Dehai News

Colluli Project Update: Appointment of Preferred Power Contractor

Posted by: Semere Asmelash

Date: Thursday, 08 October 2020

Thursday 08 October, 2020

Danakali Limited

Appointment of Preferred Power Contractor

RNS Number : 4902B
Danakali Limited
08 October 2020

Announcement

Thursday, 8 October 2020


Colluli Project Update:

Appointment of Preferred Power Contractor

· Aggreko  appointed as Preferred Power Contractor for Colluli

· 5-year Buy Own Operate Transfer (BOOT) contract with lower overall cost than FEED estimations

· 12.36MW thermal Heavy Fuel Oil (HFO) solution chosen as the most effective option for Module 1

Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company), is pleased to announce that the Colluli Mining Share Company (CMSC) has appointed Aggreko, (LSE:AGK) as its preferred power supply contractor for its 12MW HFO power plant at Colluli.  Aggreko will provide full scope of support services for the supply, commissioning, and maintenance of the power plant, then transfer to CMSC, under 5-year BOOT contract, (the Agreement). Aggreko will provide the funding for the power solution which provides certainty over delivery of this preferred solution.

The agreement is a 'Buy Own Operate Transfer' contract, as the equipment is available now and does not need to be built, and de-risks our development schedule.  The equipment can therefore be mobilised at short notice as required during the development of the project.

The costs of the power solution provided by Aggreko over the 5-year contract period is lower than the FEED study results.  Aggreko is funding the capex required for the power plant an all equipment will be transferred to CMSC at no extra cost at the end of the contract period. This power solution is scalable and can increase/decrease according to CMSC's needs.  

The Agreement is subject to:

(a) the conclusion of ongoing negotiations to optimise the scope of works, contract pricing and execution; and

(b) Board approval of the Final Investment Decision (FID).

Niels Wage, CEO of Danakali, commented: "We are very pleased to announce the appointment of Aggreko as our single power provider. With 55 years of experience in delivering high-quality, reliable service to a large number of projects we are confident they have the capabilities to provide our power needs for Colluli. At the early stages of the project development, the HFO solution will provide us with flexibility and reliability, and as confirmed by SEIA, Colluli will have a relatively small impact on the environment. Going forward, once project development is in more of a steady state we will look to diversify our energy sources towards renewables available in the Danakil region, as per our commitment to sustainable and environmentally friendly solutions".

John Lewis, Managing Director, Africa - Aggreko commented:   "We are delighted to have been chosen as the preferred power contractor to work with Danakali and its partners on the Colluli Project. Our extensive experience in Eritrea and knowledge of the local market means that we are ideally placed to provide a solution which meets the specific needs of Danakali and deliver a reliable power supply for this project."

About Aggreko:

Aggreko (AGK-LSE), has nearly 60 years of experience in delivering complex power plant solutions to projects in challenging locations[i]. They are world leading providers of mobile, modular, temperature control and energy services.[ii] Aggreko provides short-term hire and longer-term power solutions to a diversified customer base in mining, oil & gas, utilities, petrochemicals & refining.  Operating in around 100 countries around the world, of which 35 are in the African continent, including providing off-grid power solution to a mining company in Eritrea since 2012[iii].

Announcement authorised for release by the CEO of Danakali. 

An example of the power solution to be provided by Aggreko.  Source: Aggreko October 2020

For more information, please contact: 

Danakali


Niels Wage

Chief Executive Officer

+61 8 6189 8635

Mark Riseley

Senior Corporate Development Manager

+61 8 6189 8635

Corporate Broker - Canaccord Genuity

UK IR/PR - Instinctif Partners

James Asensio / Angelos Vlatakis

+44 (0)20 7523 4680

Mark Garraway / Dinara Shikhametova / Sarah Hourahane

danakali@instinctif.com

+44 (0)207 457 2020


Visit the Company's website: 
www.danakali.com

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