TIDMDNK
RNS Number : 7191R
Danakali Limited
10 March 2021
Announcement Wednesday, 10 March 2021
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Clean energy zero carbon SOP
Danakali Limited (ASX: DNK, LSE: DNK, Danakali or the Company)
is focused on the development of the Colluli Sulphate of Potash
Project (Colluli or the Project). The Project is 100% owned by the
Colluli Mining Share Company (CMSC), a 50:50 joint venture between
Danakali and the Eritrean National Mining Corporation (ENAMCO). The
Company is continuing the process of evaluating its renewable
energy options of solar, wind and geothermal energy with a view to
becoming zero carbon in the production of Sulphate of Potash
(SOP).
Solar and Wind
The early assessment work on the solar and wind energy potential
of Colluli has been completed and this has confirmed that both of
these renewable energy sources can be incorporated into the future
generation of power for the Project. The Company will now work with
its preferred power provider, Aggreko (LSE:AGK) on further
developing these solutions. Aggreko announced on 26 January 2021
[1] its ambition to be carbon net zero, aligning with the Paris
Climate Agreement, by helping its customers meet their
sustainability targets.
Geothermal
Colluli is located in the Danakil depression which lies within
the East African Rift Valley, one of the world's most geothermally
endowed rifts. Significantly, the mining license area is in close
proximity to known geothermal gradients including at Alid, located
on the axis of the Danakil depression, between the Red Sea and the
Afar Triple Junction. Alid has been recognised by the Eritrean
Ministry of Mines and Energy (MoEM) as a potential high geothermal
resource due to the evidence of various surface manifestations and
the presence of underground magma.
In 1996, detailed geological and geochemical work funded by
USAID and conducted by United States Geological Survey (USGS) and
MoEM identified a high temperature reservoir at Alid. Samples
collected indicate a reservoir temperature of a
hydrothermal-convection system likely to be in the range of 250 deg
-300 deg C(2) , which is extremely promising as a geothermal power
source. Follow up work in 2015 demonstrated structural trends and
temperature permeability that are very favourable for an electric
grade geothermal resource.
The importance of geothermal and other renewable energy sources
is set out in Eritrea's national renewable energy policy and
development framework. Danakali will utilise the impressive body of
work already conducted in Eritrea to develop its plans and further
its commitment to carbon neutral SOP production.
Executive Chairman of Danakali, Seamus Cornelius, said: "We are
determined to embrace renewable energy and run our business in a
way that delivers positive environmental impacts for Eritrea and
the world. Our initial goal is to create a responsible,
environmentally friendly, zero carbon, premium fertilizer business
that clearly links Colluli SOP with the production of nutritious
crops, bolsters global food and nutrition security, and improves
millions of lives. We know very well that with an asset like
Colluli, the extensive studies we have done to date provide us with
a useful baseline and the ceiling won't even be glimpsed until
after many decades of growth."
For more information, please contact:
Danakali
Seamus Cornelius Mark Riseley
Executive Chairman Senior Corporate Development Manager
+61 8 6266 8368 +61 8 6266 8368
Corporate Broker - Canaccord
Genuity
James Asensio / Angelos Vlatakis
+44 (0)20 7523 4680
Visit the Company's website: www.danakali.com
Follow Danakali on LinkedIn:
www.linkedin.com/company/danakali-limited
Subscribe to Danakali on YouTube:
www.youtube.com/channel/UChGKN4-M4lOvPKxs9b-IJvw
Announcement authorised for release by the board of
Danakali.
About Danakali
Danakali Limited (ASX: DNK, LSE: DNK) (Danakali, or the Company)
is an ASX- and LSE-listed potash company focused on the development
of the Colluli Sulphate of Potash Project (Colluli or the Project).
The Project is 100% owned by the Colluli Mining Share Company
(CMSC), a 50:50 joint venture between Danakali and the Eritrean
National Mining Corporation (ENAMCO).
The Project is located in the Danakil Depression region of
Eritrea, East Africa, and is 75km from the Red Sea coast, making it
one of the most accessible potash deposits globally. Mineralisation
within the Colluli resource commences at just 16m, making it the
world's shallowest known potash deposit. The resource is amenable
to open cut mining, which allows higher overall resource recovery
to be achieved, is generally safer than underground mining, and is
highly advantageous for modular growth.
The Company has completed a Front End Engineering Design (FEED)
for the production of potassium sulphate, otherwise known as
Sulphate of Potash or SOP. SOP is a chloride free, specialty
fertiliser which carries a substantial price premium relative to
the more common potash type; potassium chloride (or MOP). Economic
resources for production of SOP are geologically scarce. The unique
composition of the Colluli resource favours low energy input, high
potassium yield conversion to SOP using commercially proven
technology. One of the key advantages of the resource is that the
salts are present in solid form (in contrast with production of SOP
from brines) which reduces infrastructure costs and substantially
reduces the time required to achieve full production capacity.
The resource is favourably positioned to supply the world's
fastest growing markets. A binding take-or-pay offtake agreement
has been confirmed with EuroChem Trading GmbH (EuroChem) for up to
100% (minimum 87%) of Colluli Module I SOP production.
Development Finance Institutions, Africa Finance Corporation
(AFC) and African Export Import Bank (Afreximbank), have obtained
formal credit approval to provide CMSC with US$200M in senior debt
finance. The credit documentation was executed in December 2019,
allowing drawdown of CMSC senior debt on satisfaction of customary
conditions precedent. This represents the majority of funding
required for the development and construction of the Colluli. AFC
has also made a strategic equity investment in Danakali of US$21.5M
(A$31.8M) allowing the commencement of the development for the
Project.
The Company's vision is to bring Colluli into production using
the principles of risk management, resource utilisation and
modularity, using the starting module (Module I) as a growth
platform to develop the resource to its full potential.
Forward looking statements and disclaimer
The information in this document is published to inform you
about Danakali and its activities. Danakali has endeavoured to
ensure that the information enclosed is accurate at the time of
release, and that it accurately reflects the Company ' s
intentions. All statements in this document, other than statements
of historical facts, that address future production, project
development, reserve or resource potential, exploration drilling,
exploitation activities, corporate transactions and events or
developments that the Company expects to occur, are forward looking
statements. Although the Company believes the expectations
expressed in such statements are based on reasonable assumptions,
such statements are not guarantees of future performance and actual
results or developments may differ materially from those in
forward-looking statements.
Factors that could cause actual results to differ materially
from those in forward-looking statements include market prices of
potash and, exploitation and exploration successes, capital and
operating costs, changes in project parameters as plans continue to
be evaluated, continued availability of capital and financing and
general economic, market or business conditions, as well as those
factors disclosed in the Company ' s filed documents.
There can be no assurance that the development of Colluli will
proceed as planned. Accordingly, readers should not place undue
reliance on forward looking information. Mineral Resources and Ore
Reserves have been reported according to the JORC Code, 2012
Edition. To the extent permitted by law, the Company accepts no
responsibility or liability for any losses or damages of any kind
arising out of the use of any information contained in this
document. Recipients should make their own enquiries in relation to
any investment decisions.
Mineral Resource, Ore Reserve, production target, forecast
financial information and financial assumptions made in this
announcement are consistent with assumptions detailed in the
Company ' s ASX announcements dated 25 February 2015, 23 September
2015, 15 August 2016, 1 February 2017, 29 January 2018, and 19
February 2018 which continue to apply and have not materially
changed. The Company is not aware of any new information or data
that materially affects assumptions made.
No representation or warranty, express or implied, is or will be
made by or on behalf of the Company, and no responsibility or
liability is or will be accepted by the Company or its affiliates,
as to the accuracy, completeness or verification of the information
set out in this announcement, and nothing contained in this
announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. The Company and each of its affiliates accordingly
disclaims, to the fullest extent permitted by law, all and any
liability whether arising in tort, contract or otherwise which it
might otherwise have in respect of this announcement or any such
statement.
The distribution of this announcement outside the United Kingdom
may be restricted by law and therefore any persons outside the
United Kingdom into whose possession this announcement comes should
inform themselves about and observe any such restrictions in
connection with the distribution of this announcement. Any failure
to comply with such restrictions may constitute a violation of the
securities laws of any jurisdiction outside the United Kingdom.
1 26 January 2021 Aggreko sets industry-leading net zero targets
to support customers through the energy transition
2 Abraham Ruth, (6 February 2021), Geothermal Energy in Eritrea,
Ministry of Information, www.shabait.com .
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END
MSCFFFIVVRIAIIL
(END) Dow Jones Newswires
March 10, 2021 02:00 ET (07:00 GMT)
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