Miner divests from Eritrean potash project - Mining Weekly
Posted by: Semere Asmelash
Date: Friday, 28 July 2023
Miner divests from Eritrean potash project
FERTILE GROUNDS Danikali has divested its stake in the Colluli potash project in Eritrea
28th July 2023
ASX- and LSE-listed potash company Danakali announced in March it had successfully divested its 50% stake in the Colluli Mining Share Company (CMSC), which owns the Colluli potash project, in Eritrea, to China’s Sichuan Road and Bridge Group (SRBG), which is owned by Chinese State-owned enterprise Shudao Investment Group.
The Colluli potash project, which is planned to be developed in two phases, is estimated to have a near-surface high-grade sulphate of potash reserve of 1.1-billion tonnes, making it one of the world’s largest of its kind.
With an operational life of 200 years, Phase 1 of project development will involve an estimated capital investment of about $298-million, while the project is expected to produce 472 000 t/y of high-quality sulphate of potash (SoP).
It is predicted that in Phase 2, the mine will produce up to 944 000 t/y of SoP from year six of project development, with an additional capital investment of $202-million.
CMSC was established as a 50:50 joint venture between Danakali and Eritrean National Mining Corporation (Enamco), aimed at developing the Colluli project.
According to the deal, SRBG will acquire all of Danakali’s stake in the CMSC for $135-million, as well as a shareholder loan of $31-million owed by CMSC to Danakali.
Holding an interest in CMSC through its subsidiary STB Eritrea, Danakali has now received $105-million in the first tranche payment.
It will receive the second tranche payment of $16-million within the next six months.
Danakali will distribute 90% of the net proceeds from the transaction to its shareholders and shift focus towards identifying new projects for investment.
“This is an excellent outcome for all stakeholders made possible by a lot of hard work by too many people to name, over many years,” says Danakali executive chairperson Seamus Cornelius.
He extended a special thanks and acknowledgement to Enamco, the Eritrean Ministry of Mines and Energy as well as SRBG.