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Danakali to sell its stake in Eritrea potash project

Posted by: Semere Asmelash

Date: Tuesday, 04 October 2022

Danakali to sell its stake in Eritrea potash project

Danakali to sell stake in flagship Colluli potash project in Eritrea
Danakali explored the use of filtered seawater at Colluli. (Image courtesy of Danakali.)
Fertiliser exploration company Danakali on Monday announced the potential sale of its 50% interest in the Colluli sulphate of potash (SOP) project, in Eritrea, for $166-million before tax, sending the Australia-listed company’s stock surging 25%.

Danakali, which owns the project in a 50:50 partnership with the Eritrean National Mining Company, has executed a non-binding term sheet with Sichuan Road and Bridge Group.

The term sheet is subject to the Chinese company’s satisfactory completion of a due diligence and the parties entering into definitive agreements.

The deal, net of all government taxes, means Danakali will receive about $121-million. If the conditions are satisfied or waived, Danakali will distribute 90% of the net proceeds to its shareholders and continue as a listed company to identify new projects and growth opportunities.

The deal is expected to be finalised between March and May next year.

The company’s stock closed 25% higher at A$0.32 a share on Monday, having touched a high of A$0.36 a share earlier in the day.

The Colluli projects boasts a 1.1-billion tonne-ore reserve and an almost 200-year mine life.

A front-end engineering design study confirmed an advanced stage and economically attractive project.  Module 1 development capital will be $302-million, with an incremental module 2 development capital will be $202-million. 

ERi-TV, Eritrea - ጸብጻብ ዑደት ፕረዚደንት ኢሳይያስ ኣፈወርቂ ኣብ ዋዕላ ደቡብ ኮርያ አፍሪቃ | Reportage on President Isaias Afwerki's visit to South Korea for the South Korea-Africa Summit, held from June 3-4

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