 8.5% over Libor. 

Proceeds will be used for the construction and development of the Colluli Sulphate of Potash in Eritrea. Earlier this year, a report funded by the UN Development Programme claimed the project would "significantly contribute to the advancement of Eritrea's sustainable development agenda including through exports, the emergence of adjacent industries, training and employment". 

Production of the project is expected in 2022. 

South Africa's Export Credit Insurance Corporation will be providing credit support to AFC for its part of the facility, South Africa SOC Limited (ECIC) will provide credit support for AFC’s portion of the Facility. ECIC is South Africa’s statutory export credit and foreign investment insurance provider.

Benedict Okey Oramah, president of Afreximbank, said in a statement: “The Colluli Project will bring significant positive impact to the Eritrean economy... We see the project as a continuation of the rapid and positive changes that are taking place in Eritrea and look forward to future opportunities to support the country and its people.”

By Mariam Meskin
 
01.15 PM

Danakali Receives More Funding For Eritrea Potash Project

Mon, 23rd Dec 2019 17:00

(Alliance News) - Potash explorer Danakali Ltd on Monday said it finalised an agreement with two lenders to secure a USD200 million loan, boosting its funding for its Colluli mining project in Eritrea.

Africa Finance Corp and African Export Import Bank will commit USD100 million of funding for the potash project as part of the agreement.

The agreement sees the total funding commitment in the project rise to USD250 million. Earlier in December, Africa Finance said it will USD50 million in Colluli.

Danakali said: "With USD250 million of funding commitment completed in December project execution has commenced and production is expected in 2022. The company is well progressed with a range of options for the balance of funding required."

Danakali shares ended 4.7% higher at 32.99 pence each in London on Monday.

By Eric Cunha; ericcunha@alliancenews.com

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